--so nothing happened; will it last?
Posted on 01/25/2015 10:11:11 AM PST by expat_panama
--so nothing happened; will it last?
No. As an experienced investor, I predict something will happen.
Now if I knew what was about to happen, then I’d be rich....
http://www.wsj.com/articles/is-it-time-to-invest-in-energy-stocks-1422028657
Is It Time to Invest in Energy Stocks?
With Oil Prices at a Six-Year Low, Here Are the Options for Investors—and the Risks
By Dan Strumpf
Jan. 23, 2015 10:57 a.m. ET
The sharp fall in oil prices has wreaked havoc on shares of energy companies, leaving investors to decide whether now is the time to go bargain hunting.
U.S. crude prices have fallen by more than half since June, trading at a six-year low of around $45 a barrel. For motorists filling up their tanks with sub-$2 gasoline, that has been a cause for celebration. But for investors in the energy sector, it has been a calamity.
The S&P 500 Energy index, comprising the industry’s largest companies, lost more than a fifth of its value over the six months through Thursday, the biggest decline of any of the 10 major sectors, according to FactSet. The broader S&P 500, by contrast, rose 4%.
The pain has been worse for shares of smaller producers, many of which took on loads of debt to finance new drilling. A barometer of small energy companies, the S&P SmallCap 600 Energy index, has swooned 47% in the past six months.
Experts warn that the wild swings in energy stocks could continue for some time. While blue-chip names like Exxon Mobil have offered energy investors some insulation from volatile oil prices, producers and service companies are more vulnerable to the tumult—but have more to gain should oil prices stage a rebound.
What’s the consensus for investing in coal? I think it will resurge after Obama’s gone, if we get a real conservative Congress and a real conservative president. Comments?
We can't count on that merely because nothing happened last week. [From 12 Cognitive Biases That Endanger Investors Minyanville.com]
Gambler's Fallacy
One of the most famous disclaimers in finance is that past performance is no guarantee of future results. This bias is often referred to as a "glitch" in our thinking in that it extrapolates what happened in the past to construct an idea of what will happen the future. How many of you have played roulette at a casino under the premise that a string of red increases the likelihood of a black outcome? That's flawed thinking; the odds of red (or black, for that matter) or 48% on each independent spin.
No, my answer is based on experience. Things have been happening for thousands of years. Quiet periods do not usually last long. The more people there are on earth, the more likely that something will happen.
Nobody seems to want to talk about it but the fact is that coal stock piles are down (Coal stockpiles at coal-fired power plants smaller than in recent years) and the price is up (Wholesale power prices increase across the country in 2014).
I haven't looked at coal stocks but the energy stock sector has not been looking so good lately...
--because they've been down or because something new is happening now? This is the core of all our head-scratching here....
I have been thinking about coal too. The risk is that the low oil prices could bankrupt many coal producers. I am holding off for now.
I may get flamed here, but investing IS NOT, repeat IS NOT gambling.
History has shown that a long-term, buy and hold strategy of buying equity in proven companies is a nearly GUARANTEED way to accumulate wealth.
Day trading? That’s gambling.
Nobody wants to wait. They want it ALL, and they want it NOW.
Human nature, I suppose.
I wonder if oil hasn’t found a floor and will now be in a $45-$55 trading range...
IMO, nothing new is happening. Petroleum and the industry that provides it AIN’T going away, not in the next hundred years. The boom and bust cycles are a historical part of the biz, and represent an opportunity to accumulate companies at a bargain price.
I think that, w/o much effort, you will find that "if", as an investment or trading parameter, is much less likely to yield a profit than a different parameter, to wit, "is likely to".
No personal view on coal, but being long coal (directly or by proxy) has many more imponderables right now than simply straddling crude, or writing puts/stripping calls on natural gas. Coal "should" rally given the insertion of a competent US government after Odildo, but I also prefer "is likely to" over "should". And, the assumption of a competent US goobermint carries with it innumerable other risks.
FReegards to you, and good trading!
--although that's a fondly held belief of those that like gambling and are clueless w/ investing. Sometimes gamblers try their addiction in the financial markets and they may even call themselves 'day traders'. They're not. Gambling addict's bottom out and stop --one way or the other. Real day traders who endure (and there are many) are those that know what they're doing and provide a needed service.
Since late 2008 and into 2009 central bankers around the world have been fighting a losing battle against "Deflation".
The only tool they have is the printing press/QE*, which is designed to create "inflation" in order to stop the deflationary cycle. In the short run they are not necessarily wrong since it is really the only thing they can do.
The QE* efforts of the U.S. have sent the U.S. stock market to record highs but the utter lack of real economic growth suggests there are other forces at work.
Deflation is a Bitch.
That would make a good sign on the wall of a trading office....
--and they did it, it seemed to work for a while, but now they're quitting and we're all watching the world's economy deflate, beginning now with negative interest rates. The problem (imho) is that w/ all the printing the money supply hasn't made any serious moves. Money's supposed to be created by econ activity and it's not there. We especially see it in the fact that money-velocity has gone AWOL
Actually that range is close to the historical long term floor, but my thinking is that we really should be open to another plunge before stabilizing.
There are some who seem to think they’d benefit from deflation. Perhaps so, assuming no debt, ample savings and cash reserves, and your financial institutions don’t fail. That’s the biggie, failing financial institutions.
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