Posted on 01/05/2015 10:57:16 AM PST by Signalman
It's quite the sobering Monday on Wall Street as many traders and investors return from their holiday hiatus. The Dow plunged over 300 points in mid-day trading as stock markets around the world fell sharply.
What's going on? The main culprits of market jitters these days are falling oil prices and the souring global economy. Crude oil now trades at about $50 and even dipped briefly below that level on Monday -- another psychological threshold for the market.
Experts now predict oil could go as low as $40 or even $30 a barrel. While that's great for U.S. consumers, who are enjoying gas prices of $2 or less not seen since the worst of the Great Recession, there comes a point when sustained low prices begin to really hurt energy company stocks and jobs in the U.S. and other countries around the world.
(Excerpt) Read more at money.cnn.com ...
We should open up all those land and ocean areas that we have closed off to cheaper methods of drilling (compared to fracking) over the years.
Or, if that causes a slow economy, that means interest rates go or stay down—and that is more central to a country’s ability to repay its debts.
I completely agree with both of your paragraphs. And I did the same thing you did. I lost a lot of “income potential” but I don’t want to be there when it collapses. I put the money in “useful” real estate and improvements, btw.
Gold hasn’t been this high since.... early December!
Or, if that causes a slow economy, that means interest rates go or stay down—and that is more central to a country’s ability to repay its debts.
A lot of us have been saying that. Over the past half century the price of a barrel in 2014$ ranged between $20 and $60 --these past few years have been an aberration.
Gold has dropped to ~$1200 from the 52-week high of $1379 in March
Most of my stuff is in IRA type areas so i had to settle for moving it into money market areas that are savings account safe, but effectively zero interest. I have a friend who handles investments mainly in the insurance area and he claims to have some safe/guaranteed growth areas. Will be sitting down with him soon to see if I want to move anything.
http://online.barrons.com/articles/jeffrey-gundlachs-surprising-forecast-1420259030
Where the median economic forecast tabulated by Bloomberg for the 10-year U.S. Treasury Bond yield for year-end 2015 currently stands at 3.24%, Gundlach thinks the 10-year that finished 2014 at 2.17% could potentially take out its modern-era low of 1.38% yield hit in 2012. This would particularly be the case if crude-oil prices keep falling to, say, $40 a barrel from their 2014 year-end level of about $55. This further drop from the 46% decline suffered by crude in 2014 would only accentuate deflationary forces he sees at work globally that continue to drop long-bond yields.
Gold is exactly where it was a year ago.
Essentially gold has done nothing significant for well over a year.
Pssh—all the Fed has to do is stop with its artificially low rates.
“The first rule of investing is don't lose money; the second rule is don't forget Rule No. 1.” - Warren Buffet
I've also significantly reduced my exposure in the past few years -- currently 50% cash. After so many years of ultra-easy-credit policies, market valuations are so distorted now that it's really hard to make sound decisions.
Many are brooding over big oil’s demise. It is a sign that things are totally out of whack, as if the oil industry that produces energy IS our economy instead of the multitude of those who would use cheap energy to produce goods and products to thrust the economy forward. Now, that will make for a diverse, sound economy. The GDP of producers who use the energy will far exceed that of big oil. Energy is the dynamo and when it is cheap just watch the economy accelerate.
“At these prices the government better be buying up all they can to refill the strategic reserves...”
Surely you jest. That would actually make good business sense.
NOW, if someone would tell Obama that replenishing the oil reserves would boost prices (like buying up ammo did), he would be onboard with it.
(Sorry I called you Surely.)
The money paragraph from that article:
“Per usual, Gundlach has an idiosyncratic view of where markets are headed in 2015. Like virtually everyone, he expects the Federal Reserve to begin raising the federal-funds rate this year, but he predicts that the impact will be the opposite of the conventional wisdom. To wit, longer-term bond yields will, in fact, decline rather than rise as a result of a surprising flattening of the yield curve, he argues.”
That said, I'm about to throw in the towel and proclaim that market bulls have been right all along. Despite some setbacks the market has done very well over the last 2 decades. That is despite all conventional thinking I held to be true, such as the importance of PE ratios in the 10 to 15 range, or that stocks require a healthy economy.
Turns out there is some paradigm I am missing.
Yeah, but gold’s performance frankly rather leaves a lot to be desired.
I'll take mine at 49 cents a gallon like 1975....the good year ~,~
Ed
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