Rapid drop in Petroleum prices could be a warning....

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Brovane

Diamond Member
Dec 18, 2001
5,272
1,441
136
Managed funds consistently do worse than the S&P 500.

Judging by my Tesla deathwatch thread, I would say most people should never buy stocks. I made the bold (obvious) claim that a startup company with no earnings should trade at a significant discount to book value. People disagreed. According to ATOT, companies with negative cash flow are worth significantly more than companies with positive cash flow. These are the same people who bought shares of pets.com and AOL. These are the same people who bought sub-prime mortgage securities. These are the same people who bought 50 year old homes for half a million dollars and expected the price to magically go up. Cash flow? What's that?

Anyway, I always like to tell people how they can bet against me.
The way this works is very simple. My position is that the economy is getting worse and bankruptcies are likely to rise. If I'm wrong about this, high yield bonds will do exceptionally well JNK.

Still waiting on that Tesla Motors Deathwatch huh?

We'll know the recession is over when the fed decides to normalize interest rates.

Now you are just making up new definitions for words.
 
Nov 8, 2012
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Tesla is simply living proof that stocks aren't priced at present value. They are (and always will be) based on future expected value.

Given the current circumstances of Tesla, the large back-bone they have of support (Apple-boi equivalents almost), along with some state & local government support, they are pretty well off. Do they have dealerships all over the states to sell them? No. Not yet. Regardless, I do think buying Tesla stock is a stupid move at this point, you simply missed the boat.
 

fskimospy

Elite Member
Mar 10, 2006
83,717
47,406
136
Individual investments is absolutely fine on the side table.

While the majority of your investments should be in an Index fund for RETIREMENT sake, that is not what individual stock buying is about. It's about gambling on the chance of winning large.

Not everyone is looking to gain 5-7% YoY and would rather take chances. Albeit, we are talking chances in a Poker sense - skills do play a large factor. It's not a slot machine of picking a stock and hoping you get lucky. And no, we aren't talking about day trading. Things like that I agree is what Wall Street Investors are for.

Sure, if you feel like gambling on something with money you don't mind losing then picking individual stocks is fine. If you feel like you have some very specialized knowledge about a particular industry that might be useful too.

Overall though, you are very likely to lose more than you win. Trading is a zero sum game and the person on the other side of that trade probably has more information, more experience, and more resources than you do. People win at the casino all the time even though the odds are stacked against them but that doesn't mean going there is a good strategy for increasing your wealth.
 
Nov 8, 2012
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Sure, if you feel like gambling on something with money you don't mind losing then picking individual stocks is fine. If you feel like you have some very specialized knowledge about a particular industry that might be useful too.

Overall though, you are very likely to lose more than you win. Trading is a zero sum game and the person on the other side of that trade probably has more information, more experience, and more resources than you do. People win at the casino all the time even though the odds are stacked against them but that doesn't mean going there is a good strategy for increasing your wealth.

When HP was at the bottom of the hill trading at ~$11 from it's peak of $50 a couple years ago, was there anywhere to go but up? It's up to $38 as of today. It's not exactly rocket science. I honestly wish I had the money to invest at the time.

I completely disagree. If you pay attention to the news, if you watch what you buy and when you buy, it's not hard. There are also plenty of safe bets that you can buy for the sake of dividends as well.

But yes, individual stocks should be on the basis of money you don't mind losing. Just ask Enron folks whom invested their entire retirement into company stock.
 

senseamp

Lifer
Feb 5, 2006
35,786
6,188
126
Does anyone have a chart of how much oil is economical to produce globally vs price/barrel?
 

Blanky

Platinum Member
Oct 18, 2014
2,457
12
46
When HP was at the bottom of the hill trading at ~$11 from it's peak of $50 a couple years ago, was there anywhere to go but up? It's up to $38 as of today. It's not exactly rocket science. I honestly wish I had the money to invest at the time.

I completely disagree. If you pay attention to the news, if you watch what you buy and when you buy, it's not hard. There are also plenty of safe bets that you can buy for the sake of dividends as well.

But yes, individual stocks should be on the basis of money you don't mind losing. Just ask Enron folks whom invested their entire retirement into company stock.

Yes, hp could have gone to $0.

On the contrary not only is it actually hard but it is almost impossible for most. Given most professionals cannot even beat the market I don't know why lay people think they can. They can't. If anybody thinks they can consistently get even 15% over long term in stocks and they can prove it they would have people clambering to give then money.

As far as peak oil is concerned it is increasingly shown as a load of junk. We were told oil production would peak and then we would go down the tubes of civilization. On the contrary not only do new sources keep getting found but tech keeps making already known economically feasible. Combine with substantial increases in energy efficiency and continued gains in alternative energy, it seems clearer to me each year that we won't be selling our kids for a can of gas ever.

Most of the negative predictions have been hilariously wrong. Look at the hubbert guy mentioned at wiki' speak oil page. He loses his shit after a whole and his prediction goes to pot. Plenty of others have made similar doomy and completely wrong predictions.
 

desy

Diamond Member
Jan 13, 2000
5,433
204
106
Heres the counter opinion that its Saudis doing
http://seekingalpha.com/article/272...ast-to-2020-will-make-saudi-arabia-very-happy

Leaving aside the popular press’s antipathy to Saudi Arabia, it is eminently possible the reason oil prices finally crashed from their unreasonably high level, was not a Machiavellian scheme instigated by Saudi Arabia, and more likely had something to do with the increasing demand from U.S. shale-oil producers to hedge the part of their production that was necessary for their payback on CAPEX

The Saudis have been remarkably open and consistent about their position. For ten-years, they have been telling anyone and everyone who would listen what they think is the correct price of oil; that (NYSE:A)) their customers can afford and (B) provides a reasonable incentive for bringing-on new oil to replace what got pumped.

· When it shot to $145 in 2008…..They said the correct price was $75

· When it plunged to $35 in 2009…..They said the correct price was $80

· When it jumped to $85 in 2010…..They said that’s about right

· When it rocketed to $110…..They said the correct price was $90

· Now….. They are saying the correct price is $95

It is (perhaps) reasonable to ask, “If the Saudis think the correct price of oil today is $95 then why is it $65?” The reason is that four-years of prices being higher that what Warren Buffet calls the intrinsic value, accountants call Fair Value, and others call the Fundamental, leads like day follows night to what the Austrian Economists call malinvestment.
 

desy

Diamond Member
Jan 13, 2000
5,433
204
106
Peak oil isn't a theory its fact, its simple, flow rates from conventional oil will peak to a maximum , they have in 2005 or 2008 depending on who you read, everything else added has been substitution,
Just because shale oil is adding to the lower 48 production how's Alaska doing? North Sea? Mexico? Canadian conventional and on and on, its global and that has hit maximum flow

Like I said predicting the future is as dangerous and saying we will all convert to solar or hydrogen or algae. You can find half as many economist predicting the overall economy will collapse as will grow, yes you have doomers in peak oil or and you have cornicopians where technology will save the day.
Nobody knows how it will play out

http://oilprice.com/Energy/Crude-Oil/Did-Peak-Oil-Arrive-in-2014.html

This chart is Crude + Condensate and the data is through July 2014. I show it to emphasize the point that only the US is keeping the world from peak oil. And what you see above is many nations that have improved production in the last 5 years or so but have now peaked. Only a couple of non-OPEC nations will increase production next year and those by only a tiny amount. Most nations will see a decline next year.

But what will happen to US production? The price decline will most definitely affect production but how long will it take for that decline to show up? After all, at the end of September there were 610 Bakken wells awaiting completion. That is a three months’ supply. That means any slowdown in drilling will take several months to show a decline in wells completed.
 
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slatr

Senior member
May 28, 2001
957
2
81
The US shale oil industry is in a world of hurt right now. Schlumberger is trying to join with Baker Hughes to survive.

States with budgets based on higher oil revenue such as Texas, Louisiana, North Dakota are in financial trouble too.

If my taxes can bail out the auto industry, they can bail them out too.

The government should be buying and placing much of the output in reserves anyway.
 

OverVolt

Lifer
Aug 31, 2002
14,278
89
91
If my taxes can bail out the auto industry, they can bail them out too.

The government should be buying and placing much of the output in reserves anyway.

China's already on it!

Meanwhile George W. PANIC bought oil at like $140/barrel to fill up our SPR right before it peaked. Cripes. Somebody knows how to time the market and somebody else is doing it wrong.
 

shira

Diamond Member
Jan 12, 2005
9,567
6
81
Peak oil isn't a theory its fact, its simple, flow rates from conventional oil will peak to a maximum , they have in 2005 or 2008 depending on who you read, everything else added has been substitution,
Just because shale oil is adding to the lower 48 production how's Alaska doing? North Sea? Mexico? Canadian conventional and on and on, its global and that has hit maximum flow

Like I said predicting the future is as dangerous and saying we will all convert to solar or hydrogen or algae. You can find half as many economist predicting the overall economy will collapse as will grow, yes you have doomers in peak oil or and you have cornicopians where technology will save the day.
Nobody knows how it will play out

http://oilprice.com/Energy/Crude-Oil/Did-Peak-Oil-Arrive-in-2014.html

This chart is Crude + Condensate and the data is through July 2014. I show it to emphasize the point that only the US is keeping the world from peak oil. And what you see above is many nations that have improved production in the last 5 years or so but have now peaked. Only a couple of non-OPEC nations will increase production next year and those by only a tiny amount. Most nations will see a decline next year.

But what will happen to US production? The price decline will most definitely affect production but how long will it take for that decline to show up? After all, at the end of September there were 610 Bakken wells awaiting completion. That is a three months’ supply. That means any slowdown in drilling will take several months to show a decline in wells completed.
It sounds like a great strategy would be for the U.S. government to get into fracking. If the government invests, say $20 billion a year on fracking, and "government oil" drives/keeps the market price of oil down by (say) $10 a barrel, the benefit to the American consumer would be MUCH larger than the $20 billion spent.
 
Nov 8, 2012
20,828
4,777
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Yes, hp could have gone to $0.

On the contrary not only is it actually hard but it is almost impossible for most. Given most professionals cannot even beat the market I don't know why lay people think they can. They can't. If anybody thinks they can consistently get even 15% over long term in stocks and they can prove it they would have people clambering to give then money.

As far as peak oil is concerned it is increasingly shown as a load of junk. We were told oil production would peak and then we would go down the tubes of civilization. On the contrary not only do new sources keep getting found but tech keeps making already known economically feasible. Combine with substantial increases in energy efficiency and continued gains in alternative energy, it seems clearer to me each year that we won't be selling our kids for a can of gas ever.

Most of the negative predictions have been hilariously wrong. Look at the hubbert guy mentioned at wiki' speak oil page. He loses his shit after a whole and his prediction goes to pot. Plenty of others have made similar doomy and completely wrong predictions.

HP could not have gone to zero, and that's exactly why I was willing to place a bet.

At 99% of corporations that hand out laptops (which grows by the day as it becomes more of a requirement), which brand is it that they are contracted with? Their printing service is probably the only major one that still stands that the general consumer recognizes. Their server technology has substantially grown and advanced.

They are a world wide leader in computers, and you think they somehow could have plummeted to $0? C'mon now, Dell still stands somehow and you're thinking HP was anywhere near?

The simple truth is the majority don't know the news, they can't follow market trends, and they don't pay enough attention to politics to know how to play the stock market worth a shit.
 

shira

Diamond Member
Jan 12, 2005
9,567
6
81
Yes, hp could have gone to $0.

On the contrary not only is it actually hard but it is almost impossible for most. Given most professionals cannot even beat the market I don't know why lay people think they can. They can't. If anybody thinks they can consistently get even 15% over long term in stocks and they can prove it they would have people clambering to give then money.

As far as peak oil is concerned it is increasingly shown as a load of junk. We were told oil production would peak and then we would go down the tubes of civilization. On the contrary not only do new sources keep getting found but tech keeps making already known economically feasible. Combine with substantial increases in energy efficiency and continued gains in alternative energy, it seems clearer to me each year that we won't be selling our kids for a can of gas ever.
Most of the negative predictions have been hilariously wrong. Look at the hubbert guy mentioned at wiki' speak oil page. He loses his shit after a whole and his prediction goes to pot. Plenty of others have made similar doomy and completely wrong predictions.
I keep wondering why this chart (of the historical and projected growth of global photovoltaic power production capacity - projections include "low" and "high" estimates) doesn't convince more people that oil-power's days are numbered:

PV_capacity_growth_EPIA_forecast_2014-2018.jpg
 

desy

Diamond Member
Jan 13, 2000
5,433
204
106
I don't think there is any question cheap oil is a net benefit to the economy as the GDP grows when inputs are cheap and for an industrialized economy energy being a biggy.
I'd like it high enough though to pursue alternatives because there will come a time where technology won't be enough to keep flow rates going or clean enough there isn't significant environmental damage.
Look at the society we have built on an oil economy over the last 150 yrs. The world was pretty stagnant until cheap energy revolutionized civilization. For my kids sake I'd like to keep it going
http://8020vision.com/2010/06/21/the-real-population-problem/
 

Svnla

Lifer
Nov 10, 2003
17,999
1,396
126
The smaller players will be hurt and it might be good long term for the bigger players as they can consumer the smaller ones.

Long term it might cause problems with state budgets, but not yet.

Not yet? Really? because:

The dramatic 20 percent drop in the price of oil over the past couple months might be good for drivers, but it’s causing state government to recalibrate its spending plans, which could include dramatic cuts in state government services during the next seven months

http://theadvocate.com/news/10825248-123/falling-oil-prices-may-spark
 
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fskimospy

Elite Member
Mar 10, 2006
83,717
47,406
136
When HP was at the bottom of the hill trading at ~$11 from it's peak of $50 a couple years ago, was there anywhere to go but up? It's up to $38 as of today. It's not exactly rocket science. I honestly wish I had the money to invest at the time.

I completely disagree. If you pay attention to the news, if you watch what you buy and when you buy, it's not hard. There are also plenty of safe bets that you can buy for the sake of dividends as well.

But yes, individual stocks should be on the basis of money you don't mind losing. Just ask Enron folks whom invested their entire retirement into company stock.

If it's not hard then why do so many managed funds underperform the market as a whole? These are people who follow those things professionally.

I think you are dangerously underestimating the difficulty in beating market index funds long term.
 

Sonikku

Lifer
Jun 23, 2005
15,749
4,558
136
Maybe we oughtta start thinking about some alternate power sources at some point. :hmm:
 
Nov 8, 2012
20,828
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Maybe we oughtta start thinking about some alternate power sources at some point. :hmm:

Honestly, this was my exact thought process. If there was anything that was going to come out of this drop in oil prices, it is going to be the start of massive production in competing energy sources (solar being the main one is my guess).

Everyone is waiting for solar panels to be reasonably priced so they no longer have to pay $100 - $200 every month, but no one wants to plop down $10k+. It would take an eternity to start profiting from that. But if prices were to fall - which they continue to do but not at a rapid enough pace - it could make some very good headway for climate change activists to get on the board.
 

xBiffx

Diamond Member
Aug 22, 2011
8,232
2
0

senseamp

Lifer
Feb 5, 2006
35,786
6,188
126
Yea, I was looking for more fine grained and global chart. $80 is more of average number, some projects will still be profitable at less.
 

Pulsar

Diamond Member
Mar 3, 2003
5,225
306
126
Yeah, well before we start the ticker tape parade, we could lose this battle very easily at least in the short term. It's much cheaper to pump oil out of the ground than to extract it from Shale. The Saudi's can afford to drop their price until it no longer makes economical sense to continue production from Shale in the U.S. But the pendulum will swing back because they won't be able to keep their price low forever.

The best thing to do is to enjoy the lower prices at the pump and figure out a good way to profit when the price of oil comes roaring back.

Exactly. I'm perfectly happy letting the fracking shutdown. It means that down the road, our energy reserves will be intact and worth even more money. It's an investment in America's future.

I'm not going to hold my breath over the junk bonds. If companies continue to gamble in huge ways and go out of business, it's time to let them. If companies are 'too big to fail' it's time to fix that too. We can't allow them to hold us over a barrel.
 

Spungo

Diamond Member
Jul 22, 2012
3,217
2
81
If it's not hard then why do so many managed funds underperform the market as a whole? These are people who follow those things professionally.
It's because this is the guy managing your fund:

cramer.jpg


His stock picks have a lot less to do with cash flow and more to do with cocaine flow.


Tesla is simply living proof that stocks aren't priced at present value. They are (and always will be) based on future expected value.
It would take several decades for Tesla to grow to its current valuation. Ford's price to sales ratio is 0.42, and that's for a company that actually makes a profit and pays dividends.
Tesla's price to sales ratio is 10.16, and that's for a company that has never made a profit in its entire history. To justify Tesla's current share price, the company would need to expand sales by a factor of 24. Maybe I'm too pessimistic, but I think 2400% growth is unlikely.

The people buying Tesla stock know they'll never get that money back.