Monday, July 7, 2014
Self Fulfilling Prophecy and the Wall Street Dance of Doom and Gloom
Self Fulfilling Prophecy and the Wall Street Dance of Doom and Gloom An Instant Bear Market Out of the Blue Lex Loeb Contributor Network . I always find it interesting to watch the financial news even though the content is mostly nonsense. Every hour and every day of live cable TV financial news they have instant news gratification explanations of what caused the market or particular stocks to rise or fall that moment. Yes there maybe some trigger happy traders that watch TV financial news and decide what they are going to do but it is hard to imagine they can make a lot of money doing it unless they can predict what the pundits will say in advance. I don't think there is evidence that just because live TV financial news puts a stock in the headlines that it has to move? I sometimes see stocks move very temporarily in knee jerk reactions on the ticker. What is interesting about the doom and gloom at the present moment with the oil prices getting most of the blame is that we have people like Warren Buffet on TV and in print being very negative about the market but at the same time we have seen him buy over 4 billion dollars worth of Kraft Shares alone. The other day Buffet said that if he were the federal reserve chief he would resign, It was supposed to be a joke. I would not be so sure. I see a number of people regularly on TV who are trying to spook investors to sell while they are more quietly buying. Up to 3-31-08 Warren Buffet purchased large numbers of shares in a variety of companies and probably continues to add to his positions in these companies. I can see why he might be bearish on his competition and willing to point out the accidents just waiting to happen in the markets thanks to accumulated debt loads that may be hard to manage in a coming longer term recession, but clearly Buffet is enjoying the pain and agony in the markets as he continues buying., Now out of the blue we are suddenly in a market with the wall street dance of doom and gloom and it is a festive occasion. The best resource on line to find out what Warren Buffet and other taking heads on TV financial news are buying and selling is to be found at http://www.gurufocus.com . The site offers a variety of windows on what the highly visible stock traders are buying and selling in recent months. As for the Oil Crisis nonsense here are some facts and figures that put that nonsense in perspective: The average American uses 25 barrels of petroleum a year in all sorts of products verses around 14 barrels used by the Japanese. At 150 bucks a barrel of light sweet crude that costs the average American just $4000 a year for the raw material. That means American can actually generally afford the higher oil prices because the average income in the USA is over quite a bit $40,000 per year. It costs less than 30 cents a barrel for Saudi Arabia to break even pumping oil out of the ground! Processed gasoline now costs around 49 cents a gallon in Saudi Arabia. It may be slightly subsidized by the government as a benefit to their citizens. That seems to suggest that the world is not exactly running out of oil. Most of our present supply problem in the USA was created by environmental interest lobbies. We shoot ourselves and then blame foreign oil producers. The United States is the third largest producer of petroleum in the world. Exxon by itself may have more international oil reserves alone than Saudi Arabia does. There is a lot of hysteria in the market and a lot of people fanning it for fun and profit.. Americans can save a huge amount of gas driving by just slowing their cars down to under 55 mph on the highways. I try it and everyone is passing me at 70 mph. I save a quarter of a tank of gas going slower! There is plenty of oil on the global markets and real BTU rich alternatives including coal and bio mass to power cars ,trucks and trains for ever more. It is a fantasy that our world will mirror the world in the Mad Max movie. That is just stupid wishful thinking. I did the calculations and it is clear that we can have steam powered piston V-8 engines burning pellet stove pellets. The cost is less than half of that of gasoline per gallon equivalent although more that doubles the fuel weight in the car.. The supply of bio mass that can be compressed into pellets is unlimited and it requires no fermentation or distilling like ethanol. The environmentalists may want to wish cars away but beware they may out last humans and even cockroaches! Its true Chariots died out around 1400 years ago but that is because bigger better carriages took their place. .