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MadeInTaiwan
Participant[quote=stockstradr]Now here’s where I ASK FOR ADVICE.
I’m fairly weak on knowing which big cap oil players are the better positioned for stock price increases, once oil price starts to recover.
So who on this forum has done good research, and can advise us which are the oil sector companies to invest in for long-term? Tell us why you like the companies you recommend?
Exxon?
Petrobras? (Brazil play)
PTR? (China Play)
BP? (more diversified?)
COP?
MRO?Others?
[/quote]
stockstradrI don’t mean to beat a dead horse but read up a little on the Steve LeVine’s background. oilandglory.com is his blog that he created to promote his last book on the oil businees (He still updates it). Don’t know about Petrobras or PTR, but BP, Exxon are not in good long term shape because their bookable reserves are declining. He writes extensively on Eurasia, and oil business/politics. Fun read as well imho.
Participant[quote=stockstradr]Now here’s where I ASK FOR ADVICE.
I’m fairly weak on knowing which big cap oil players are the better positioned for stock price increases, once oil price starts to recover.
So who on this forum has done good research, and can advise us which are the oil sector companies to invest in for long-term? Tell us why you like the companies you recommend?
Exxon?
Petrobras? (Brazil play)
PTR? (China Play)
BP? (more diversified?)
COP?
MRO?Others?
[/quote]
stockstradrI don’t mean to beat a dead horse but read up a little on the Steve LeVine’s background. oilandglory.com is his blog that he created to promote his last book on the oil businees (He still updates it). Don’t know about Petrobras or PTR, but BP, Exxon are not in good long term shape because their bookable reserves are declining. He writes extensively on Eurasia, and oil business/politics. Fun read as well imho.
Participant[quote=stockstradr]Now here’s where I ASK FOR ADVICE.
I’m fairly weak on knowing which big cap oil players are the better positioned for stock price increases, once oil price starts to recover.
So who on this forum has done good research, and can advise us which are the oil sector companies to invest in for long-term? Tell us why you like the companies you recommend?
Exxon?
Petrobras? (Brazil play)
PTR? (China Play)
BP? (more diversified?)
COP?
MRO?Others?
[/quote]
stockstradrI don’t mean to beat a dead horse but read up a little on the Steve LeVine’s background. oilandglory.com is his blog that he created to promote his last book on the oil businees (He still updates it). Don’t know about Petrobras or PTR, but BP, Exxon are not in good long term shape because their bookable reserves are declining. He writes extensively on Eurasia, and oil business/politics. Fun read as well imho.
Participant[quote=stockstradr]Now here’s where I ASK FOR ADVICE.
I’m fairly weak on knowing which big cap oil players are the better positioned for stock price increases, once oil price starts to recover.
So who on this forum has done good research, and can advise us which are the oil sector companies to invest in for long-term? Tell us why you like the companies you recommend?
Exxon?
Petrobras? (Brazil play)
PTR? (China Play)
BP? (more diversified?)
COP?
MRO?Others?
[/quote]
stockstradrI don’t mean to beat a dead horse but read up a little on the Steve LeVine’s background. oilandglory.com is his blog that he created to promote his last book on the oil businees (He still updates it). Don’t know about Petrobras or PTR, but BP, Exxon are not in good long term shape because their bookable reserves are declining. He writes extensively on Eurasia, and oil business/politics. Fun read as well imho.
Participant[quote=stockstradr]Think again regards Big Oil versus small oil companies.
What do you think will happen to the small oil companies (also bigger players with high extraction costs, such as shale oil) when this recession keeps oil prices under $75 for an extended period?
They cannot make money at these current oil prices. Yet Big Oil can make money even when oil prices are low, due to benefits of economy of massive scale. This theme has been discussed many times on Bloomberg/CNBC. Small oil is already getting hammered much harder on stock price than we see with Big Oil.
we might face deflation
We MIGHT face it? Have you read the paper lately? CPI shows we are already into deflationary period. I should note that I do not expect gold to appreciate significantly during this deflationary phase for the overall economy.[/quote]
I tend to be wishy/washy in my posts because I get overwhelmed with all the conflicting info. It is precisely because I read the papers (or more accurately, economic and financial posts on the web here, at the Economist, Finantial Times, LA Times, Slate, The Atlantic…)
My point was that the bookable reserves (oil in the ground they own, or have a right to extract) for large oil multinationals are falling and currently not being replenished. New reserves are mostly controlled by sovereigns. These countries (like Russia) were demanding larger and larger concessions from oil companies in all future development and extraction. This means that long term big oil might go under once their bookable reserves run out even as oil goes up and up. A respected reporter of energy producing Eurasia (Russia, Georgia, Kazakhstan, Turkmenistan, Azerbaijan, Iran etc) Steve LeVine (got his name wrong previously) has been saying this since at least mid 2007. I’m pretty sure (too lazy to check), that big oil stock took a big dip before the recent run up on crude prices. The reason was professional investors were getting wise to big oil’s low bookable reserves.
Of course, oil sovereigns were flexing their muscle when prices were closer to $140 a barrel. Could the leverage switch back to oil multinationals now that as oil has fallen? I don’t know, but I wouldn’t bet on it.
I am curious how one can long oil without buying oil multinationals. I imagine the timing of oil futures to be very risky (can individual investors even buy oil futures for 2015 right now?)
Does that mean longing big oil stocks is a bad move? Hell if I know. I just want to alert piggies to issues big oil faces.
Participant[quote=stockstradr]Think again regards Big Oil versus small oil companies.
What do you think will happen to the small oil companies (also bigger players with high extraction costs, such as shale oil) when this recession keeps oil prices under $75 for an extended period?
They cannot make money at these current oil prices. Yet Big Oil can make money even when oil prices are low, due to benefits of economy of massive scale. This theme has been discussed many times on Bloomberg/CNBC. Small oil is already getting hammered much harder on stock price than we see with Big Oil.
we might face deflation
We MIGHT face it? Have you read the paper lately? CPI shows we are already into deflationary period. I should note that I do not expect gold to appreciate significantly during this deflationary phase for the overall economy.[/quote]
I tend to be wishy/washy in my posts because I get overwhelmed with all the conflicting info. It is precisely because I read the papers (or more accurately, economic and financial posts on the web here, at the Economist, Finantial Times, LA Times, Slate, The Atlantic…)
My point was that the bookable reserves (oil in the ground they own, or have a right to extract) for large oil multinationals are falling and currently not being replenished. New reserves are mostly controlled by sovereigns. These countries (like Russia) were demanding larger and larger concessions from oil companies in all future development and extraction. This means that long term big oil might go under once their bookable reserves run out even as oil goes up and up. A respected reporter of energy producing Eurasia (Russia, Georgia, Kazakhstan, Turkmenistan, Azerbaijan, Iran etc) Steve LeVine (got his name wrong previously) has been saying this since at least mid 2007. I’m pretty sure (too lazy to check), that big oil stock took a big dip before the recent run up on crude prices. The reason was professional investors were getting wise to big oil’s low bookable reserves.
Of course, oil sovereigns were flexing their muscle when prices were closer to $140 a barrel. Could the leverage switch back to oil multinationals now that as oil has fallen? I don’t know, but I wouldn’t bet on it.
I am curious how one can long oil without buying oil multinationals. I imagine the timing of oil futures to be very risky (can individual investors even buy oil futures for 2015 right now?)
Does that mean longing big oil stocks is a bad move? Hell if I know. I just want to alert piggies to issues big oil faces.
Participant[quote=stockstradr]Think again regards Big Oil versus small oil companies.
What do you think will happen to the small oil companies (also bigger players with high extraction costs, such as shale oil) when this recession keeps oil prices under $75 for an extended period?
They cannot make money at these current oil prices. Yet Big Oil can make money even when oil prices are low, due to benefits of economy of massive scale. This theme has been discussed many times on Bloomberg/CNBC. Small oil is already getting hammered much harder on stock price than we see with Big Oil.
we might face deflation
We MIGHT face it? Have you read the paper lately? CPI shows we are already into deflationary period. I should note that I do not expect gold to appreciate significantly during this deflationary phase for the overall economy.[/quote]
I tend to be wishy/washy in my posts because I get overwhelmed with all the conflicting info. It is precisely because I read the papers (or more accurately, economic and financial posts on the web here, at the Economist, Finantial Times, LA Times, Slate, The Atlantic…)
My point was that the bookable reserves (oil in the ground they own, or have a right to extract) for large oil multinationals are falling and currently not being replenished. New reserves are mostly controlled by sovereigns. These countries (like Russia) were demanding larger and larger concessions from oil companies in all future development and extraction. This means that long term big oil might go under once their bookable reserves run out even as oil goes up and up. A respected reporter of energy producing Eurasia (Russia, Georgia, Kazakhstan, Turkmenistan, Azerbaijan, Iran etc) Steve LeVine (got his name wrong previously) has been saying this since at least mid 2007. I’m pretty sure (too lazy to check), that big oil stock took a big dip before the recent run up on crude prices. The reason was professional investors were getting wise to big oil’s low bookable reserves.
Of course, oil sovereigns were flexing their muscle when prices were closer to $140 a barrel. Could the leverage switch back to oil multinationals now that as oil has fallen? I don’t know, but I wouldn’t bet on it.
I am curious how one can long oil without buying oil multinationals. I imagine the timing of oil futures to be very risky (can individual investors even buy oil futures for 2015 right now?)
Does that mean longing big oil stocks is a bad move? Hell if I know. I just want to alert piggies to issues big oil faces.
Participant[quote=stockstradr]Think again regards Big Oil versus small oil companies.
What do you think will happen to the small oil companies (also bigger players with high extraction costs, such as shale oil) when this recession keeps oil prices under $75 for an extended period?
They cannot make money at these current oil prices. Yet Big Oil can make money even when oil prices are low, due to benefits of economy of massive scale. This theme has been discussed many times on Bloomberg/CNBC. Small oil is already getting hammered much harder on stock price than we see with Big Oil.
we might face deflation
We MIGHT face it? Have you read the paper lately? CPI shows we are already into deflationary period. I should note that I do not expect gold to appreciate significantly during this deflationary phase for the overall economy.[/quote]
I tend to be wishy/washy in my posts because I get overwhelmed with all the conflicting info. It is precisely because I read the papers (or more accurately, economic and financial posts on the web here, at the Economist, Finantial Times, LA Times, Slate, The Atlantic…)
My point was that the bookable reserves (oil in the ground they own, or have a right to extract) for large oil multinationals are falling and currently not being replenished. New reserves are mostly controlled by sovereigns. These countries (like Russia) were demanding larger and larger concessions from oil companies in all future development and extraction. This means that long term big oil might go under once their bookable reserves run out even as oil goes up and up. A respected reporter of energy producing Eurasia (Russia, Georgia, Kazakhstan, Turkmenistan, Azerbaijan, Iran etc) Steve LeVine (got his name wrong previously) has been saying this since at least mid 2007. I’m pretty sure (too lazy to check), that big oil stock took a big dip before the recent run up on crude prices. The reason was professional investors were getting wise to big oil’s low bookable reserves.
Of course, oil sovereigns were flexing their muscle when prices were closer to $140 a barrel. Could the leverage switch back to oil multinationals now that as oil has fallen? I don’t know, but I wouldn’t bet on it.
I am curious how one can long oil without buying oil multinationals. I imagine the timing of oil futures to be very risky (can individual investors even buy oil futures for 2015 right now?)
Does that mean longing big oil stocks is a bad move? Hell if I know. I just want to alert piggies to issues big oil faces.
Participant[quote=stockstradr]Think again regards Big Oil versus small oil companies.
What do you think will happen to the small oil companies (also bigger players with high extraction costs, such as shale oil) when this recession keeps oil prices under $75 for an extended period?
They cannot make money at these current oil prices. Yet Big Oil can make money even when oil prices are low, due to benefits of economy of massive scale. This theme has been discussed many times on Bloomberg/CNBC. Small oil is already getting hammered much harder on stock price than we see with Big Oil.
we might face deflation
We MIGHT face it? Have you read the paper lately? CPI shows we are already into deflationary period. I should note that I do not expect gold to appreciate significantly during this deflationary phase for the overall economy.[/quote]
I tend to be wishy/washy in my posts because I get overwhelmed with all the conflicting info. It is precisely because I read the papers (or more accurately, economic and financial posts on the web here, at the Economist, Finantial Times, LA Times, Slate, The Atlantic…)
My point was that the bookable reserves (oil in the ground they own, or have a right to extract) for large oil multinationals are falling and currently not being replenished. New reserves are mostly controlled by sovereigns. These countries (like Russia) were demanding larger and larger concessions from oil companies in all future development and extraction. This means that long term big oil might go under once their bookable reserves run out even as oil goes up and up. A respected reporter of energy producing Eurasia (Russia, Georgia, Kazakhstan, Turkmenistan, Azerbaijan, Iran etc) Steve LeVine (got his name wrong previously) has been saying this since at least mid 2007. I’m pretty sure (too lazy to check), that big oil stock took a big dip before the recent run up on crude prices. The reason was professional investors were getting wise to big oil’s low bookable reserves.
Of course, oil sovereigns were flexing their muscle when prices were closer to $140 a barrel. Could the leverage switch back to oil multinationals now that as oil has fallen? I don’t know, but I wouldn’t bet on it.
I am curious how one can long oil without buying oil multinationals. I imagine the timing of oil futures to be very risky (can individual investors even buy oil futures for 2015 right now?)
Does that mean longing big oil stocks is a bad move? Hell if I know. I just want to alert piggies to issues big oil faces.
Participant[quote=4plexowner]The 7-9% return is figured over a 50 to 70 year time period (Wall Street doesn’t mention this when they are touting “Buy and Hold”)
Most investors have an investment window of 30 to 40 years max so the 7-9% is really deceptive and mostly irrelevant
“The article reinforces my personal financial strategy” – I think this is called confirmation bias …
I am guilty of confirmation bias as well but my RAS alerts me to data that confirms the negative things happening in our economy right now
…[/quote]
I was under the impression that the 7-9% was average return over any given 15year period.
In any event, regardless of my confirmation bias, with family, job that is not finance related, community involvements, I don’t have the time or mental capacity to absorb the market news and adjust my portfolio with the latest developments.Case in point. Most of us realized that the housing was overprices three/four years ago. Some of us saw a danger of overall economy and stock market being dragged down by a housing collapse, but I’d venture that very few actually predicted when the bubble burst, when the overall market collapsed, and the extent of the downturn. Who actually predicted the current deflationary pressure on the global economy? Piggy hedgers who bought commodities, foreign stocks, currencies all suffered some nasty surprises (not to say they are not good strategies). I am listening to a Paul Krugman interview right now, and he’s commenting on his updated book “Return of Depression Economics and the Crisis of 2008”, which was first published in the 90s. One of his points is that there are these connections and unintended consequences that we don’t understand. For example, by lowering interest rates, the “normal” model expects devalued currency, inflationary pressure, and export expansion. However, when companies are highly in debt, as was the case in Mexico in their recent crisis, foreign capital flight actually caused more contraction.
We all think that national and personal debt will lead to inflation or hyper inflation in the future, but how far is that future, how long will the current deflationary trend last? a year, five, longer? How confident are you at predicting the transition? For all other investment vehicles, how confident are you of identifying how other financial connections bellow the surface might affect your investment choice? WallStreet collapse causing devaluation of Euro is but one example. How come the Japanese Yen continue to gain against the dollar? I might be wrong but I don’t think this is like housing where we can easily calculate buying price vs. rent.
Even when we know the long term trend, we may not know how to invest properly to gain. Most of us think that oil will go up once the recession/depression ends (when?), but as I pointed out in a different thread, buying oil stock may not be that wise.
What I do know is that I have little confidence in my ability decipher all of this myself, and I know I will drive myself mad trying to do so.
As far as I can see, U.S. still has one of the best combination of open society, democracy, stability, relative social and economic mobility, education, market friendly environment, large integrated market, can do attitude myth, and trust in capitalism. Therefore long term I still bet on the U.S. economy, and index cost average is the easiest way to make that bet. Again, it is what Warren Buffet advices for long term investment, and for me it is the best combination or low effort, low risk, sleep at night strategy. Your mileage may very.
MadeInTaiwan
Participant[quote=4plexowner]The 7-9% return is figured over a 50 to 70 year time period (Wall Street doesn’t mention this when they are touting “Buy and Hold”)
Most investors have an investment window of 30 to 40 years max so the 7-9% is really deceptive and mostly irrelevant
“The article reinforces my personal financial strategy” – I think this is called confirmation bias …
I am guilty of confirmation bias as well but my RAS alerts me to data that confirms the negative things happening in our economy right now
…[/quote]
I was under the impression that the 7-9% was average return over any given 15year period.
In any event, regardless of my confirmation bias, with family, job that is not finance related, community involvements, I don’t have the time or mental capacity to absorb the market news and adjust my portfolio with the latest developments.Case in point. Most of us realized that the housing was overprices three/four years ago. Some of us saw a danger of overall economy and stock market being dragged down by a housing collapse, but I’d venture that very few actually predicted when the bubble burst, when the overall market collapsed, and the extent of the downturn. Who actually predicted the current deflationary pressure on the global economy? Piggy hedgers who bought commodities, foreign stocks, currencies all suffered some nasty surprises (not to say they are not good strategies). I am listening to a Paul Krugman interview right now, and he’s commenting on his updated book “Return of Depression Economics and the Crisis of 2008”, which was first published in the 90s. One of his points is that there are these connections and unintended consequences that we don’t understand. For example, by lowering interest rates, the “normal” model expects devalued currency, inflationary pressure, and export expansion. However, when companies are highly in debt, as was the case in Mexico in their recent crisis, foreign capital flight actually caused more contraction.
We all think that national and personal debt will lead to inflation or hyper inflation in the future, but how far is that future, how long will the current deflationary trend last? a year, five, longer? How confident are you at predicting the transition? For all other investment vehicles, how confident are you of identifying how other financial connections bellow the surface might affect your investment choice? WallStreet collapse causing devaluation of Euro is but one example. How come the Japanese Yen continue to gain against the dollar? I might be wrong but I don’t think this is like housing where we can easily calculate buying price vs. rent.
Even when we know the long term trend, we may not know how to invest properly to gain. Most of us think that oil will go up once the recession/depression ends (when?), but as I pointed out in a different thread, buying oil stock may not be that wise.
What I do know is that I have little confidence in my ability decipher all of this myself, and I know I will drive myself mad trying to do so.
As far as I can see, U.S. still has one of the best combination of open society, democracy, stability, relative social and economic mobility, education, market friendly environment, large integrated market, can do attitude myth, and trust in capitalism. Therefore long term I still bet on the U.S. economy, and index cost average is the easiest way to make that bet. Again, it is what Warren Buffet advices for long term investment, and for me it is the best combination or low effort, low risk, sleep at night strategy. Your mileage may very.
MadeInTaiwan
Participant[quote=4plexowner]The 7-9% return is figured over a 50 to 70 year time period (Wall Street doesn’t mention this when they are touting “Buy and Hold”)
Most investors have an investment window of 30 to 40 years max so the 7-9% is really deceptive and mostly irrelevant
“The article reinforces my personal financial strategy” – I think this is called confirmation bias …
I am guilty of confirmation bias as well but my RAS alerts me to data that confirms the negative things happening in our economy right now
…[/quote]
I was under the impression that the 7-9% was average return over any given 15year period.
In any event, regardless of my confirmation bias, with family, job that is not finance related, community involvements, I don’t have the time or mental capacity to absorb the market news and adjust my portfolio with the latest developments.Case in point. Most of us realized that the housing was overprices three/four years ago. Some of us saw a danger of overall economy and stock market being dragged down by a housing collapse, but I’d venture that very few actually predicted when the bubble burst, when the overall market collapsed, and the extent of the downturn. Who actually predicted the current deflationary pressure on the global economy? Piggy hedgers who bought commodities, foreign stocks, currencies all suffered some nasty surprises (not to say they are not good strategies). I am listening to a Paul Krugman interview right now, and he’s commenting on his updated book “Return of Depression Economics and the Crisis of 2008”, which was first published in the 90s. One of his points is that there are these connections and unintended consequences that we don’t understand. For example, by lowering interest rates, the “normal” model expects devalued currency, inflationary pressure, and export expansion. However, when companies are highly in debt, as was the case in Mexico in their recent crisis, foreign capital flight actually caused more contraction.
We all think that national and personal debt will lead to inflation or hyper inflation in the future, but how far is that future, how long will the current deflationary trend last? a year, five, longer? How confident are you at predicting the transition? For all other investment vehicles, how confident are you of identifying how other financial connections bellow the surface might affect your investment choice? WallStreet collapse causing devaluation of Euro is but one example. How come the Japanese Yen continue to gain against the dollar? I might be wrong but I don’t think this is like housing where we can easily calculate buying price vs. rent.
Even when we know the long term trend, we may not know how to invest properly to gain. Most of us think that oil will go up once the recession/depression ends (when?), but as I pointed out in a different thread, buying oil stock may not be that wise.
What I do know is that I have little confidence in my ability decipher all of this myself, and I know I will drive myself mad trying to do so.
As far as I can see, U.S. still has one of the best combination of open society, democracy, stability, relative social and economic mobility, education, market friendly environment, large integrated market, can do attitude myth, and trust in capitalism. Therefore long term I still bet on the U.S. economy, and index cost average is the easiest way to make that bet. Again, it is what Warren Buffet advices for long term investment, and for me it is the best combination or low effort, low risk, sleep at night strategy. Your mileage may very.
MadeInTaiwan
Participant[quote=4plexowner]The 7-9% return is figured over a 50 to 70 year time period (Wall Street doesn’t mention this when they are touting “Buy and Hold”)
Most investors have an investment window of 30 to 40 years max so the 7-9% is really deceptive and mostly irrelevant
“The article reinforces my personal financial strategy” – I think this is called confirmation bias …
I am guilty of confirmation bias as well but my RAS alerts me to data that confirms the negative things happening in our economy right now
…[/quote]
I was under the impression that the 7-9% was average return over any given 15year period.
In any event, regardless of my confirmation bias, with family, job that is not finance related, community involvements, I don’t have the time or mental capacity to absorb the market news and adjust my portfolio with the latest developments.Case in point. Most of us realized that the housing was overprices three/four years ago. Some of us saw a danger of overall economy and stock market being dragged down by a housing collapse, but I’d venture that very few actually predicted when the bubble burst, when the overall market collapsed, and the extent of the downturn. Who actually predicted the current deflationary pressure on the global economy? Piggy hedgers who bought commodities, foreign stocks, currencies all suffered some nasty surprises (not to say they are not good strategies). I am listening to a Paul Krugman interview right now, and he’s commenting on his updated book “Return of Depression Economics and the Crisis of 2008”, which was first published in the 90s. One of his points is that there are these connections and unintended consequences that we don’t understand. For example, by lowering interest rates, the “normal” model expects devalued currency, inflationary pressure, and export expansion. However, when companies are highly in debt, as was the case in Mexico in their recent crisis, foreign capital flight actually caused more contraction.
We all think that national and personal debt will lead to inflation or hyper inflation in the future, but how far is that future, how long will the current deflationary trend last? a year, five, longer? How confident are you at predicting the transition? For all other investment vehicles, how confident are you of identifying how other financial connections bellow the surface might affect your investment choice? WallStreet collapse causing devaluation of Euro is but one example. How come the Japanese Yen continue to gain against the dollar? I might be wrong but I don’t think this is like housing where we can easily calculate buying price vs. rent.
Even when we know the long term trend, we may not know how to invest properly to gain. Most of us think that oil will go up once the recession/depression ends (when?), but as I pointed out in a different thread, buying oil stock may not be that wise.
What I do know is that I have little confidence in my ability decipher all of this myself, and I know I will drive myself mad trying to do so.
As far as I can see, U.S. still has one of the best combination of open society, democracy, stability, relative social and economic mobility, education, market friendly environment, large integrated market, can do attitude myth, and trust in capitalism. Therefore long term I still bet on the U.S. economy, and index cost average is the easiest way to make that bet. Again, it is what Warren Buffet advices for long term investment, and for me it is the best combination or low effort, low risk, sleep at night strategy. Your mileage may very.
MadeInTaiwan
Participant[quote=4plexowner]The 7-9% return is figured over a 50 to 70 year time period (Wall Street doesn’t mention this when they are touting “Buy and Hold”)
Most investors have an investment window of 30 to 40 years max so the 7-9% is really deceptive and mostly irrelevant
“The article reinforces my personal financial strategy” – I think this is called confirmation bias …
I am guilty of confirmation bias as well but my RAS alerts me to data that confirms the negative things happening in our economy right now
…[/quote]
I was under the impression that the 7-9% was average return over any given 15year period.
In any event, regardless of my confirmation bias, with family, job that is not finance related, community involvements, I don’t have the time or mental capacity to absorb the market news and adjust my portfolio with the latest developments.Case in point. Most of us realized that the housing was overprices three/four years ago. Some of us saw a danger of overall economy and stock market being dragged down by a housing collapse, but I’d venture that very few actually predicted when the bubble burst, when the overall market collapsed, and the extent of the downturn. Who actually predicted the current deflationary pressure on the global economy? Piggy hedgers who bought commodities, foreign stocks, currencies all suffered some nasty surprises (not to say they are not good strategies). I am listening to a Paul Krugman interview right now, and he’s commenting on his updated book “Return of Depression Economics and the Crisis of 2008”, which was first published in the 90s. One of his points is that there are these connections and unintended consequences that we don’t understand. For example, by lowering interest rates, the “normal” model expects devalued currency, inflationary pressure, and export expansion. However, when companies are highly in debt, as was the case in Mexico in their recent crisis, foreign capital flight actually caused more contraction.
We all think that national and personal debt will lead to inflation or hyper inflation in the future, but how far is that future, how long will the current deflationary trend last? a year, five, longer? How confident are you at predicting the transition? For all other investment vehicles, how confident are you of identifying how other financial connections bellow the surface might affect your investment choice? WallStreet collapse causing devaluation of Euro is but one example. How come the Japanese Yen continue to gain against the dollar? I might be wrong but I don’t think this is like housing where we can easily calculate buying price vs. rent.
Even when we know the long term trend, we may not know how to invest properly to gain. Most of us think that oil will go up once the recession/depression ends (when?), but as I pointed out in a different thread, buying oil stock may not be that wise.
What I do know is that I have little confidence in my ability decipher all of this myself, and I know I will drive myself mad trying to do so.
As far as I can see, U.S. still has one of the best combination of open society, democracy, stability, relative social and economic mobility, education, market friendly environment, large integrated market, can do attitude myth, and trust in capitalism. Therefore long term I still bet on the U.S. economy, and index cost average is the easiest way to make that bet. Again, it is what Warren Buffet advices for long term investment, and for me it is the best combination or low effort, low risk, sleep at night strategy. Your mileage may very.
MadeInTaiwan
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