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Roman Chuyan, CFA

 
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  • Oil Price: Beginning Of A Downtrend [View article]
    Thank you, Scott. Agree that demand for paper is an important driver of the price, at least in the short term. The Supply-Demand chart that I described looks at broader measures: demand growth and supply capacity growth, globally. To the extent that capacity growth is not met with demand (production), it results in Spare capacity - nothing to do with production, but arguably an important metric. These metrics seem to be highly correlated with subsequent 1-2y price performance, but maybe not over weeks/months that one would need for trading. The IEA's Mid-Term Oil Market report is issued annually, not sure if IEA updates them more frequently.

    Regarding inventories - I think US crude oil + products inventory is at 1.14B barrels now (excluding SPR), which is close to all-time high. You may want to look at that, if it leads price better than just crude inventory. It's on the IEA web site.
    Oct 29 02:51 PM | Likes Like |Link to Comment
  • Oil Price: Beginning Of A Downtrend [View article]
    Fernando, good question, sorry it's a bit confusing. It is actually growth in capacity rather than in the amount of supply. The IEA chart says "supply Capacity growth," but I simply use "supply growth." To the extent that it exceeds demand (ignoring change in stocks), Spare Capacity rises.

    Also, U.S. stocks of crude oil and products are material and not constant - stocks are currently approaching a record 1.14 billion barrels (excluding the strategic petroleum reserve).

    Hope this helps.
    Oct 28 10:23 PM | Likes Like |Link to Comment
  • Oil Price: Beginning Of A Downtrend [View article]
    @Dougmayer, I agree, over several years, it likely will.
    Oct 28 06:15 PM | Likes Like |Link to Comment
  • Gold: Making The Most While Avoiding The Risks - A Strategy For Income Investors [View article]
    Rick - a great rebuttal of common gold standard myths, laid out in simple terms - thanks!
    Oct 24 05:43 PM | Likes Like |Link to Comment
  • Market Outlook - Will The Bounce Have Legs? [View article]
    Price - good summary of strong US fundamentals. Fundamentals drive markets, not technicals. "Resistance" proved to be imaginary; indices wend through 200dMA's like knife through butter.
    Oct 23 10:08 AM | 1 Like Like |Link to Comment
  • Thoughts From Dallas On Ebola And The Markets [View article]
    Finally some common sense about this ebola/market craze - thanks!
    Oct 15 05:40 PM | 1 Like Like |Link to Comment
  • Warning: Market Correction Last Week... Did You See The Opportunity? [View article]
    Frank - good article.

    Your argument that OPEC+Russia would cut production based on their production costs and/or budget, while seems theoretically strong, may not be historically valid. These countries would still HAVE to produce/export as much as they can, at lower prices, in order to receive that export revenue. Historically, they tend to claim to 'limit' production, only to exceed their quotas. As a result, oil has historically traded at: $13-$20 in late 1990's, $25-$30 in 2000-03 (WTI prices).

    Also, keep in mind that it is in the U.S. political interest to keep Brent price as low as possible - even if only to disadvantage OPEC, Russia. We are now the largest producer in the world, at about 8.8 mb/d running, while we still consume 11+ mb/d. In that light, here's a possibility: the U.S. limits its crude imports, thus pressuring Brent further, but boosting WTI to support U.S. producers... just a thought.
    Oct 15 01:40 PM | Likes Like |Link to Comment
  • Crude Oil Fundamentals Bad For Price [View article]
    The drop in oil price was expected, even overdue. In this Nov-9-2013 article, I argued that "supply-demand fundamentals should determine price in the medium- to long-term... If IEA's projections are accurate and supply growth exceeds demand by about one mb/d this year and next, it is likely that oil price will drop below $85."

    In less than a year, the WTI contracts dropped below $85 - it trades around $82 today. This is despite geopolitical issues that are arguably even worse than they were late last year. It shows that fundamentals drive markets, not geopolitics. In the case of oil, it comes down to supply and demand.
    Oct 15 10:40 AM | Likes Like |Link to Comment
  • Is The S&P 500 Valuation High Or Average? [View article]
    DrewDunklin - I'm not arguing that the S&P valuation is low - it is, in fact, slightly above-average. But how high is it, what does it mean for near-term expected index return? Historical comparisons of the type that I provided, only go so far. We can't answer this without measuring it exactly. At my firm, we use this as one factor in a multi-factor forecasting model. It shows that valuation (P/E and other valuation factors) is mildly negative right now - but not large enough negative to offset the positive effect of other (mainly economic) factors
    Oct 13 09:27 AM | Likes Like |Link to Comment
  • The Real Reason Why Unemployment Is Falling [View article]
    Tom, awesome article! Totally agree that job market is already strong and improving, but your long-term demographics perspective was new to me, and I think you are right... Millenials are a bit freakish :)
    Oct 9 05:43 PM | 1 Like Like |Link to Comment
  • The Bull That Is Buy Low, Sell High [View article]
    So you've experienced "period of underperformance and lackluster results" because you've been defensive, and you need the market to crash in order for your pain to "come to an end." You are not alone, there a a lot of bears out there who have been defensive/short, who need a crash.
    Oct 9 11:03 AM | Likes Like |Link to Comment
  • Oil Market Karma Reversed? [View article]
    You conclude that "the bruising has been harsh" for energy stocks "in light of fundamentals," but you don't mention energy stock or their fundamentals anywhere in your article. Oil is -7.5% YTD, energy stocks (XLE) is -2.1%. Seems the opposite.
    Oct 9 10:23 AM | Likes Like |Link to Comment
  • Is The S&P 500 Valuation High Or Average? [View article]
    Jeff65, thank you for your comments. I think your conclusion "not too hot nor too cold" is the same as mine in this post. And you are right, investing has to be forward-looking. At my firm, we use this as one factor in a multi-factor forecasting model. It shows that valuation (P/E and other valuation factors) is mildly negative right now - but not large enough negative to offset the positive effect of other (mainly economic) factors.
    Oct 9 07:32 AM | Likes Like |Link to Comment
  • Is The S&P 500 Valuation High Or Average? [View article]
    I agree with you, but think folks tend to use CAPE for near-term. The article is written from the standpoint of tactical management, i.e., forecasting near-term returns (say, 1y).
    Oct 8 06:55 AM | Likes Like |Link to Comment
  • Is The S&P 500 Valuation High Or Average? [View article]
    10% or more is typically considered a correction; I call 3-6% a mini-correction.
    Oct 8 06:52 AM | Likes Like |Link to Comment
COMMENTS STATS
165 Comments
126 Likes