battman

60 Minutes on Oil: Did Anyone Verify Anything?

OldLimey,

The difference between speculating on oil and investing in stocks, like say RIMM or Google, or Microsoft, is the investment in the stock doesn't have a direct impact on everyones life. We saw what a specuative market to oil did to EVERYONE. Wether you were an old lady in Georgia who drives to church once a week or truck driver hauling loads across the country, you got affected diectly not just from filling your cars/trucks gas tanks, but to the costs of goods being shipped and sold that you HAVE TO consume.

If you were an investor in RIM in its run up to $ 130.00 then its fall to $ 40.00, who got affected except other stock players? Of course there can be some peripheral damage (employees could lose their jobs, someone heavily leverged could lose their house) but other than somewhat direct nvolvement, that old lady, or that truck driver, if they didn't have a trading account, woke up the next morning and nothing changed for them.

That is the difference between the two. I don't want to pretend to be Mr. holier than thou and that you need to do things for the good of mankind, because we all want to make money (just hopefully not at everyone elses expense) but you said what is the difference and I'm telling you what i think the difference is.


On Jan 12 11:22 AM OldLimey wrote:

> Here's a question pitched for maximum 'thumbs down': Why is it that
> folks who trade in oil and its derivatives are 'speculators' and
> folks who trade in equities are 'investors'?
>
> Does it not occur to anybody that trading shares on a secondary market
> - as opposed to buying an IPO - invests nothing new into the company
> concerned? To rant against somebody who invests in oil is as meaningless
> as ranting against the people who bid stock indices (or Treasuries?)
> up to unsustainable highs and leave the wider economy to pick up
> the pieces from the ensuing crash. Pretty much everybody reading
> SA is a speculator whether or not they like to think of themselves
> as such, insofar as most of us aim to ride a chosen asset class as
> high as it will go and get out before it starts to reverse. If that's
> unacceptable to some readers, best idea would be to elect a government
> that will change the rules we all freely play by. Maybe you have
> just done that - but I rather doubt it. Better still, elect a government
> that won't debase the fiat currency.

Oil Price Economics the 60 Minutes Way

To totally dismiss the hundreds of billions of dollars that were ivested by the investment bankers and pension funds is ridiculous. The whole problem as I see it is when the investment banks, pensions funds and souveriegn (sp?) funds started getting too aggressive in their investing practices. It was no longer okay to make a return, but now you had to make a BIG return on your money. At what cost? Does it make sense that you drive oil prices up to $ 147.00 when the people you represent (CalPERs as an example) can't afford the gas to drive their car, or the cost of food because of shipping and packaging increases?
If my investment strategies increases your cost of living by 10%, but when you retire I can bump up your retirment pay by 7%, who benefits? Other than the people who work at CalPERs who were involved in the trades and increased their own bonuses?
NB. CalPERs can be substitued with any number of pensions funds, investment banks, etc.

What we're seeing here is too much money chasing too few deals. This will not end with oil, and like oil, the government will only be reacting after the damage is done and the money has been made.

60 Minutes on Oil: Did Anyone Verify Anything?

With all the OPEC cuts, the middle east strife and the Russia fiasco, by your logic oil prices should be flying again, yet they are not, because oil is only worth around $ 40.00 a barrel. With all the speculators out of the market, the price has stabilized. The prices before were straight out manipulation. Consumers have about as much control over the cost of oil as they do with what time the sun rises, but the big financial houses, who can pump in $ 300,000,000,000.00 (300 Billion) and can trade the same barrel of oil 27 times before it actually takes delivery can have some say.