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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (14237)	5/21/2004 1:02:46 PM
From: Wyätt Gwyön	Read Replies (1) of 110194

that scenario could very well play out. i think it's a good idea to keep some powder dry, quite a bit. but being completely out doesn't exactly appeal to me either, since i expect much higher prices in the long run and with oil there's the possiblity that a punctuated event could override whatever spec liquidation might be called for under a gradual rise scenario. given the obvious vulnerability of Saudi facilities, and the obvious interest in suicide bombers in attacking facilities in SA and Iraq, i have to assign a non-zero probability to an event which would cause a temporary supply shock resulting in $100+ oil in the near term. if that happens, and even if it's only temporary, i think the market will tend to price in a higher risk premium resulting in secularly higher price levels over the long term. what that amount is, i don't know, but i assume it's larger to the upside than whatever the potential downside there is from a spec blowout. so i have a toehold position which i will add to with increasing aggressiveness if significantly lower prices indeed happen.

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