Continuing the analyis on oil, which seems to be the hot topic of the world today, I thought of an old story of the farmer and the hen who laid golden eggs. The farmer got greedy and wanted to become rich overnight. He wanted all the gold eggs in one day. So as the story goes, he killed the hen and found that there is only one golden egg. The moral of the story - do not kill the customer on whom your existence depends.
It applies to oil as well. The farmer in this case are the OPEC countries ( Saudi, Iraq etc), the hen, no doubt is the US. High oil prices will kill the US, as recession steps in. So the farmer will also perish then.
The 'farmers' of the world know this very well. They will ensure prices comes down, so that they have jolly good lives, as well ...till eternity I suppose!!!
Saturday, June 14, 2008
Tuesday, June 3, 2008
Herd Mentality in Equity
Some things are so common with human nature. We always tend to follow what our neighbours have done, what our relatives have done, what our collegues are doing in terms of cars, houses and even careers. So it is no wonder that investment manager across the globe have the same point of view at any given time. Either they are super bearish or bullish.
So when markets are done everybody is selling and when up everybody is buying.. how predictable.. we do not ever put our minds. We follow the pundit and the channels.
Always keep two things in mind. Do not always follow the herd and secondly ask yourself if you are comfortable putting your money in a particular stock for next 5 yrs.
So when markets are done everybody is selling and when up everybody is buying.. how predictable.. we do not ever put our minds. We follow the pundit and the channels.
Always keep two things in mind. Do not always follow the herd and secondly ask yourself if you are comfortable putting your money in a particular stock for next 5 yrs.
Sunday, June 1, 2008
Oil Madness
Today oil price has become the hot topic of discussion for everybody. The price of oil is boiling at $127 plus... why is there so much spike in the prices?
The US economy is going nowhere, Europe is contracting... the world growth is faltering.. The US is still the biggest consumer of the gasoline,and the economy is headed towards a recession!!
The experts will tell you that India and China are adding to the consumption story!! but if we see the demand and supply, we can make out that this 40% rise is not sustainable..
Then what is the real storyline... It's easy folks.. The big commodity and hedge funds cannot make easy money after the subprime mess!!
They put all the money on oil and took them out of equity..Simple!! too much hot money is pushing up prices..
Newton's law will prevail.. I see the oil prices falling to $ 100 -105 levels in next quarters..
In the meantime you will hear all these stormy weather, 'supply disruption' stories leading to price hike as if this is the first time in history this is happening..!!
The US economy is going nowhere, Europe is contracting... the world growth is faltering.. The US is still the biggest consumer of the gasoline,and the economy is headed towards a recession!!
The experts will tell you that India and China are adding to the consumption story!! but if we see the demand and supply, we can make out that this 40% rise is not sustainable..
Then what is the real storyline... It's easy folks.. The big commodity and hedge funds cannot make easy money after the subprime mess!!
They put all the money on oil and took them out of equity..Simple!! too much hot money is pushing up prices..
Newton's law will prevail.. I see the oil prices falling to $ 100 -105 levels in next quarters..
In the meantime you will hear all these stormy weather, 'supply disruption' stories leading to price hike as if this is the first time in history this is happening..!!
My first day at Blogging
Hello All,
Finance, especially capital market, is my passion, apart from being my profession. I have more than a decade of experience in leading Investment Banking houses, management consulting firms and process outsourcing companies.
With the advent of the blog revolution I thought it is an ideal platform to share my ideas and view points, with the people at large. And hence this blog...
Enjoy my 'gyan' and let's interact!!
Finance, especially capital market, is my passion, apart from being my profession. I have more than a decade of experience in leading Investment Banking houses, management consulting firms and process outsourcing companies.
With the advent of the blog revolution I thought it is an ideal platform to share my ideas and view points, with the people at large. And hence this blog...
Enjoy my 'gyan' and let's interact!!
Subscribe to:
Posts (Atom)