Wednesday, May 21, 2008

Let me Repeat: Markets Zig and Zag, They Don't Zig and Zig

Oil is on the tip of everyone's tongue.  It is the most recent "can't miss" investment.  I have been a long term bull on Oil, but as I always said - "market's zig and zag, they don't zig and zig".  Also, the rally in oil has had profound effects on other markets, and any correction in oil will have profound effects as well.  Figuring out these derivations might do wonders for your portfolio.

There are always unknown and/or unintended consequences to events like this.  What might they be?  How can you benefit?  What is the risk/reward ratio?  

Investing is more  like chess than anything else I, personally, can think of.  You must think several, perhaps many, steps ahead.

I always like to play a game I call: If - Then

If Oil continues up... then perhaps the U.S. equity market heads down further, inflation gains momentum, the U.S. trade deficit worsens, the $ is pressured further, which has effects A, B, and C on commodities 1, 2, and 3.

If Oil corrects...

You got to have a plan, and a plan B. 

Mentatt (at) yahoo (d0t) com


Anonymous said...

Check out the following from WSJ. What a nightmare. This is the FIRST TIME they are actually doing a real study of the field by field reserves. I am shocked.

The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought."

Chuck H.

Greg T. Jeffers said...


Thanks, crazy isn't it. Still, the volatility in oil prices will go UP not down. That means BIG swings. My kind of market.

As for the public becoming aware? non event.

Be well,


Anonymous said...

Having spent time with my friends to warn them of what is coming and literally hours of connecting the dots I can see that even those (exept for one person) have still trouble understanding the entire magnitude of problem we are facing. This is even when they agree with me that peak oil is coming. The size of this beast leaves us like blind men trying to understand that they are faced with an elephant and not a post, snake and rope. So no, even reading this magazine article 99% of people will not understand the true significance of it. I used to be keen on as many people as possible understanding this PO thing. Now I am afraid of what will happen when he mob finally gets it. Even if the majority stops wasting energy and try to come together as a community it would only take 2% or so to disrupt any efforts at community building for their own selfish needs. For more insight into what I am thinking here is an interesting link:

Happy reading,
Chuck H.