sbenard

http://globalcapital.blogspot.com

201 Comments

    • ON: Wed Sep 24th 13:57 PM
      Commented on:
      Impact of Commodity ETFs on Prices: An Update
      Fellow forum members:
      Calling someone a "lunatic" because you disagree with them is unbecoming a professional. It suggests that since you can't make a case for your opinion, you resort to denigration of the author of the opposing viewpoint. Weak minds and poor arguments must resort to profane and denigrating language because they can't express themselves forcefully any other way than through the shock value of crude language. It would be better to make your case with reasonable and powerful arguments rather than denigration!

      Furthermore, your use of such language tells me NOTHING of the author of this article. However, it speaks MULTITUDES of your character -- or lack thereof! We learned more about YOU in your snide posts than than we learned about the author of this article!
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    • ON: Wed Sep 24th 13:43 PM
      Commented on:
      Impact of Commodity ETFs on Prices: An Update
      Coincidence is NOT causality. The existence of funds that invest in commodities does not mean that they caused those price rises. That would be like saying that just because you choose to sleep in the garage, you must therefore be a car!

      To the contrary, the year-long study by the CFTC that was released about 10 days ago shows that the percentage of futures contracts attributable to speculator/investors has DECLINED over the past two years. The increases in commodity markets were attributable to the entrance of more and more commercial hedgers, NOT speculators.

      The CFTC study showed that the commodities that have experienced the sharpest price rises were the commodities that had the least speculator/fund influence, and the commodities that showed the smallest price increases were the ones with the largest percentage of speculators/funds. This is because speculators are a moderating influence on prices; because of their sensitivity to high prices, speculators are the first market participants to short the market when prices are overbought. Commercials tend to cause prices to escalatte more rapidly because the higher the prices go, the more frenetic becomes their buying, as they panic to buy more of the commodity that they need in their business before it goes even higher. This is why, as speculators exit the market, as they did late last year, prices tend to rise faster and higher.

      Just watch! As Congress imposes more restrictions on commodity trading (higher margins, smaller positions, more restrictions), the size of commodity markets will shrink, and prices will become more erratic, the Dollar will decline faster (capital flight), prices will spike much higher (the commodities will flow to places where people are willing to pay market prices), and shortages (lines at the gas stations) will become commonplace in those places where governments attempt to control the markets.

      I know that this is counter-intuitive, but as fewer market participants are allowed entrance to the marketplace, a few large players can exert greater influence on the smaller market size. A few big fish in a smaller pond can throw their weight around. The more market participants there are and the larger the market pool, the more impossible it becomes for "big fish" players to manipulate those markets. Smaller markets benefit large participants MORE (ala Hunt Bros. in the silver markets 20 years ago) rather than restricting them. The Hunt Bros. lost their shirts when more and more market participants finally caused a collapse in the silver markets. As silver prices rose, more people entered the market to sell silver, including even housewives who sold their silverware for a quick buck. The Hunt Bros. never anticipated that this would occur and that the market would expand so large with so many new participants. As the market became larger and more participants entered, the Hunt Bros. could no longer corner the market, and they eventually lost their shirts as the price collapsed. The point is that the larger and more liquid a market is, the more it keeps extreme prices in check. Bigger markets are better markets! Bigger markets keep extreme prices in check.

      EMERGENCE OF INVERSE COMMODITY ETFS
      One aspect of the subject of "ETF influence" that wasn't covered here is that over the past six months, there have emerged many new ETFs that also SHORT commodities. Early this year, I was writing many of the ETF provider to beg for these, since I saw an opportunity coming when commodity prices became overbought. Interestingly, these inverse commodity funds emerged at just about the time the commodity prices topped out, suggesting the possibility of some influence, although it may have been merely coincidental, as I mentioned earlier in my post. This, we may find going forward, will likely have an even greater moderating force on commodity prices. In fact, my own research has shown that these inverse commodity ETFs have grown much more rapidly, and are now much larger, than their long ETF twins. (There is also now a rather unique commodity ETN that takes both long and short positions in the same fund!)

      The best examples of these paired long/short ETFs are the family of Deutsche Bank ETNs. The short and 2X short ETNs are much larger and more liquid than their long/2X long twins, in some cases by more than 10 times the size of their long-fund twins! DB has matched short/long ETNs in oil, commodities (in general), precious metals, ag/grain commodities, and base metals. In each of these cases, the short funds are currently significantly larger than their long twins. However, as commodity prices show more signs of bottoming out, this phenomenon is beginning to shift. The existence of more of these inverse funds, I expect, will play a moderating role in the commodity sector in the future. I am glad to see these short ETFs to counter-balance the (purported/supposed) inflationary impact of the long-only funds. There are new players in the game now, and their presence is sure to be felt.

      Thanks all, for sharing your thoughts/perspectives.
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    • ON: Thu Sep 18th 13:33 PM
      Commented on:
      MacroShares to Launch Case-Shiller ETFs
      I've been waiting weeks for these. No symbols yet?
      View article »
    • ON: Wed Sep 10th 19:55 PM
      Commented on:
      Plethora of Commodities ETFs for Retail Investors
      One of my favorite commodity ETFs is one that is truly unique. It takes both long and short positions in a single ETN, and is rebalanced monthly. And guess what? While most long commodity funds are down over the past 2 months, this one is higher. The symbol is LSC.
      View article »
    • ON: Mon Sep 1st 20:18 PM
      Commented on:
      Dividend Aristocrats Handily Outperforming Main Indexes in 2008
      I always get a kick in the pants from people who say that index XYZ performed BETTER than the market, when in reality, they just lost LESS!
      View article »
    • ON: Mon Sep 1st 19:53 PM
      Commented on:
      Consumer Discretionary Sector is Going Down
      In addition, the better-than-expected GDP number was somewhat worse than the headline implied. It was all based upon exports. Now that the Dollar has risen and global spending, especially in Europe and Japan, have tanked, the exports won't give support for future GDP growth. Even worse, the stimulus package is all spent too, so that contribution to GDP will be history also.
      View article »
    • ON: Mon Sep 1st 19:31 PM
      Commented on:
      Financial Crisis: Our Founding Fathers' America
      Wasn't Hamilton responsible for both the First and Second National Banks, both of which were economic catastrophes? The second one was the reason Andrew Jackson refused to renew its charter, considering it to be the single most important accomplishment of his presidency. In his will, Jackson wrote that on his gravestone were to be inscribed the words, "I killed the bank". I wish we had learned the lessons that he and Jefferson tried to teach us! We might not be headed for another economic catastrophe if we had!
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    • ON: Mon Sep 1st 19:19 PM
      Commented on:
      Do 'Experts' Really Know What Is Going On?
      codswallop -- Brit, Austr., and NZ -- nonsense

      For those of us who don't speak the king's English.
      View article »
    • ON: Sun Aug 31st 22:25 PM
      Commented on:
      Questioning Obamanomics
      "Here comes the orator, with his flood of words, and his drop of reason." Benjamin Franklin

      How did Ben Franklin know about Obama?

      Only Obama has an ego so expansive that it couldn't be contained in a convention center. He had to have a stadium instead!
      View article »
    • ON: Mon Aug 25th 11:11 AM
      Commented on:
      The Obama Plan: We Can't Entitle Our Way Out of Paying Taxes
      I always get such a kick out of analysis ad nauseum. What they really are trying to do is to figure out how the government can vampirically suck as much of the life out of us without killing us. That's what all this back and forth about how high the can tax us without destroying the goose that lays the golden eggs. Until we can change the mentality of these policy wonks to one of figuring out how to provide the best environment for long-term prosperity, we'll be dieing a slow economic death. True, lasting prosperity can only come from savings, productivity, low taxes, and limited government. Everything else is just a dog and pony show intended to obfuscate and mislead.
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    • ON: Fri Aug 22nd 21:02 PM
      Commented on:
      Natural Gas Fund Is Flaming Out
      I have been waiting a long time to buy this fund. It looked like it had bottomed and would start to climb after yesterday. However, the price of Nat Gas cratered today. Last year nat gas bottomed at about $7.50, just about 50 cents lower than where we are now. Nat gas tends to rise in the fall/winter months. Liquidity for this fund is excellent. What's not to love? The technical charts for the futures and the ETF are virtually identical, too!
      View article »
    • ON: Mon Aug 18th 17:54 PM
      Commented on:
      On the Dollar and Commodities: Currencies Move Because We Let Them
      One more thought. In a day when there are stock index ETFs that short the market, why would ANYONE just sit and wait through an economic downturn! We can be either long or short the market at all times, benefiting from both bull and bear markets! Learn to read the charts!
      View article »
    • ON: Mon Aug 18th 17:50 PM
      Commented on:
      On the Dollar and Commodities: Currencies Move Because We Let Them
      Good article, Chris! I have been making the case for some time on my own blog that the "buy and hold" strategy of sitting tight through deep dips in stocks is likely to create steep losses that will take many years to dig out of. Your last chart makes that point very powerfully!
      View article »
    • ON: Mon Aug 18th 17:19 PM
      Commented on:
      The Wheat Debate
      There are also seasonal aspects to grain prices. Typically, the annual low prices for grains occur sometime between Aug 15 and Sept 30. After that, prices tend to rise over the following six months. Looking at grains charts for the past two years, grains have hit their lows for the year at the peak of the harvest season both years, as it become clear that the crop has been bountiful. However, this year, the cool, wet spring caused the crop to sprout late, and the plants are less mature. This makes them more vulnerable to late-season frosts and early winter. Today, the price of wheat was UP sharply. Soybeans and corn were very close to their limit UP prices. If you are going to trade the whipsaws and sharp up and down days of late summer, then all I can say is, "Good luck!" You'll need it!
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    • ON: Thu Aug 7th 09:42 AM
      Commented on:
      Responding to Bear Market Conditions
      This is a long-winded way of saying to "buy and hold" and ignore the market dips. Last I checked the NASDAQ is still less than half of its former high. NASDAQ investors who bought near the peak are still waiting to be made whole more than 10 years later. They may wait for decades longer before the NASDAQ recovers.

      In other words:

      MISERY LOVES COMPANY!

      I'm convinced a lot of these people who suggest to buy and hold forever are just hoping that other people will buy and bail out their bad decisions to keep bad investments.
      View article »
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