Tuesday, May 27, 2008

This is what the beginning of the FINAL energy crisis would look like

According to the U.S. Department of Transportation, total Vehicle Miles Traveled ("VMT") declined 4.3% in March 2008 from March 2007.

Well, folks if your total miles travel fell by 4.3% and the oil left over in the system after uses was down 1%, and the price of oil DOUBLED...  what else would the beginning of the FINAL energy crisis look like?   It would look just like this.  (For those lacking an uncanny grasp of the obvious...)

General Motor's stock price hit a 27 year low today,  Ford Motor Company is cutting back production,  American Airlines is cutting back flights... These events have NOTHING to do with the PRICE of oil, and everything to do with the AVAILABILITY of oil.  Price is just a symptom of the decline in availability.  Total VMT =  total vehicles x average gas milage x aggregate fuel availability.  Simple as that.

This data does not support a bottom in residential real estate any time soon.  Nor does it support the Federal Reserve's and the Department of Treasury's position that the economy continues to experience REAL (as opposed to nominal (read inflation)) growth.  

I must warn you:  The Markets are not as dumb as our political representatives.  They are going to pick up on this, and they are going to react.  If you take a "wait and see" approach, or should I say a "lay and pray" strategy, which will wind up with you in the "plead and bleed" position. (That is - holding your losers and praying for a come back.  Professional traders, including yours truly, know this one well. It is to be avoided at all costs.) Don't do this to yourself.

Time is of the essence...

Mentatt (at) yahoo (d0t) com


fallout11 said...

Greg, I do not normally ask for financial advise, but in this case it seems appropriate, assuming you don't mind giving some.

I am a federal gov't employee under the newer (crappier) FERS retirement system. As a result, most of my retirement will come from a 401(k)-like voluntary saving/investing plan known as TSP.
TSP funds can be invested in a handful of semi-poorly run funds.
You can view historical returns here.
An overview of what each fund tracks is listed here.

I am not very market savvy, long considering the financial markets little more than a net-sum game similar to a casino, where the smart money does well and games the system, and the buy and hold long-term small investor is the mark.

Getting funds out of the TSP system short of retirement is harder than with a typical 401k. Interfund transfers, however, are easy. Hence what if anything can I do with these funds to keep from getting creamed financially by what is coming, allocation wise?

Thank you.

Greg T. Jeffers said...

I cannot give specific advice. And I am not a financial planner, although what value they add is beyond my comprehension.

I don't know what you a permitted to own. In addition to the assets in my funds, I have some assets in Exchange Trade Funds (just go to etfconnect.com ) that own commodities directly - silver, gold, Agricultural commodities, oil, natural gas, etc... I cannot tell what or when or at what price to buy, you will have to find someone to help you or figure that out on your own. If you email me your phone, I can talk to you personally, but I cannot broadcast it here, or I would have to register my site as part of an advertising program with the SEC and FINRA.

my email is:

mentatt (at) yahoo

fallout11 said...

Thank you kindly, Mr. Jeffers.
Really, I was just asking which of the 5 funds (choices, i.e. G, F, I, C, or S) seemed the most sound investment of the bunch for this "captive" capital. It's dead money anyway, given a hard crash.

G = US Treasuries
F = Bonds (LBA)
C = S&P 500 large cap stocks
S = Wilshire 4500 small cap stocks
I = Int'l stocks

"Real" investments I have made separately.

Greg T. Jeffers said...

I sincerely wish I could add some value. given the options, I cannot.
I will say that I would rather slam my finger in a car door than own $ denomiated fixed income securities (bonds) of any type