~~~~~~ OSX: Partying like it's 1999 ~~~~~~~
Experience is a great teacher...but, only if you showed up for class, took notes, listened and learned the lessons taught.
One could have been 110% correct on the ultimate ending for the Internet,Tech & Telecom Nasdaq Bubble in 1999 - but, if you chose to step in front of the NAZ Train in the Fall of 1999 at around NAZ 3500 - the last thing you heard was that whistle and the last thing you saw was that white light...
So, if you think you know a 1999-esque Train-Wreck in the making when you see one; do you try to defy the odds and ignore risk:reward metrics and try to perfectly time the top before going short ?
- do you even attempt to trade it at all ?
- and if so, how do you trade it ?
Did we learn anything from the NAZ-Mania of 1999 that can be applied here to the Oilpatch Stocks ?
In my opinion, we did.
The lesson was this:
- NAZ 3500 ultimately offered 1,500+ Points in BOTH directions.
- both Bulls AND Bears ultimately got massacred by the NAZ Bubble in 1999.
So in retrospect, hopefully the lesson learned - was that "volatility" was the best risk:reward bet of all. Certainly better than either trying to call either an ultimate Top, or a Bottom.
As such, for those that attended Class, took notes and both listened and learned from "The Party of 1999" - The "best" Risk:Reward Trade is not in attempting to call either the ultimate Top, or the Bottom in the Peak Oil Play - but rather it is in making the Trade that in my opinion, is being offered to us once again on a deja-vu Silver Platter - VOLATILITY.
* VOLATILITY is the Play & OPTIONS are the Way *
Options allow us to lever Volatility, while simultaneously allowing us to quantify and limit both our exposure and our potential downside.
That would have been a very smart way to Trade the "Nasdaq Party of 1999" and I think it will be the smart way to trade the Peak Oil Party of 2005 as well.
I went short in March & April atop the parabolic move in Oil & Gas stocks from Jan to March:
Message 21121409
Message 21121783
I thought that if the Bush/Cheney Energy Plan was passed, that Oil could ultimately fall to as low as $38 on a pullback... it hit $46 - which was over a 20% retracement and some stocks like ATW & BRY paid me $12-$15 on the short-side and it ended up being a pretty well timed and nicely profitable swing-trade on the short-side.
When I covered my short - I bought some max out of the money Calls & LEAPS to institute a moving/dynamic Options Straddle - but admittedly, with an ultimate Short-Sided Trading bias.
Today, those "calls" are highly profitable and I am cashing in all of my "calls" bought on the short-cover...but, will still hold 'all' of my LEAP CALLS - in following the Market Lesson of 1999.
As far as re-instituting the Short side of the Straddle and buying some more Puts... patience.
Long fought resistance when ultimately penetrated, oft' becomes future support.
- give the OSX some line here... let 'em run. Earnings are strong and HAL is popping +9% on 3-4 x normal volume - so patience on the short-sided trigger finger is prudent here.
One does not have to be a believer in $60 Oil to profit from it on the long side any more than one had to be a beliver in NAZ 3500 in 1999.
The lesson hopefully learned was that irrational exhuberances and speculative momenteum can go much higher, for much longer - than anyone would rationally expect.
Being right and choosing to be right - via standing in front of a Freight Train... are two different things.
I think I am "right" on the Fundamentals of Oil here, but I learned my lessons from those that attempted Martyrdom from the NAZ-Bubble of 1999.
The beauty of being "right" on the "VOLATILITY" Trade, is that I do not have to be "right" on the ultimate veracity of the "Peak Oil is Here & Now" Trade... I only have to be right on the lessons learned from "1999" on what the best trade really was... "VOLATILITY".
PS: Only 200 more Rigs drilling this year than last... for Peak Oil-Mania to unfold as scripted by the Simmonsite's - there had better be one helluva depletion rate YEAR over YEAR and one helluva lot of dry holes being drilled (vbg).
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