I think pretty much everyone thinks the stock market will fall further. I am a contrarian by nature and a cynic by birth. I post these two articles not to point directions for oil but to use them to illustrate how quickly accepted fact and one sided opinion can change almost overnight or in this case within 6 months. In this media driven, blackberry infested, 24/7 news world we go from one extreme to the other with astonishing speed.

“Goldman’s Murti Says Oil `Likely’ to Reach $150-$200”
may 2008 oil

“Oil to hit $25 a barrel as global recession deepens, Merrill Lynch predicts”
December 2008 oil

morekaos - 05 December 2008 06:42 PM

I think pretty much everyone thinks the stock market will fall further. I am a contrarian by nature and a cynic by birth. I post these two articles not to point directions for oil but to use them to illustrate how quickly accepted fact and one sided opinion can change almost overnight or in this case within 6 months. In this media driven, blackberry infested, 24/7 news world we go from one extreme to the other with astonishing speed.

“Goldman’s Murti Says Oil `Likely’ to Reach $150-$200”
may 2008 oil

“Oil to hit $25 a barrel as global recession deepens, Merrill Lynch predicts”
December 2008 oil

Really?  I’m a contrarian too.  However, I felt that everybody is talking about market bottoming out and rallying till end of January.

Speaking of it, my BAC puts are doing jack.  I think I’m going to dump for about a 20% loss.  Market can go further down, but my timing is off; two weeks left till expiration this thing will decay fast…oh well.  I’ll give it till end of today.

Man, if this market can rally on this kind of bad news…perhaps we do rally till January.

Overpriced puts are a hard way to play shorts in this market.  Too much doom and gloom is priced in.

Now you are seeing things my way

morekaos - 05 December 2008 08:00 PM

Now you are seeing things my way

I am, I’m not…I don’t know what I’m seeing.  When we hit 7500, I was 99% confident that within a day or two the market will snap and we will have a nice rally.  When I’m NOT highly confident about the direction of the market…I’ve learned to stay out of it as I tend to get myself in trouble.

My portfolio right now is positioned to be most profitable if DOW trades between 8300-8900.  So I have some upward profits still to take, but if we go past 8900…covered calls willl prevent me from profiting any further—atleast till Dec 19.  I also will have a neutral position if the market goes below 8300 assuming I hold on to my BAC puts and I think I will.  I also remain 68% cash.

So I’ll just remain in my current position…kinda boring but oh well.

Morekaos, I meant to ask you what your definition of hitting bottom is.  Are you looking at things short term or long term?  My original response was a long term view, my cluelessness as to where the market is going next couple of weeks is short term view.

Saying that here is my statement.

If the market continues to climb on really bad news, it will just fall from a higher cliff down the road at some point.  Yes? No?

I was making a intermediate to long term bottoming call. Not a trading call. I don’t think the markets will violate the 7450 level for the next year. Having said that I am taking UCLA and the 33 points

morekaos - 06 December 2008 05:48 AM

I was making a intermediate to long term bottoming call. Not a trading call. I don’t think the markets will violate the 7450 level for the next year. Having said that I am taking UCLA and the 33 points

Morekaos.

I am going against you on this one too.
My prediction:

USC wins by 35.    45 to 10

bltserv - 06 December 2008 08:43 PM

morekaos - 06 December 2008 05:48 AM

I was making a intermediate to long term bottoming call. Not a trading call. I don’t think the markets will violate the 7450 level for the next year. Having said that I am taking UCLA and the 33 points

Morekaos.

I am going against you on this one too.
My prediction:

USC wins by 35.    45 to 10

Thank God for generous bookies!!!

It looks like a good time to go long oil and short treasuries.

morekaos - 07 December 2008 06:07 PM

bltserv - 06 December 2008 08:43 PM

morekaos - 06 December 2008 05:48 AM

I was making a intermediate to long term bottoming call. Not a trading call. I don’t think the markets will violate the 7450 level for the next year. Having said that I am taking UCLA and the 33 points

Morekaos.

I am going against you on this one too.
My prediction:

USC wins by 35.    45 to 10

Thank God for generous bookies!!!

USC came up short for my bet.  2 INT`s and 3 missed FG`s.  Oh Well.

awgee - 07 December 2008 07:45 PM

It looks like a good time to go long oil and short treasuries.

Not that I am in disagreement, but what are you basing that on?

I still don’t think we’ve hit bottom, so any input on where the next hit is going to land (even if it’s only educated guesses) would be appreciated.

According to the OC Business Journal,

ECONOMIC INDICATORS

DOWN: Consumer bankruptcies in Orange County doubled to 852 in November from a year earlier, according to the National Bankruptcy Research Center.

OC Business Journal Executive Summary section

Oscar - 07 December 2008 08:44 PM

awgee - 07 December 2008 07:45 PM

It looks like a good time to go long oil and short treasuries.

Not that I am in disagreement, but what are you basing that on?

I still don’t think we’ve hit bottom, so any input on where the next hit is going to land (even if it’s only educated guesses) would be appreciated.

Simple fundamental and technical analysis.  I have no idea if oil has hit bottom or if treasuries have topped.  I do not find the top or bottom particularly relevant except for hindsight.

Oil is about $42 right now.  How much lower can it go?  $35?  $30?  How high will it go in the next few years?  $100 $200 More?  From a simple risk vs. reward basis, this seems like a no brainer.

The ten year is 2.55%.  How much lower can it go?  The three month is 0.05%.  Both the short end and the long end are in negative return territory.  Institutions are now paying the US gov to hold their funds on an inflation adjusted basis.  How long can that go on?  How high can they go?  7%?  10%?  15%? More?  Seems like another no brainer on a risk vs. reward basis.

On another note, just because I got something stuck up my craw:
How you ever noticed that every investor, trader, speculator, etc. considers themselves to be a “contrarian” investor?  By my estimation, 99.9% of all investors are contrarian?  And 99% of them make money, if you go by their posts.

I think oil has room to go down, and if you want to invest in it then do it in stages as predicting a bottom is impossible.  Stage it and cost average if it continues down.  Don’t simply go all in…in anything you buy.
At the same time you won’t see oil go as high as before.  it won’t happen.  Wall street drove the price of oil to where it was, not demand.  Well that is still demand, but its artificial demand.  Just like people buying homes left and right, but half were empty as it was investor owned, not occupied.  This is fake demand.  So demand for a commodity as widely as used as oil can’t drop from its peak to where its at in a matter of 3 months.  World didn’t all of a sudden consume 70% less oil.  Did you consume 70% less oil?  I bet not.  Some demand will go down as prices rise, but often its something people need and will cut back on other expenses. 

Saying that oil was a bubble that popped…I will agree that at some point oil will go up…but not to 150 any time soon.
Same thing happend to home prices.  When do you think home prices will rise to the levels we had in 2007?  When do you think that home valued for 250K in the Inland Empire will go back to 700K?
Or when do you think Microsoft will go back to 90 a share?  Some are still waiting.  Or Yahoo to go back to 1500 a share? Still waiting?

You can find value in the aftermath of every bubble…however be careful catching the knife on the way down.  I did this when I first started investing.  I bought Cisco Systems at 42 a share, thinking market has bottomed.  Eventually I sold for 22 a couple years later, and now 8-9 years since Cisco is at 16 a share.

Good luck.

The SUV is backkkk

awgee - 07 December 2008 09:28 PM

Oscar - 07 December 2008 08:44 PM

awgee - 07 December 2008 07:45 PM

It looks like a good time to go long oil and short treasuries.

Not that I am in disagreement, but what are you basing that on?

I still don’t think we’ve hit bottom, so any input on where the next hit is going to land (even if it’s only educated guesses) would be appreciated.

Simple fundamental and technical analysis.  I have no idea if oil has hit bottom or if treasuries have topped.  I do not find the top or bottom particularly relevant except for hindsight.

Oil is about $42 right now.  How much lower can it go?  $35?  $30?  How high will it go in the next few years?  $100 $200 More?  From a simple risk vs. reward basis, this seems like a no brainer.

The ten year is 2.55%.  How much lower can it go?  The three month is 0.05%.  Both the short end and the long end are in negative return territory.  Institutions are now paying the US gov to hold their funds on an inflation adjusted basis.  How long can that go on?  How high can they go?  7%?  10%?  15%? More?  Seems like another no brainer on a risk vs. reward basis.

On another note, just because I got something stuck up my craw:
How you ever noticed that every investor, trader, speculator, etc. considers themselves to be a “contrarian” investor?  By my estimation, 99.9% of all investors are contrarian?  And 99% of them make money, if you go by their posts.[/quote]

“If I am going to have an argument I must take a CONTRARIAN POSITION!!”

“But thats not just saying “No it isn’t”!!”

“Yes it is!!!”

 

[youtube]http://m.youtube.com/watch?v=teMlv3ripSM&client=mv-google&gl=US&hl=en&warned=True[/youtube]

Let me try that again

Thanks Graph

awgee - 07 December 2008 09:28 PM

Oscar - 07 December 2008 08:44 PM

awgee - 07 December 2008 07:45 PM

On another note, just because I got something stuck up my craw:
How you ever noticed that every investor, trader, speculator, etc. considers themselves to be a “contrarian” investor?  By my estimation, 99.9% of all investors are contrarian?  And 99% of them make money, if you go by their posts.

So are you saying there are 99.9% contrarians and out of that 99% make money?  So there are .01% non-contrarians…how much of the time do they make money?

graphrix - 04 December 2008 05:59 PM

What!? What do you mean you don’t believe in magic? I have all my faith in Hank “The Magician” Paulson.

I dunno about a bottom, but it could be, and if it were I wouldn’t call it. However, Morekaos has been right way too many times, and while Barry isn’t saying it is a bottom, we could be in for a nice rally.

Looks like Barry is changing his mind a bit

A Leading Bear Turns Bullish, Sort of
Barry Ritholtz, CEO and Director of Equity Research, FusionIQ

blackvault_cm - 08 December 2008 10:11 AM

awgee - 07 December 2008 09:28 PM

Oscar - 07 December 2008 08:44 PM

awgee - 07 December 2008 07:45 PM

On another note, just because I got something stuck up my craw:
How you ever noticed that every investor, trader, speculator, etc. considers themselves to be a “contrarian” investor?  By my estimation, 99.9% of all investors are contrarian?  And 99% of them make money, if you go by their posts.

So are you saying there are 99.9% contrarians and out of that 99% make money?  So there are .01% non-contrarians…how much of the time do they make money?

I am not saying that there are 99.9% contrarians.  I am saying that 99.9% of traders/investors consider themselves to be contrarians.  I do not know how often anyone makes money, but if you go by their posts, 99% of their trades are successful.

If you are to be successful in any markets you MUST be a contrarian. It is simple to say “buy low, sell high” It is another thing entirely to do so. In order to “buy low” you must be buying an asset that by definition nobody wants (they are all selling it and depressing the price). On the flip, to “sell high” you must be sell an asset that everyone is clamoring to buy. All successful trades are then “contrarian” or against the tide or even what may be considered good judgement by many.

Maybe the word “bubble” is over used.

Maybe the best word(s) for this is “OH, S__T!”

Treasuries