Stocks to crash next like oil?

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  • pip895
    pip895 Posts: 1,173
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    Old news - interview on the 16th. He is a permanent bear as far as I can see. They always wheel them out when we get a few days of losses.
  • bowlhead99
    bowlhead99 Posts: 12,295
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    edited 23 December 2014 at 2:12AM
    Sustained falls in oil price are great for every company in the world apart from those who are (or whose customers are) in the oil industry. Cheap oil (and gas)is great for the US and they will be happy that they've embraced fracking and cut their imports way down.

    However, it's certainly true that with hindsight you can find periods where oil price fell and major stock indexes fell too (FTSE100 is after all ~15% oil companies, even though S&P has a more moderate allocation). And certain types of negative events have been negative for both stocks and oil in the past.

    One has to assume that removal or reversal of QE will be bad for stocks, bonds, commodities (including oil), anything that has a market price which was at least partly driven by the existence of lashings and lashings of free money. So actually raising interest rates is not exactly something the market wants, which the Fed and BoE know very well. We probably won't see rates rise shortly or sharply and when they are raised slowly it will be on the back of an expectation that the economic fundamentals are looking in better shape, which is positive for markets and has a mitigating effect on the rate rises or QE unwind.

    Obviously the oil price fall is not expected to be permanent - otherwise the Exxons and Shells of this world whose profits are geared to oil price would have fallen more (rather than less) than the oil price fell. There are of course some smaller oilers that have been hammered rather harder.

    But basically a short while of living with the imported oil price drastically reduced will be helpful to the wider economy. So if people are droning on that (e.g.) the US market is overvalued compared to company profits, then the market will look less overvalued at the same price when companies profits improve because their operating costs from energy to transport decline - and consumer purchases rise while staff wages fall, because employees can better afford the commute...

    This one off boost until the price rises again will give a real chunk of cash by which the economy is better off, though it is better for economies that import oil more than those that don't import much or that export it. In the long term oil as a scarce resource will not stay at $60 a [STRIKE]gallon[/STRIKE] barrel unless some radical alternative is developed, and radical alternatives don't tend to get developed when the status quo is super cheap.

    So, eventually oil will be more expensive again and eventually stocks will be lower due to that and eventually stocks will be lower still due to interest rates etc and eventually stocks will be higher due to their general individual performance and growth / macroeconomic performance. The order in which that happens and the timescale is unknown.

    So, probably makes sense not to sell all your shares based on the guy in this video. A recent play of mine on the oil markets in the context of jittery stocks prices was to sell some shares to provide funds towards buying a car with a large V8 engine. But I do this in the knowledge that my super unleaded price is not capped at the current levels and an oil price increase is likely to hurt the value of the car as well as its running costs. It's more about smiles per gallon than a true portfolio decision.
  • 2010
    2010 Posts: 5,329
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    Oil price lifts for 2nd day amid Saudi confidence

    The beleaguered oil price is bouncing back, following comments from Saudi Arabia's oil minister that the recent rout was "temporary". Brent Crude, the global oil marker, is up 2.2 per cent, or $1.30, at $62.68 per barrel.
    This came after Ali Al-Naimi, Saudi Arabia's oil minister, said at an energy conference last week that the sharp fall in oil prices, down over 40 per cent since mid-June, was "temporary".



    http://www.ft.com/fastft/254571/saudi-confidence-lifts-oil-price-second-day
  • Glen_Clark
    Glen_Clark Posts: 4,397 Forumite
    edited 22 December 2014 at 9:29AM
    bowlhead99 wrote: »
    Cheap oil (and gas)is great for the US and they will be happy that they've embraced fracking

    I thought fracking was uneconomic at 60$ a barrel (you said gallon), and I am surprised someone as sensible as you has bought a fast car to drive on Britain's slow roads.
    Otherwise Good Post as usual :)
    PS: the big oilers like Shell make money from such things as refining and retailing, so they are less dependent on the oil price than the other frackers ;)
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
  • kidmugsy
    kidmugsy Posts: 12,709
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    Glen_Clark wrote: »
    the big oilers like Shell make money from such things as refining and retailing

    It's been hard to make much money from refining for some years.
    Free the dunston one next time too.
  • Thrugelmir
    Thrugelmir Posts: 89,546
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    Glen_Clark wrote: »
    I thought fracking was uneconomic at 60$ a barrel

    Figures quoted at more like $80. The fracking industry is financed by billions of $ of debt, i.e. to be repaid out of future income. So the oil price could have severe financial repercussions if it continues. As investors bought the "oil" bonds for the underlying yield.
  • coastline
    coastline Posts: 1,647
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    A 10 year view of the SP500 and earnings forecasts..slightly lower in recent months but the market holding up so far.

    http://3.bp.blogspot.com/-3MB98uRXPvo/VIxR5oSpMuI/AAAAAAAAKcE/7o5IDAG8AWU/s1600/Factset%2Bfwd%2BEPS.png

    After a slump in oil prices the markets have done well in the next 12 months...

    http://1.bp.blogspot.com/-eVmol1fttD4/VIyKeA8OeII/AAAAAAAAKc8/UEY5bbeb6bY/s1600/oil_equities_3121765c.jpg
  • Jonbvn
    Jonbvn Posts: 5,562
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    coastline wrote: »

    After a slump in oil prices the markets have done well in the next 12 months...

    Are you a time traveller or his wife?;););)
    In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:
  • even hedge funds cant call the the market

    many burnt this year
    £48515 interest £181 (2009)debt/mortgage-MFIT/T2/T3
    debt/mortgage free 28/11/14
    vanguard shares index isa £1000
    credit union £400
    emergency fund£500
    #81 save 2018£4200
  • coastline
    coastline Posts: 1,647
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    Jonbvn wrote: »
    Are you a time traveller or his wife?;););)

    see they've been looking at those oil figures..;)

    http://www.munknee.com/analysts-predict-the-party-will-keep-on-going-in-2015-here-are-the-details/
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