Stocks and investing thread

[Cknolls]

So, oil hit a significant mark at the end of trading yesterday - $93.53. Why is it significant? Its the highest level... ever. Even adjusted for inflation.

 

Now, interestingly, gas prices are still not overwhelmingly bad. I think its still averaging just under $3. Now, I am sure it will go up into the $3 to $3.50 range soon, but, I think its really surprising that its not a lot higher. Experts are pointing out that demand has been down this fall, keeping prices lower. What is cool about that, to me, is that a couple of the factors involved in that trend are a change in the habits of Americans, along with a slightly more diverse energy base. The use of alternative energy sources, the efforts of people to cut down consumption, etc., may finally be having a positive effect. I think thats fantastic, and its a sign of how much better things could get if we keep pushing new technologies and energy independence.

 

So, I guess I'm saying... nice start, America. Let's dig in and keep it going.

 

Oil has to reach a little over $100/barrel adjusted for inflation to reach all time high.

[southsider2k5]

So, oil hit a significant mark at the end of trading yesterday - $93.53. Why is it significant? Its the highest level... ever. Even adjusted for inflation.

 

Now, interestingly, gas prices are still not overwhelmingly bad. I think its still averaging just under $3. Now, I am sure it will go up into the $3 to $3.50 range soon, but, I think its really surprising that its not a lot higher. Experts are pointing out that demand has been down this fall, keeping prices lower. What is cool about that, to me, is that a couple of the factors involved in that trend are a change in the habits of Americans, along with a slightly more diverse energy base. The use of alternative energy sources, the efforts of people to cut down consumption, etc., may finally be having a positive effect. I think thats fantastic, and its a sign of how much better things could get if we keep pushing new technologies and energy independence.

 

So, I guess I'm saying... nice start, America. Let's dig in and keep it going.

 

Look at where it closed... It ran like a scared little b****. It isn't fundamentally ready for these levels. At least not yet.

[NorthSideSox72]

Oil has to reach a little over $100/barrel adjusted for inflation to reach all time high.

Not according to WSJ. Its already over.

 

But $5 is semantic at this point.

 

 

[NorthSideSox72]

Look at where it closed... It ran like a scared little b****. It isn't fundamentally ready for these levels. At least not yet.

First test. Just dippin' the toe in the water.

 

[kapkomet]

The WSJ had it at $101.70 (the inflation adjusted high) in an article I read this morning.

[NorthSideSox72]

The WSJ had it at $101.70 (the inflation adjusted high) in an article I read this morning.

I read it just the other day - highest inflation-adjusted price ever. I'll try to find it online.

 

[kapkomet]

 

- not really, I don't have time... but I did read it this morning for sure.

[NorthSideSox72]

 

- not really, I don't have time... but I did read it this morning for sure.

Well this is interesting. Turns out the reason we have different numbers is that even the experts aren't sure what the correct number is.

 

[NUKE_CLEVELAND]

Look at where it closed... It ran like a scared little b****. It isn't fundamentally ready for these levels. At least not yet.

 

With todays inventory report it shot right back up to those levels. Oil doesn't trade according to fundamentals, it trades based on speculation and fear and has done so for a long time now.

 

[StrangeSox]

With todays inventory report it shot right back up to those levels. Oil doesn't trade according to fundamentals, it trades based on speculation and fear and has done so for a long time now.

 

The top economist from the Soros foundation said that the fundamentals indicate oil should be around $65.

[NorthSideSox72]

The top economist from the Soros foundation said that the fundamentals indicate oil should be around $65.

Part of the problem with discussing "fundamentals" and oil is that there is not (contrary to what some people want you to believe) a definitive concensus on what makes up those fundamentals. Certainly your basic supply (oil out, refining capacity, transport capacity, storage capacity and current inventories) and demand (consumer, energy, US versus non-US) aspects are in play. Costs of production too. But here is the thing. Aren't regional political problems such a normal, expected thing now, that they should be considered fundamental? I think so. But how do you adjust price for such an unpredictable factor?

 

[sox4lifeinPA]

I made 26k in 3 days on my 1 mill investment.....

 

 

 

at smartstocks.com

 

 

[Balta1701]

I'll leave it to you guys to tell me what this one means.

The Federal Reserve lowered the target for a critical short-term interest rate by a quarter of a point Wednesday, citing continued concerns about the housing market crunch.

 

The widely-expected move comes on the heels of a half-point rate cut by the central bank in September and leaves the federal funds rate at 4.5 percent, its lowest level since April 2001.

 

The federal funds rate, an overnight lending rate for banks, is important to the economy since it influences how much interest consumers pay on credit card debt, home equity lines of credit and auto loans. It also impacts how much it costs corporations to borrow money.

[sox4lifeinPA]

I'll leave it to you guys to tell me what this one means.

 

 

It means our deposit rates are going to drop...again...

 

the blue hairs are going to go CRAZY when they can't even get 4.5% on a CD.

[kapkomet]

I'll leave it to you guys to tell me what this one means.

I'm telling you (like I said with the last rate cut) that we are about to see the 1970's inflation cycle all over again. OK, maybe that's a bit of an exaggeration, but 5%+ inflation will happen in about 18 months - and will it be a coincidence that Hillarity will have been in office for 3 months?

[NorthSideSox72]

I'm telling you (like I said with the last rate cut) that we are about to see the 1970's inflation cycle all over again. OK, maybe that's a bit of an exaggeration, but 5%+ inflation will happen in about 18 months - and will it be a coincidence that Hillarity will have been in office for 3 months?

I don't think so. This is a small move to counter the credit tightening, and I think ultimately the credit crunch slowly removing cash from the system will actually mitigate inflationary pressures. As bankruptcies and foreclosures increase, debts will be paid off partially, but because this economy is so debt-heavy, that will actually be something good for the debt levels. Plus decreasing home values will allow some new home buyers into the market.

 

I do have two inflationary concerns other than the flow of money into the system, though: energy and food commodities. While we are making progress away from oil, its very slow going, and oil prices will continue to rise, as well as eventually gas prices. As for food commodities, the corn thing is starting to hit hard, and that will show up in the market basket for real costs to consumers. Its towards something positive, but short term, it hits hard. Diversification into switchgrass and other non-food green stuff to be used for fuel is essential.

 

[sox4lifeinPA]

Plus decreasing home values will allow some new home buyers into the market.

 

 

ding ding ding!

[kapkomet]

I don't think so. This is a small move to counter the credit tightening, and I think ultimately the credit crunch slowly removing cash from the system will actually mitigate inflationary pressures. As bankruptcies and foreclosures increase, debts will be paid off partially, but because this economy is so debt-heavy, that will actually be something good for the debt levels. Plus decreasing home values will allow some new home buyers into the market.

 

I do have two inflationary concerns other than the flow of money into the system, though: energy and food commodities. While we are making progress away from oil, its very slow going, and oil prices will continue to rise, as well as eventually gas prices. As for food commodities, the corn thing is starting to hit hard, and that will show up in the market basket for real costs to consumers. Its towards something positive, but short term, it hits hard. Diversification into switchgrass and other non-food green stuff to be used for fuel is essential.

Any time you put MORE money into the system by reducing rates, with already key inflation indicators starting to look unstable, you run the risk of blowing things right over the top.

[NorthSideSox72]

Any time you put MORE money into the system by reducing rates, with already key inflation indicators starting to look unstable, you run the risk of blowing things right over the top.

Sure. But look at the whole money picture, and remember that the amount of money in the system that is more liquid to the economy is a factor inflation as well. What I mean is, look at the housing boom and the cash-outs that occurred from 2002-2006. That was that equity, non-repeating cash you heard me harping about at the time. Even with all that cash being flung around, inflation was controlled. Now, you put a small margin more cash in the whole economy, BUT... with all the foreclosures and bankruptcies, a lot more of it is coming "off the table", if you will. Less money to be spent, less propellant for prices.

 

Know what I mean?

 

[Rex Kickass]

I'm just a bit confused. I thought the housing meltdown had a bit to do with the fact that the housing craze made everything pretty overpriced in general and put a lot of people in a much more financially strapped position than they could afford to be in. As those people started to default on their houses, the mortgage market imploded which basically created a shortage of liquidity in the market? This doesn't seem to be an altogether bad thing - because the liquidity that was there caused big financial institutions to overstretch on housing, yes?

 

So, although a drop in the Fed interest rate helps keeping the housing market from cooling too quickly, is it really doing the right thing in an economy headed for recession? Lower interest rates equals a weaker dollar. This would help our exporting, however with our manufacturing base shriveled, is that really a huge gain for us anymore? On the other hand, it helps boost energy costs, specifically the price of oil. This fuels inflation in food and energy - which seems to be the big problem for the most of us who don't have a ton of cash to throw around on 3.00+ a gallon gas and 4.00+ a gallon milk. So while prices for essentials for Americans increase, savings rates get further depressed because traditional means of savings are getting more and more pointless. Wouldn't this dampen the already weak American will for saving further?

 

I just don't see how rate reductions at this point would be a good thing for the average American.

[Balta1701]

I just don't see how rate reductions at this point would be a good thing for the average American.

The "average American" is, in very few cases, who these rate cuts are designed to benefit, except through the concept of growth in the economy generally being a good thing.

Edited October 31, 2007 by Balta1701

[NorthSideSox72]

I'm just a bit confused. I thought the housing meltdown had a bit to do with the fact that the housing craze made everything pretty overpriced in general and put a lot of people in a much more financially strapped position than they could afford to be in. As those people started to default on their houses, the mortgage market imploded which basically created a shortage of liquidity in the market? This doesn't seem to be an altogether bad thing - because the liquidity that was there caused big financial institutions to overstretch on housing, yes?

 

So, although a drop in the Fed interest rate helps keeping the housing market from cooling too quickly, is it really doing the right thing in an economy headed for recession? Lower interest rates equals a weaker dollar. This would help our exporting, however with our manufacturing base shriveled, is that really a huge gain for us anymore? On the other hand, it helps boost energy costs, specifically the price of oil. This fuels inflation in food and energy - which seems to be the big problem for the most of us who don't have a ton of cash to throw around on 3.00+ a gallon gas and 4.00+ a gallon milk. So while prices for essentials for Americans increase, savings rates get further depressed because traditional means of savings are getting more and more pointless. Wouldn't this dampen the already weak American will for saving further?

 

I just don't see how rate reductions at this point would be a good thing for the average American.

I personally think the rate change, especially such a minimal one, isn't really good or bad in the net - its just a softening move. But I tend to be more or less a market naturalist. People make mistakes, they struggle to reset, and then get stronger again, hopefully making slightly smaller mistakes next time. In any case, the higher commodity and fuel prices will result in lower costs elsewhere over time.

 

[kapkomet]

Sure. But look at the whole money picture, and remember that the amount of money in the system that is more liquid to the economy is a factor inflation as well. What I mean is, look at the housing boom and the cash-outs that occurred from 2002-2006. That was that equity, non-repeating cash you heard me harping about at the time. Even with all that cash being flung around, inflation was controlled. Now, you put a small margin more cash in the whole economy, BUT... with all the foreclosures and bankruptcies, a lot more of it is coming "off the table", if you will. Less money to be spent, less propellant for prices.

 

Know what I mean?

Yes, and I agree, only to an extent. IMO you need to not cut the funds rate. You cut the rate between banks so that the money moves easier to cover the fluxes.

[NUKE_CLEVELAND]

What I find really amusing is that all these people keep saying we're headed for recession when you have GDP growth approaching 4% for this quarter according to the latest read on it that was out today. It doesn't seem as though the housing problem is hurting the economy as a whole with numbers like that. This is doubly remarkable in the face of the ongoing subprime mortgage mess and sky high energy prices. People have been predicting impending doom for the economy for months now and even though events say we should be slowing down, we're not.

Edited November 1, 2007 by NUKE

[DBAHO]

The good news for me, the AUD/USD is up past 93c, and people down here think it'll hit 96c by the end of the year, and maybe parity some point into next year, and that's VERY good news for me.

 

And since I last posted in here about how our market was "crashing" well it's gone back up 1200 points in about 2 and a half months. Some sort of recovery hey.