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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (1340)	10/21/2005 8:35:46 PM
From: Taikun	Read Replies (1) \| Respond to of 217820

TJ, OK, here's a question for you then. Lets say you can price risk. For example, a Hurricane will hit the GOM and O&G facilities, knocking out some, plus curtailing supply. O&G names appreciate 10% in the days up to the storm and for awhile after until it is apparent there is enough supply (ie despite the damage, there is supply-mainly due to increased imports, lowering of emissions standards for refiners) So, you can profit from risk then, by buying derivatives around the event. I supposed the only risk you can't price is systemic failure, and the only risk you can't trade is where there is no product (for example, a Put option on a particular piece of property) With derivatives, we now know that for a small price, we could have all been rotating contracts of OIH, XLE and OSX deep in the money puts to protect ourselves from this rout in energy. (Remember, the problem with energy was 'too many Bulls' and on Oct 1, 2005 the Crowd was in energy) Lets say that is Crowd 'A'. Crowd 'B' is the K-winter crowd, and they believe there will be a certain end to this economic cycle. Even among the K-winter crowd there are those who believe energy is part of the investment picture, as in the following Safe Haven article: safehaven.com However, it is not necessarily true that energy securities (or royalty trusts) would have made the most out of the K-winter energy investment opportunity. We could even be in K-winter now and oil and gasoline, but not the shares or trusts, are the investment to be made. Considering that buying far into the future oil futures in March 05 would probably have been more profitable measured on Oct 19 than buying oil shares and we have an idea of the problem. Ditto NG. In that sense, could the stock market be the crowd? I recently received the following data to illustrate this point: Period DJIA Return # Years AUG 1886 to NOV 1903 -16% 17 SEP 1899 to JUL 1932 -27% 33 JAN 1906 to AUG 1921 -15% 15 NOV 1919 to APR 1942 -22% 23 SEP 1929 to JAN 1950 -50% 21 AUG 1959 to DEC 1974 -17% 15 FEB 1966 to AUG 1982 -23% 16 Since 1903, there have been 26 different years where at some point that year the DJIA was lower than at some point 15 or more years earlier. In other words, 25% of the total number of years falls into this category. If you are an investor who believes 10% returns are a right, then I am afraid you will be disappointed. For many people, 15 years is a bulk of their investing lifetimes. You must make the most of those years, and it is possible stocks are not the place to put your money. dailyspeculations.com D