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So is there anyone else that still thinks crude prices reflected supply and demand?

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dmcowen674

No Lifer
Oct 13, 1999
54,894
46
91
www.alienbabeltech.com
Originally posted by: Genx87
I dont believe it was 100% the reason. But it certainly played a part.

The tumble started on news of increased supply due to lower demand.
I've proved many times over that oil inventories never went below 9 year highs.

Oil storage facilties ran out of space and overflowed in Oklahoma.

Why the lies about supply?
 

mshan

Diamond Member
Nov 16, 2004
7,868
0
71
"I've proved many times over that oil inventories never went below 9 year highs."

Wasn't / Isn't the fuel for the speculative bubble that projected demand was going to outstrip all available supply several years going forward? And isn't oil a global market of supply and demand?

It might be interesting to see, several years down the road, whether this was a speculative bubble that permanently popped, or just price action that just got way ahead of what was currently justified...

 

newmachineoverlord

Senior member
Jan 22, 2006
484
0
0
Low oil prices lead to increased demand until $145/barrel. Then high oil prices finally decreased demand. Decreasing demand decreased the price of oil. Soon demand will increase again leading to increased prices, up until $145/barrel prices cause demand to decrease again. This cycle will continue until actual supply decreases become the driving factor in pricing rather than demand fluctuations. Then the price can break out far above $145/barrel.

Increases in supply cannot break this cycle, only introducing alternatives to oil can do that.
 

CycloWizard

Lifer
Sep 10, 2001
12,348
1
81
Originally posted by: LegendKiller
The price didn't drop because demand moved, the demand dropped when the price kept going up.
Actually, both are true. Prices went up as demand was increasing. Once the price was too high, demand started decreasing again. What's the problem? I know economists like to pretend everything is linear, but as an engineer, I know otherwise. In this scenario, just the cost of crude production scales nonlinearly, let alone any refining, delivery, or market effects.
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: CycloWizard
Originally posted by: LegendKiller
The price didn't drop because demand moved, the demand dropped when the price kept going up.
Actually, both are true. Prices went up as demand was increasing. Once the price was too high, demand started decreasing again. What's the problem? I know economists like to pretend everything is linear, but as an engineer, I know otherwise. In this scenario, just the cost of crude production scales nonlinearly, let alone any refining, delivery, or market effects.
Economists do not pretend "everything is linear". Only a non-economics trained person would think that. Perhaps you should read up on (in)elasticity.

If this had anything to do with actual supply/demand, the volume of futures contracts for oil wouldn't have risen and fallen so quickly. The shift was artificial. Only engineers think that input equals output, financial people know that they aren't linear, and, often, are artificial, considering the movements of psychological reactions and irrationality in pricing.

Go read up on behavioral finance while you're at it.
 

CycloWizard

Lifer
Sep 10, 2001
12,348
1
81
Originally posted by: LegendKiller
Economists do not pretend "everything is linear". Only a non-economics trained person would think that. Perhaps you should read up on (in)elasticity.

If this had anything to do with actual supply/demand, the volume of futures contracts for oil wouldn't have risen and fallen so quickly. The shift was artificial. Only engineers think that input equals output, financial people know that they aren't linear, and, often, are artificial, considering the movements of psychological reactions and irrationality in pricing.

Go read up on behavioral finance while you're at it.
Only an economist would call nonlinear elasticity "inelasticity." And don't worry about me - I can derive the Sturm-Liouville differential equations in my sleep (you know, those equations for conservation of anything?). Thus, I understand perfectly well the concepts of accumulation and generation/consumption. What you fail to realize is that engineers and mathematicians discovered this stuff centuries ago and only recently have economists decided to borrow some of it. Maybe instead of just saying how things often are a certain way, you should shoulder your burden of proof and actually demonstrate it rather than relying on your credentials as a crutch. Shouldn't be that hard for someone of your caliber.
 

senseamp

Lifer
Feb 5, 2006
35,025
5,107
126
Originally posted by: Skoorb
Originally posted by: senseamp
Originally posted by: halik
Did supply and/or demand change to warrant 35% discount on crude clearing prices?
Yes. Prices are set on the margins, so even a small shift in supply and demand can make for a big shift in price.
Lawls, would you say that if it dropped to $50?
Of course. Marginal supply and demand changes have big impact on the market price. It only takes a small swing in each to make a difference between a glut and a shortage.
they also reflect supply & demand in investment markets. people invested
in oil futures because, for a while, they thought they could get a better
return there.
If we go this far, obviously bubbles are impossible because they all reprsent an investment demand/supply relationship. The supposition was that the demand was unreasonable and not in line with reality, hence an unnatural bump in value.
Just because it's supply and demand, doesn't mean there aren't bubbles, as you call them.
It is speculation on future supply and demand due to emerging markets becoming big consumers of oil, and production becoming harder. As new economic data comes out investors adjust their expectations of future demand, and prices adjust, as you have seen. You can call whatever you want "unreasonable," but you aren't putting your money where your mouth is, investors are.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
Originally posted by: senseamp
Originally posted by: Skoorb
Originally posted by: senseamp
Originally posted by: halik
Did supply and/or demand change to warrant 35% discount on crude clearing prices?
Yes. Prices are set on the margins, so even a small shift in supply and demand can make for a big shift in price.
Lawls, would you say that if it dropped to $50?
Of course. Marginal supply and demand changes have big impact on the market price. It only takes a small swing in each to make a difference between a glut and a shortage.
they also reflect supply & demand in investment markets. people invested
in oil futures because, for a while, they thought they could get a better
return there.
If we go this far, obviously bubbles are impossible because they all reprsent an investment demand/supply relationship. The supposition was that the demand was unreasonable and not in line with reality, hence an unnatural bump in value.
Just because it's supply and demand, doesn't mean there aren't bubbles, as you call them.
It is speculation on future supply and demand due to emerging markets becoming big consumers of oil, and production becoming harder. As new economic data comes out investors adjust their expectations of future demand, and prices adjust, as you have seen. You can call whatever you want "unreasonable," but you aren't putting your money where your mouth is, investors are.
Clearly, when it's called a bubble it is asserting that their perceptions of supply/demand are out of whack with reality. Technically, it's always supply and demand because somebody just bought it at such and such a price, so when we call it a bubble we're submitting that the market's view of the future supply and/or demand is off, and since it has contracted far beyond any prudency based on a marginally decreased demand, we know we were right. When the market shoots up $9 in a day as it did, that is pure and unadulterated panic/hysteria. There is no fundamental to that.



 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: CycloWizard
Originally posted by: LegendKiller
Economists do not pretend "everything is linear". Only a non-economics trained person would think that. Perhaps you should read up on (in)elasticity.

If this had anything to do with actual supply/demand, the volume of futures contracts for oil wouldn't have risen and fallen so quickly. The shift was artificial. Only engineers think that input equals output, financial people know that they aren't linear, and, often, are artificial, considering the movements of psychological reactions and irrationality in pricing.

Go read up on behavioral finance while you're at it.
Only an economist would call nonlinear elasticity "inelasticity." And don't worry about me - I can derive the Sturm-Liouville differential equations in my sleep (you know, those equations for conservation of anything?). Thus, I understand perfectly well the concepts of accumulation and generation/consumption. What you fail to realize is that engineers and mathematicians discovered this stuff centuries ago and only recently have economists decided to borrow some of it. Maybe instead of just saying how things often are a certain way, you should shoulder your burden of proof and actually demonstrate it rather than relying on your credentials as a crutch. Shouldn't be that hard for someone of your caliber.
Gosh, you can do something in your sleep. So efficient. I just do it in excel, but I guess that's so passe.

It doesn't matter if engineers have used since the big bang, what matters is application and reality.

Breaking down financial markets into equations is utterly retarded and often a point I've made many times during debates with fellow CFAs, who rely way too much on models which prove incorrect more often than not.

Proof of a commodities bubble is abundant. A massive runup in prices, equating to a doubling of prices, as well as massively increased volume, with no justification, is a classic bubble.

Empirical information? You can't prove psychology, but you can point out that while the marginal cost of a barrel of oil is higher, it isn't 2x as much as it was a year ago with no significant shifts.

But of course, you can prove that this was completely driven by fundamentals, right?
 

senseamp

Lifer
Feb 5, 2006
35,025
5,107
126
Originally posted by: Skoorb
Originally posted by: senseamp
Originally posted by: Skoorb
Originally posted by: senseamp
Originally posted by: halik
Did supply and/or demand change to warrant 35% discount on crude clearing prices?
Yes. Prices are set on the margins, so even a small shift in supply and demand can make for a big shift in price.
Lawls, would you say that if it dropped to $50?
Of course. Marginal supply and demand changes have big impact on the market price. It only takes a small swing in each to make a difference between a glut and a shortage.
they also reflect supply & demand in investment markets. people invested
in oil futures because, for a while, they thought they could get a better
return there.
If we go this far, obviously bubbles are impossible because they all reprsent an investment demand/supply relationship. The supposition was that the demand was unreasonable and not in line with reality, hence an unnatural bump in value.
Just because it's supply and demand, doesn't mean there aren't bubbles, as you call them.
It is speculation on future supply and demand due to emerging markets becoming big consumers of oil, and production becoming harder. As new economic data comes out investors adjust their expectations of future demand, and prices adjust, as you have seen. You can call whatever you want "unreasonable," but you aren't putting your money where your mouth is, investors are.
Clearly, when it's called a bubble it is asserting that their perceptions of supply/demand are out of whack with reality. Technically, it's always supply and demand because somebody just bought it at such and such a price, so when we call it a bubble we're submitting that the market's view of the future supply and/or demand is off, and since it has contracted far beyond any prudency based on a marginally decreased demand, we know we were right. When the market shoots up $9 in a day as it did, that is pure and unadulterated panic/hysteria. There is no fundamental to that.
So what are you arguing about? Seems like you agree that it is supply and demand. Markets are driven by greed and fear, that's nothing new. With information available before, the market valued oil at $150, with the current information, it's valued at $100, some people made money, some people lost money, life goes on.
 

Special K

Diamond Member
Jun 18, 2000
7,098
0
76
Originally posted by: LegendKiller
Originally posted by: CycloWizard
Originally posted by: LegendKiller
Is that the ox pulling the cart, or the cart pulling the ox?
Burden of proof.
The price didn't drop because demand moved, the demand dropped when the price kept going up.

There has been 3 companies destroyed by the market falling, eliminating a huge portion of the trading activity. another hedge fund exited the commodities market yesterday after getting murdered.

TB Picken's own hedge fund was sustained huge losses because of falling commodities.

Everybody knows what happened, nobody wants to admit it.
What 3 companies were destroyed? Do you know what % of the volume of oil futures contracts those 3 companies accounted for?
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: Special K
Originally posted by: LegendKiller
Originally posted by: CycloWizard
Originally posted by: LegendKiller
Is that the ox pulling the cart, or the cart pulling the ox?
Burden of proof.
The price didn't drop because demand moved, the demand dropped when the price kept going up.

There has been 3 companies destroyed by the market falling, eliminating a huge portion of the trading activity. another hedge fund exited the commodities market yesterday after getting murdered.

TB Picken's own hedge fund was sustained huge losses because of falling commodities.

Everybody knows what happened, nobody wants to admit it.
What 3 companies were destroyed? Do you know what % of the volume of oil futures contracts those 3 companies accounted for?
http://www.bloggingstocks.com/...s-oil-play-peters-out/

http://business.timesonline.co...nce/article4670881.ece

I am trying to find the chart on volume. I saw it a couple weeks ago.


Here is one article about volume jumping...


http://commodities.about.com/o...ties/a/volume-2007.htm

So, a huge jump in volume of futures = huge jump in demand = huge jump in price?

Wait, futures are not demand...

 

CycloWizard

Lifer
Sep 10, 2001
12,348
1
81
Originally posted by: LegendKiller
Gosh, you can do something in your sleep. So efficient. I just do it in excel, but I guess that's so passe.
Really, Excel has an add-in that solves problems using the calculus of variations? Either that, or you don't even know what I'm talking about and your attempt to badmouth engineers just blew up in your face. Stay in school.
Breaking down financial markets into equations is utterly retarded and often a point I've made many times during debates with fellow CFAs, who rely way too much on models which prove incorrect more often than not.

Proof of a commodities bubble is abundant. A massive runup in prices, equating to a doubling of prices, as well as massively increased volume, with no justification, is a classic bubble.

Empirical information? You can't prove psychology, but you can point out that while the marginal cost of a barrel of oil is higher, it isn't 2x as much as it was a year ago with no significant shifts.

But of course, you can prove that this was completely driven by fundamentals, right?
The burden of proof isn't on me. You are the claimant, so back up your claim. Your runup in price was highly correlated with an increase in global demand. The fact that both demand and volume were increasing means that the rate of production also increased. Since cost rises nonlinearly with the production rate, there is obviously some fundamental justification for the observed trend even in the absence of speculative effects.
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: CycloWizard
Originally posted by: LegendKiller
Gosh, you can do something in your sleep. So efficient. I just do it in excel, but I guess that's so passe.
Really, Excel has an add-in that solves problems using the calculus of variations? Either that, or you don't even know what I'm talking about and your attempt to badmouth engineers just blew up in your face. Stay in school.
Breaking down financial markets into equations is utterly retarded and often a point I've made many times during debates with fellow CFAs, who rely way too much on models which prove incorrect more often than not.

Proof of a commodities bubble is abundant. A massive runup in prices, equating to a doubling of prices, as well as massively increased volume, with no justification, is a classic bubble.

Empirical information? You can't prove psychology, but you can point out that while the marginal cost of a barrel of oil is higher, it isn't 2x as much as it was a year ago with no significant shifts.

But of course, you can prove that this was completely driven by fundamentals, right?
The burden of proof isn't on me. You are the claimant, so back up your claim. Your runup in price was highly correlated with an increase in global demand. The fact that both demand and volume were increasing means that the rate of production also increased. Since cost rises nonlinearly with the production rate, there is obviously some fundamental justification for the observed trend even in the absence of speculative effects.
I was referring to my work, which I don't do in my sleep, just excel, but I'm not as 1337 as you.

Ohhh, nice way of side-stepping the debate. In a logical one, both sides bring information. But of course, "burden of proof" is a lame-ass internet speak for "I don't know what the fuck I am talking about". stay in school? Nice way of debate. Where do you work again? Not in Manhattan, for an i-bank, right?

Highly correlated? Of course, you've done the regression analysis right? In that you factored currency, macroeconomic, and other factors, correct?

Yeah, I thought so.

But who am I? George Soros and others agree.

http://business.inquirer.net/m...ces-tumble----analysts

The word of the day is now "distressed debt". Oil is played out and people are leaving the area.

You stick to engineering. I'll stick to finance.
 

CycloWizard

Lifer
Sep 10, 2001
12,348
1
81
Originally posted by: LegendKiller
I was referring to my work, which I don't do in my sleep, just excel, but I'm not as 1337 as you.

Ohhh, nice way of side-stepping the debate. In a logical one, both sides bring information. But of course, "burden of proof" is a lame-ass internet speak for "I don't know what the fuck I am talking about". stay in school? Nice way of debate. Where do you work again? Not in Manhattan, for an i-bank, right?
So yeah, you don't have any idea about Sturm-Liouville theory, do you? Didn't think so. I suppose that means I have a little better understanding than you about conserved quantities. Therefore, I'd recommend not talking out of your ass and bad-mouthing engineers. "Burden of proof" refers to a logical fallacy which you are obviously fond of committing, as I already pointed out. If you want to make a claim about something, particularly one that goes against fundamentals, it is up to you to demonstrate why your claim is correct. I have made no claims, therefore there is no burden of proof on me. Sorry if pure logic goes against your argument, but that generally indicates that your argument is wrong.
Highly correlated? Of course, you've done the regression analysis right? In that you factored currency, macroeconomic, and other factors, correct?

Yeah, I thought so.
Give me the numbers and I'll be more than happy to do it. I'll give you the results, even if it proves your theory. Shouldn't be hard for you to get the numbers, should it? This would actually supply your burden of proof too.
But who am I? George Soros and others agree.

http://business.inquirer.net/m...ces-tumble----analysts

The word of the day is now "distressed debt". Oil is played out and people are leaving the area.

You stick to engineering. I'll stick to finance.
Yes, and I'm sure Mr. Soros had no political reasons for his statements. He's certainly not a political activist of any color, is he? :roll: Did you even read the article?
"If what we are seeing is a correction of excesses (in commodity prices), there are also fundamental factors behind their rise (earlier)," said Veronique Riches-Flores of French bank Societe Generale.

"In the medium term, growth in demand will see a rebound in prices."
No, I guess you didn't. I guess you were hoping that I was too lazy to read it all the way to the end. Either that, or you were too lazy.
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: CycloWizard
So yeah, you don't have any idea about Sturm-Liouville theory, do you? Didn't think so. I suppose that means I have a little better understanding than you about conserved quantities. Therefore, I'd recommend not talking out of your ass and bad-mouthing engineers. "Burden of proof" refers to a logical fallacy which you are obviously fond of committing, as I already pointed out. If you want to make a claim about something, particularly one that goes against fundamentals, it is up to you to demonstrate why your claim is correct. I have made no claims, therefore there is no burden of proof on me. Sorry if pure logic goes against your argument, but that generally indicates that your argument is wrong.
Please, it's pretty blatantly obvious I wasn't referring to your specific mentioning of your theory. I don't give a rats ass about "sturm-liouville". My life is spent analyzing default curves, interest rate forwards curves, prepayment probabilities, economic inputs, correlation matrixes, and distribution models. I guess that's too low for you though.

As far as "badmouthing engineers". Finance is partially formulaic and partially behavioral in analysis. Trends can be caused by fundamentals, but also because of behavioral movements. This is why chartists (technical analysis) has never proven to be true, because it's a random walk. You can never come up with something that'll predict how the market will move.

This applies also to the movement of oil. A 50% runup, followed by a 30% drop, isn't due to fundamentals, especially when the whole thing occurs in a span of 8 months. That's the classical definition of a cyclical bubble. But I guess that's not good enough for you.

Nor is the evidence of massively increased trading volumes. Nor sentiment moving into the market and then swiftly out.

But we should depend on your plethora of formulas to predict how the 'Street will move from one investment to the next? Right?

Because you know exactly how $400BN of capital flew out of the ABCP market, blowing out overnight spreads and causing funding spreads to still increase? Why did it leave? Because nobody wanted to invest in debt anymore.

Instead, you know, from your formulas, that massive wealth funds went into commodities, which are always publicly announced movements (right?).

Yup, you knew that because you work on Wall Street, at one of the biggest banks in the world, doing finance work.

I've given my proof of increased volume. Too bad there aren't official figures, since mostly the commodities markets are "dark pools" with little/no officially released numbers, but you knew that too.

So really, fuck off engineer boy. You're a two-bit quant-head with know real experience in investments or finance. You pretend everything is a quantitative model and data should be plucked from trees.

Where is your evidence, you assert that it is a correlation. So please, you made your assertion, back it up with your uber-analysis.



 

JS80

Lifer
Oct 24, 2005
26,260
4
81
Originally posted by: LegendKiller
Originally posted by: CycloWizard
So yeah, you don't have any idea about Sturm-Liouville theory, do you? Didn't think so. I suppose that means I have a little better understanding than you about conserved quantities. Therefore, I'd recommend not talking out of your ass and bad-mouthing engineers. "Burden of proof" refers to a logical fallacy which you are obviously fond of committing, as I already pointed out. If you want to make a claim about something, particularly one that goes against fundamentals, it is up to you to demonstrate why your claim is correct. I have made no claims, therefore there is no burden of proof on me. Sorry if pure logic goes against your argument, but that generally indicates that your argument is wrong.
Please, it's pretty blatantly obvious I wasn't referring to your specific mentioning of your theory. I don't give a rats ass about "sturm-liouville". My life is spent analyzing default curves, interest rate forwards curves, prepayment probabilities, economic inputs, correlation matrixes, and distribution models. I guess that's too low for you though.

As far as "badmouthing engineers". Finance is partially formulaic and partially behavioral in analysis. Trends can be caused by fundamentals, but also because of behavioral movements. This is why chartists (technical analysis) has never proven to be true, because it's a random walk. You can never come up with something that'll predict how the market will move.

This applies also to the movement of oil. A 50% runup, followed by a 30% drop, isn't due to fundamentals, especially when the whole thing occurs in a span of 8 months. That's the classical definition of a cyclical bubble. But I guess that's not good enough for you.

Nor is the evidence of massively increased trading volumes. Nor sentiment moving into the market and then swiftly out.

But we should depend on your plethora of formulas to predict how the 'Street will move from one investment to the next? Right?

Because you know exactly how $400BN of capital flew out of the ABCP market, blowing out overnight spreads and causing funding spreads to still increase? Why did it leave? Because nobody wanted to invest in debt anymore.

Instead, you know, from your formulas, that massive wealth funds went into commodities, which are always publicly announced movements (right?).

Yup, you knew that because you work on Wall Street, at one of the biggest banks in the world, doing finance work.

I've given my proof of increased volume. Too bad there aren't official figures, since mostly the commodities markets are "dark pools" with little/no officially released numbers, but you knew that too.

So really, fuck off engineer boy. You're a two-bit quant-head with know real experience in investments or finance. You pretend everything is a quantitative model and data should be plucked from trees.

Where is your evidence, you assert that it is a correlation. So please, you made your assertion, back it up with your uber-analysis.
lol "sturm-liouville".... it's amazing how smart yet fucking stupid engineers are.
 

JS80

Lifer
Oct 24, 2005
26,260
4
81
Originally posted by: LegendKiller
Originally posted by: CycloWizard
Originally posted by: LegendKiller
Economists do not pretend "everything is linear". Only a non-economics trained person would think that. Perhaps you should read up on (in)elasticity.

If this had anything to do with actual supply/demand, the volume of futures contracts for oil wouldn't have risen and fallen so quickly. The shift was artificial. Only engineers think that input equals output, financial people know that they aren't linear, and, often, are artificial, considering the movements of psychological reactions and irrationality in pricing.

Go read up on behavioral finance while you're at it.
Only an economist would call nonlinear elasticity "inelasticity." And don't worry about me - I can derive the Sturm-Liouville differential equations in my sleep (you know, those equations for conservation of anything?). Thus, I understand perfectly well the concepts of accumulation and generation/consumption. What you fail to realize is that engineers and mathematicians discovered this stuff centuries ago and only recently have economists decided to borrow some of it. Maybe instead of just saying how things often are a certain way, you should shoulder your burden of proof and actually demonstrate it rather than relying on your credentials as a crutch. Shouldn't be that hard for someone of your caliber.
Gosh, you can do something in your sleep. So efficient. I just do it in excel, but I guess that's so passe.

It doesn't matter if engineers have used since the big bang, what matters is application and reality.

Breaking down financial markets into equations is utterly retarded and often a point I've made many times during debates with fellow CFAs, who rely way too much on models which prove incorrect more often than not.

Proof of a commodities bubble is abundant. A massive runup in prices, equating to a doubling of prices, as well as massively increased volume, with no justification, is a classic bubble.

Empirical information? You can't prove psychology, but you can point out that while the marginal cost of a barrel of oil is higher, it isn't 2x as much as it was a year ago with no significant shifts.

But of course, you can prove that this was completely driven by fundamentals, right?
LTCM FTW!
 

CycloWizard

Lifer
Sep 10, 2001
12,348
1
81
Originally posted by: JS80
lol "sturm-liouville".... it's amazing how smart yet fucking stupid engineers are.
Yes, the universal theory that describes everything about conserved quantities has nothing to do with the discussion at hand. Unless you believe LK's previous statements that this is a zero-sum market, in which case it applies directly. Only in America is ignorance a virtue and someone is mocked for knowing what he is talking about simply because it is beyond the scope of knowledge of his critic. :cookie:
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
So is there anyone else that still thinks crude prices reflected supply and demand?
Raises hand.

But it's been explained so many times, with linkage to analyists' explanations I won't bother again here.

Fern
 

3chordcharlie

Diamond Member
Mar 30, 2004
9,859
1
81
Originally posted by: CycloWizard
Originally posted by: JS80
lol "sturm-liouville".... it's amazing how smart yet fucking stupid engineers are.
Yes, the universal theory that describes everything about conserved quantities has nothing to do with the discussion at hand. Unless you believe LK's previous statements that this is a zero-sum market, in which case it applies directly. Only in America is ignorance a virtue and someone is mocked for knowing what he is talking about simply because it is beyond the scope of knowledge of his critic. :cookie:
Actually, LK is a lot more on the ball here, and you're getting a little hung up on terminology, 'inelastic' and 'fundamentals' and the like. I'm pretty sure I already explained the whole (in)elastic thing - as it applies to economics - to you, last month;)
 

CycloWizard

Lifer
Sep 10, 2001
12,348
1
81
Originally posted by: 3chordcharlie
Actually, LK is a lot more on the ball here, and you're getting a little hung up on terminology, 'inelastic' and 'fundamentals' and the like. I'm pretty sure I already explained the whole (in)elastic thing - as it applies to economics - to you, last month;)
No, I understood what you were saying perfectly well. You actually made some good arguments. Unfortunately, LK is just relying on appeals to authority to dodge them because he's too intellectually lazy to even go back and dig up your arguments. :p I never said he was wrong, I just asked him to demonstrate why he's right.
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: CycloWizard
Originally posted by: JS80
lol "sturm-liouville".... it's amazing how smart yet fucking stupid engineers are.
Yes, the universal theory that describes everything about conserved quantities has nothing to do with the discussion at hand. Unless you believe LK's previous statements that this is a zero-sum market, in which case it applies directly. Only in America is ignorance a virtue and someone is mocked for knowing what he is talking about simply because it is beyond the scope of knowledge of his critic. :cookie:
What market is a zero-sum market? Not sure that the hell you are talking about.

The futures market is zero-sum. Somebody gains, somebody loses, it's the same amount of money on each side.

The financial market, excluding wealth accumulated, is also zero sum when it comes down to trading stocks.

I have said both items before.
 

dmcowen674

No Lifer
Oct 13, 1999
54,894
46
91
www.alienbabeltech.com
Originally posted by: CycloWizard
Originally posted by: LegendKiller
Gosh, you can do something in your sleep. So efficient. I just do it in excel, but I guess that's so passe.
Really, Excel has an add-in that solves problems using the calculus of variations? Either that, or you don't even know what I'm talking about and your attempt to badmouth engineers just blew up in your face. Stay in school.
Breaking down financial markets into equations is utterly retarded and often a point I've made many times during debates with fellow CFAs, who rely way too much on models which prove incorrect more often than not.

Proof of a commodities bubble is abundant. A massive runup in prices, equating to a doubling of prices, as well as massively increased volume, with no justification, is a classic bubble.

Empirical information? You can't prove psychology, but you can point out that while the marginal cost of a barrel of oil is higher, it isn't 2x as much as it was a year ago with no significant shifts.

But of course, you can prove that this was completely driven by fundamentals, right?
The burden of proof isn't on me. You are the claimant, so back up your claim. Your runup in price was highly correlated with an increase in global demand. The fact that both demand and volume were increasing means that the rate of production also increased. Since cost rises nonlinearly with the production rate, there is obviously some fundamental justification for the observed trend even in the absence of speculative effects.
LK

We have both EPIC failed with people like the above still believing it has anything to do with supply and demand.

OT is full of people like the above too.

Sheeplishness is a powerful and sad thing.
 

ASK THE COMMUNITY