Archive for January, 2010
Saudis say…
Friday, January 29th, 2010How will the Next 54 Years Play Out?
Thursday, January 28th, 2010I can only imagine, the models built, to forecast the growth rate in the consumption of oil. Considering the multi-variable model, exhausts my cognitive ability.
I’m sure more resourceful men than I, have studied the problem deeper.
However, every now and again, I like crunching some numbers. You know, ball park, back of the number type stuff.
If the entire world, consumed oil at the rate the US does per capita, we would consume 411 M bbl/day. 4.8x, the current rate of consumption.
If the people who reported income in Canada, all shouldered the cost of the country’s oil consumption, at $73, 9% of the median income in Canada was spent on oil.
If the cost of consuming oil on the planet was shouldered by every person equally, and if the average income per person on the planet is in fact $10,500 then 3.08% of income is spent on oil.
Without population growth, and assuming constant growth in consumption (equal to the growth from 2004 to 2009, which is approximately equal to the growth rate of liquid production between 1958 to 2008), it would take 37 years for China and India to be consuming just as much as the world does now. Right now, they account for 1/8th of the total consumption.
Wikipedia, estimates 54 years remain before the current reserves of the 17 countries with the highest reserves, run dry. They calculate that, with today’s production data. Of course, this will be true, if production levels stay flat and new reserves are not found.
If China and India’s consumption, grow at the rate used above, for 33 years and the rest of the world continues consuming oil at the rate it does today, then world will be consuming about 118 bbl/day in the 33rd year. Integrate that data, and the total barrels consumed would be ~1.27 T barrels. There are 1.24 T barrels in reserves. So, not only does technology have to start extracting oil quicker, than it can today, but it also has to find more, otherwise – we’re 33 years from a very very dry well.
This back of the napkin goes out the window, if a country or two gets blown up.
The next time oil moves up $25, it will never look back.
Outlook? I got one…
Monday, January 25th, 2010My humble outlook, for the next 4.33 weeks of trading
…the March Gold Contract settles above 1100, the March 30 year treasury settles below 118′000, and oil settles above $77…
Place your bets. Those are mine. I’ll roll if I have to.
I’m staying away from equities, still.
Can’t Sleep…so I’m reading about BIDU and GOOG…
Wednesday, January 13th, 2010If that isn’t a reason, not to trade equities I don’t know what is. Say you had BIDU on short, or GOOG on long…you will wake up tomorrow, pissed off. Maybe. Or maybe the market will take both of them higher. Or lower. It’s the lessons in causality, that most retail, do not observe. They get burnt because of it.
Due to this, I haven’t traded a single issue, since May of 2009. Except TTEK. I must say, its a lot less annoying, being an active bond/oil/gold/index/volatility trader than it is equity trader.
Goodnight!
Tax a Foreclosure, Not a Trade
Saturday, January 9th, 2010The recent talk of a transaction tax, has me sick to my stomach.
Make it harder for a home-owner to walk away from their mortgage. You can do this with policy, not a tax.
Make it harder for a lender to give a loan to somebody who can’t afford it. You can do this with policy, not a tax.
Tax irresponsibility. Tax stupidity. Tax the majority. Taxing a minority, is the easy way out, for a politician.
Grouping traders in with “Wall Street” and having them pay for the now re-paid bailouts, would be as dumb as lumping all Engineers with big Tobacco (because I’m sure there are Engineers, somewhere in Big Tobacco) and having them pay for the extra social strain caused by the people who choose to smoke and the people who facilitate it.
Irene Aldridge hit some good points, without even mentioning, the economies of scale traders contribute to when they purchase research, pay for news or buy technology.
And, as for the people who EVER compare trading to gambling, your nothing more than a ignorant uninformed, wannabe – who couldn’t make it as a trader. How, can I possibly, have 84% of my 304 trades during 2009, be in the green – if the ‘odds are actually independent of skill and education’? Especially, if I was net short domestic equities?
Come Join Me
Sunday, January 3rd, 2010If you’re with a broker, who charges double digit transaction fees – leave them. I recommend Interactive Brokers.
Don’t take my word for it, check out slide 13, from the deck IB put together in November [pdf].
I also want to point out, regardless of your broker, the average trader actually beat the S&P…Even folks using Ameritrade 
UPDATE: The last statement, was more to poke fun at Ameritrade clients, than anything else. I was not clear, and should have said “according to slide 13″, and thanks to Mark, for mentioning that this data does not accurately point out deposits (or, withdrawls…for that matter). Maybe everybody was moving money from their Schwab account, to IB…hahaha.
A Decade Later…
Friday, January 1st, 2010I thought the highlights, from this decade wrap-up were interesting. These are annualized returns, for different vehicles.
1. Gold Futures 14%
2. Hedge Funds 6.3%
3. Treasury Notes 6.1%
4. 19 Raw Materials 3.3%
5. Mutual Funds 1.7%
6. The S&P, including dividends -0.9%
Oil Futures put up 12% annualized returns (approx $25 in dec 1999, to $80 now…excluding cost to carry, and losses due to contango)
I also found this quote, from a BBC article dated Dec 1999, hilarious…as oil topped ~$25.
“The price of oil may not seem as vital as the price of computers or Corn Flakes – but we may all have good reason to watch its fluctuations”