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Old 01-14-2015, 04:00 PM
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Originally Posted by rriley View Post
From 1880 to 1990 the historical pattern hovered around P/E 15 but with observations from 5 up to 25. After 1990 this pattern changed with average P/E doubling per the chart and a spike up to 65. This chart compresses the last 25 years into a small horizontal scale as compared to the period from 1880 and if just the 1990 to present term was expanded I think that it would be clear that there was a sea change beginning in 1990 which was when many of the Internet related companies started to realize higher visibility and higher P/E ratios.

If one accepts the explanation of a sea change beginning in 1990 than there is ample reason to revise opinions of a P/E ratio of 15 being a norm by which share values will be judged. People who have been using P/E ratios observed during the 1880 - 1980 period to value stocks from the Internet era have missed out on a substantial move and those who have been saying that the market is overvalued for the last 500 S&P points are in denial of the facts.
So ignoring the historical data of a P/E ratio of 15 as being representative of a solid company to invest in is good? Let us invest in companies that P/E ratios of double the traditional 'safe zone', sounds like a great money making idea with high risk so it should pay well.

Those who ignore the lessons of history,,,,,,. the biggest issue is when to get out before this unsupported value turns around.
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Old 01-14-2015, 06:09 PM
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Originally Posted by petergunn View Post
Just read a piece that claims oil was lowered in a last ditch attempt to resuscitate a dieing consumer driven economy.

A deflationary spiral seems more difficult to accept by those who believe in a mass controlled conspiracy even though it is the truth.
What was the reason oil went from >$140 to <$40 in about six months back in 2008?

Could it be that at +$100 all the way to $140 and back every single well, drill, rig etc was turned wide open and then when the inevitable oversupply kicked in the price plummeted?

Could it be that all through 2013 and first part of 2014 production was ramped up at the $100/bbl level? Along with the unbelievable level of drill baby drill shale oil bonanza in the USA coming into its own. Coupled with the PERCEPTION of tensions easing in the ME, global demand lessening and slowing economies world wide then throw in the shadow sanctions against Russia and there you have it.

Commodity prices ALWAYS overshoot the mean either up or down. I will predict that within 2015 many will look back on $45/bbl oil and kick themselves for not buying the good, solid, MLPs and ETFs at these levels.

It won't last because it NEVER does. Look at the charts for the last decade or so and even adding in drill baby drill it won't stay down. Let alone one flare up in the ME or a bomb going off in Russia ,etc.

Go where the crowd ain't .... you'll win every time.
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Old 01-14-2015, 09:47 PM
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Originally Posted by cdevidal View Post
To add to the growing pile of reports that global demand has softened, copper is down as well:
http://finance.yahoo.com/news/copper...021439388.html

Y'all ready for this?
It's called the copper top for a reason...
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Old 01-14-2015, 09:47 PM
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Could it be that at +$100 all the way to $140 and back every single well, drill, rig etc was turned wide open and then when the inevitable oversupply kicked in the price plummeted?
The question is can that be duplicated again?

US steel is hot idling it's Lorain tube plant.
http://www.newsmax.com/TheWire/us-st.../07/id/616964/

wipe out the infrastructure and Drill baby Drill ain't happening or at least not quickly. Layoffs = rescission= drop in demand= depression, regardless of what the Arabs do.
What was ain't what it'll be next time around.
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Old 01-15-2015, 08:04 PM
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Originally Posted by petergunn View Post
The question is can that be duplicated again?

US steel is hot idling it's Lorain tube plant.
http://www.newsmax.com/TheWire/us-st.../07/id/616964/

wipe out the infrastructure and Drill baby Drill ain't happening or at least not quickly. Layoffs = rescission= drop in demand= depression, regardless of what the Arabs do.
What was ain't what it'll be next time around.
And at <$50 all the high priced wells and production are switched off until the over supply is used up. Overshooting to the down side. Then slowly and steadily the inexorable climb back to $70 or $80 a barrel begins.

Drill baby drill is happening and will continue to happen.

Again ... the herd is NEVER right. Even in here. One example ... the herd was loving PMs at gold $1800, threads about cashing in IRAs and 401ks to invest in them, etc etc. Whoops. In reality that was the time to bail ... when you see Joe Blow public who haven't a clue about the purpose of PM purchasing buying.

Just as now when you see pundits predicting "<$30/bbl oil for the long term", "years of low oil prices" end of the ME domination, etc etc you can pretty much start figuring the bottom is close. The smart money will be buying in now.

Go where the herd ain't. Love what they hate.

Works every time.
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Old 01-15-2015, 08:34 PM
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Originally Posted by HL431 View Post
And at <$50 all the high priced wells and production are switched off until the over supply is used up. Overshooting to the down side. Then slowly and steadily the inexorable climb back to $70 or $80 a barrel begins.

Drill baby drill is happening and will continue to happen.

Again ... the herd is NEVER right. Even in here. One example ... the herd was loving PMs at gold $1800, threads about cashing in IRAs and 401ks to invest in them, etc etc. Whoops. In reality that was the time to bail ... when you see Joe Blow public who haven't a clue about the purpose of PM purchasing buying.

Just as now when you see pundits predicting "<$30/bbl oil for the long term", "years of low oil prices" end of the ME domination, etc etc you can pretty much start figuring the bottom is close. The smart money will be buying in now.

Go where the herd ain't. Love what they hate.

Works every time.
THat isn't what I've been reading (Which seems logical as I know much of the cost is in the finding/drilling, once it's functional costs are slight.)

http://business.inquirer.net/184216/...rices-slightly

Quote:
Investors might suspend new oil well drillings, but as long as they have cash flow, they will keep pumping on wells they developed over many years — even if prices are down, according to the analysts.

Read more: http://business.inquirer.net/184216/...#ixzz3OxJpvBjh
Follow us: @inquirerdotnet on Twitter | inquirerdotnet on Facebook
http://www.wsj.com/articles/deep-deb...ing-1420594436

Quote:
Their need to service that debt helps explain why U.S. producers plan to continue pumping oil even as crude trades for less than $50 a barrel, down 55% since last June.
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Old 01-16-2015, 01:28 PM
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There are so many details to touch on, so bear with me; this is going to be long (which is saying something for me sorry guys and gals)

Quote:
Originally Posted by theTway101 View Post
I don't think it's gonna be pretty. What about you guys?
I want to start with what Tway101 was originally talking about, which is a deflationary move in the economy.

1) In addition to Oil, Silver, Cotton, Sugar, and Copper, I want to add a few other commodities.

Coffee, which has been trending down since October, dipped another 2% at last check. In addition, the volume has been down significantly since this past April.

Platinum has taken a beating since August, although its strengthening up a little in 2015.

Wheat lost about 50% of its value in October, but has trimmed the losses since.

Cocoa had a similar crunch to wheat, but has not regained as much of the lost ground as the before mentioned.

In the case of Cocoa and Wheat, we are seeing price levels which are similar to those seen back in '08.

2) Now lets look at the FOREX.

The US dollar has been surging against a number of currencies. The Ruble is now at 65.17 against the dollar, which is almost a 50% drop from as recently as August. Since US sanctions began back in March, I don't believe that sanctions are the reason for this. The decline of the Ruble and the meltdown of the Russian economy is Oil related. More worrisome, is Russia has begun to respond ( 1, 2 )

The Euro (1.15 Euro/Dollar) is down, likely due to the uncertainty in the EU economy and the move by the Swiss (the Franc surged against both the Dollar and the Euro). Even the British Pound is weaker recently against the dollar.

There is one particular currency that has gained in strength against the dollar. I'll come back to this in a moment.

3) So why is the Dollar so strong? Analysts say the increasing strength of the economy is the reason. This Article offers some insights that I found interesting. The Foreign Policy Section dovetails nicely with the noted FOREX fluctuations and the Russian actions noted here.

The crazy bit is there is a glut of Dollars on the market, due to the Feds qualitative easing programs. There are even casualties from the easy money Fed policies. So how can an inflated fiat currency be strengthening?

So my conclusions? The Dollar IS THE BUBBLE. Fed policy, aided and abetted by some outside players, are using the market to inflate the value of the dollar to achieve certain policy objectives, primarily foreign policy and economic policy toward multinational corporations. However, I think the move is a poorly conceived one, since the underlying value of our currency relies on the Federal governments ability to service the debt. With China holding a massive amount of that debt, coupled with their stronger currency position, I think they stand a good chance at countering.

So someone please tell me I'm an idiot, and I've read all of this wrong? And I apologize for the novel.
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Old 01-16-2015, 01:48 PM
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Originally Posted by DarkPhoenix13 View Post

So my conclusions? The Dollar IS THE BUBBLE. Fed policy, aided and abetted by some outside players, are using the market to inflate the value of the dollar to achieve certain policy objectives, primarily foreign policy and economic policy toward multinational corporations. However, I think the move is a poorly conceived one, since the underlying value of our currency relies on the Federal governments ability to service the debt. With China holding a massive amount of that debt, coupled with their stronger currency position, I think they stand a good chance at countering.

So someone please tell me I'm an idiot, and I've read all of this wrong?
I don't think we are going to "Pop" just yet.

I'll go along with HL431's "Prettiest girl at the ugly girl dance" UNTIL the "Pretty Girl Dance" starts.

Fortunately for us, that dance hasn't started yet. (No replacement for the USD, either on a macro scale, or with countries using technology to trade directly.)
Dance cards are being filled out, but I don't think its a 2015 issue.
(Not saying there won't be Ups and downs)

JMHO, Worth what you paid.
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Old 01-16-2015, 02:44 PM
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http://www.forbes.com/sites/investor...hidden-market/

Quote:
How do you get the international oil price down? Oil is denominated in dollars. If the central bank (the Fed), in collaboration with the large financial firms manipulate the U.S. dollar upward, it increases the cost of oil around the world. That reduces consumption, which reduces the oil price. Above I described how the carry trade increases the value of the dollar. Everything works together.
If this guy is right it still comes back to lack of consumption.
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