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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Umunhum who wrote (36363)	7/30/2005 3:36:02 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

I'd take that bet. I don't think we will ever see 42 again. while i agree (absent exogenous shocks), there are many clownish "analysts" that have predicted 20 of the last two major price drops. case in point, from an interview with a BCA analyst in today's Barron's: What's your view on oil? We haven't been very successful in forecasting it going to $60. We've been structurally bullish on oil for some time, but that was when oil was $30 a barrel and we thought, gee, it could go to $40-$45 in a couple years. It has gone far beyond what we expected. The bullish case for oil is very compelling. We all understand China's demand going through the roof. Chinese demand for gasoline, for example, rose 35% in the three years to 2004. That's huge. And auto sales in China continue to rise. But, at the same time, I believe the price mechanism works, and as prices rise it brings on more supply and, at the margin, it squeezes demand in some areas. I take the view there is a huge speculative premium in oil at these levels -- maybe it is $15 -- so oil will come back down again by quite a lot, potentially. Even oil at the $40 to $45 level is quite a high price compared to what people might have expected a few years ago. It is a high enough price that oil companies would still make a lot of money. It will still make energy a good sector to invest in. It is certainly one of our favorite sectors from a long-term structural point of view. ah, the "huge speculative premium" bogeyman. but, of course, he doesn't tell you where the speculative premium is to be found. it certainly is not to be found among the speculators: softwarenorth.net he must be relying on the same phrenology textbooks as Andy Xie.