Is the stock market going to tank?

[MontuckyFried]

The 6 Most Statistically Full of Shit Professions
http://www.cracked.com/article_18380...ofessions.html

#6. Stock Market Experts

Many of us find the stock market too intimidating to put money into, or at least we would if we had the money to invest in the first place. How do you decide what stocks to pick? We can't even pick where to go for lunch half the time and we understand lunch.

That's when you call in a professional, or if you're not rich, you buy a pre-set package of stocks and bonds that a professional has pre-picked for you, and then sit back and, uh...

Watch your stocks grow more slowly than if you picked them at random.

Yes, as it turns out, the majority of professionally managed funds picked by stock market experts (70 to 85 percent) actually underperform the Dow or S&P indexes, which are technically supposed to represent the average performance of the market to begin with.

If you do have to peddle your nest egg off to someone else, try to hand it to Warren Buffet, whose Berkshire Hathaway stocks have outperformed the index by 11.14 percent on average for over 30 years. So it's not like financial advisors can't know what to pick. They usually just don't.

But hey, there is some good news: When going up against a bunch of dudes throwing darts at a chart to randomly pick their stocks, the stock professionals performed better.

Barely.

[mud]

Cheap oil and deflation helps the median wage consumer for sure. Active market again today and it better hold. 13 of last 17 days been down for German DAX. If it holds today DAX has first back to back gains in since Sep 5. Crude oil really busy and getting crushed.

BABA getting crushed again. Cracks me up the way that thing was hyped. Media is shameless.

It wont hold.
Between the EU's problems of Spain and France and investors trying to get into a safe position before the Federal Reserve ends QE3 at the end of the month it would not be a surprise to see another big selloff in stocks in the next few weeks. Good news for FX, Bonds, and Notes as most of the Stock selloff money will will pour into those markets.

[Benny Profane]

Why would bonds be a place to go if rates are going up? That is, if rates go up, which is highly doubtful.

[creaky fossil]

Benny, I was thinking this thing I read yesterday looked like your kind of fun.

The 6 Most Statistically Full of Shit Professions
http://www.cracked.com/article_18380...ofessions.html

Should be 8 not 6, they left out (7) blood splatter analysts, and (8) intelligence analysts.

[Tippster]

Serious question: how low does the price of oil have to go before the Bakken and the Alberta tar sands shut down?

[4matic]

Serious question: how low does the price of oil have to go before the Bakken and the Alberta tar sands shut down?

They won't shut down. Debts and financing to pay or go bankrupt. They can operate at losses for years.

[MontuckyFried]

Serious question: how low does the price of oil have to go before the Bakken and the Alberta tar sands shut down?

Probably a bit lower than it previously would have been, but I do NOT foresee it shutting down any time soon. It would have to take a complete collapse in oil prices for that to happen. Although modern drilling practices are EXTREMELY expensive, I've seen the operating costs come down in the Bakken by quite a bit.

Here's why. Previously in let's say, Williston, ND, there were only a handful of wireline companies (which do well logging, perforating for frac, etc.). I'm using this example as it's one of the oilfield jobs I've worked and personally seen the following effect. As the Williston Basin play grew, there was a serious shortage of companies to provide the various services the oilfield needed, thus they could charge absurdly high prices. There was also a serious shortage of workers, and with the service companies being able to charge the operating companies absurdly high rates, they could also pay really, really well. Well, the high prices of these jobs attracted companies from all over the nation, and new ones popped up all the time, too. With all of this new competition, the companies have no longer been able to charge what they used to, and have had to become absurdly competitive in order to get any contracts. So the prices have been driven down. With this, the effect lately has been the wages have been driven down, too. There have been so many people hard up for work around the nation, that they've been accepting these lower wages, thus helping the companies to be able to continue to drive down their operating costs. Now that there's much more of a workforce in place out there, companies just don't have to pay what they used to.

From what I've witnessed over the last few years, I've seen anywhere from about 30% to 50% reduction in the various costs associated with drilling and well maintenance. Competition tends to have that effect. If oil prices get driven down enough, sure, we'll definitely see a reduction in action out there, but it just means that these various companies will get hungrier, and drive costs down even further in order to get work.

So, given the reduced operating costs, I believe we have quite a bit more room for prices to drop before anybody's talking about shutting down. Don't let the analysts bother you. The oil companies are still PLENTY profitable. As they're still making 90% of the gross profits with 70% of their old expenses. Their nets are still quite healthy.

[4matic]

Crude oil down $3. Gasoline down another .05c. Anyone notice the banners for "oil and gas royalties" on this page? MLP payouts are going to get crushed. Investors in gas royalties are going to lose everything.

[Bromontana]

Talking head on booBberg said average cost input to a barrel of WTI is ~$70, plenty of buffer.

Why would bonds be a place to go if rates are going up? That is, if rates go up, which is highly doubtful.

Said differently, why would stocks continue to falter when their relative mis-pricing is much less pronounced than the main alternative, fixed income? Increase in volatility triggers a flight to safety. Only to flow right the fvck back into equities because they offer not only protection against inflation long term, but more opportunity in a flat to slightly up trending macro environment.

[Benny Profane]

Crude oil down $3. Gasoline down another .05c.

That's turning into a pretty big stimulus for the average consumer. Xmas shopping season should be good.

[Benny Profane]

Said differently, why would stocks continue to falter when their relative mis-pricing is much less pronounced than the main alternative, fixed income? Increase in volatility triggers a flight to safety. Only to flow right the fvck back into equities because they offer not only protection against inflation long term, but more opportunity in a flat to slightly up trending macro environment.

Or, in other words, I can't make shit holding bonds, but I can buying stocks or renting out a house.

[4matic]

Said differently, why would stocks continue to falter when their relative mis-pricing is much less pronounced than the main alternative, fixed income? Increase in volatility triggers a flight to safety. Only to flow right the fvck back into equities because they offer not only protection against inflation long term, but more opportunity in a flat to slightly up trending macro environment.

Interest rates have been trending lower for 35 years as stocks have trended higher. If that trend reverses it also will for stocks. Conversely, if the German 10y Bund can yield .85% and traditionally US and German rates have been similar, I full expect the US TY to go meaningfully below 2%.

Crude oil is completely collapsing as I type this.. Down another .50c. in five minutes.

Crude now down $4. Gasoline down 08c.

[ski_adk]

So basically, oil investors are having to sell their stocks to make up for their losses. This in turn sends stock prices tumbling, which then in-turn causes companies to dump their workforces, which then in turn sets us back another 5 years? Is that what I'm seeing right now?

[4matic]

So basically, oil investors are having to sell their stocks to make up for their losses. This in turn sends stock prices tumbling, which then in-turn causes companies to dump their workforces, which then in turn sets us back another 5 years? Is that what I'm seeing right now?

That's a risk. Whether it is reality?

U.S. Oil Producers May Drill Themselves Into Oblivion

http://www.businessweek.com/articles...gn_id=DN101414

It could spell serious trouble for a lot of oil producers, many of whom are laden with debt and exaggerating their oil reserves.

[Bromontana]

Interest rates have been trending lower for 35 years as stocks have trended higher. If that trend reverses it also will for stocks. Conversely, if the German 10y Bund can yield .85% and traditionally US and German rates have been similar, I full expect the US TY to go meaningfully below 2%.

Now that interest rate policy is dictated by asset owners I don't expect the trend to change. Plus the start point on that 35yr trend is a bit anachronistic.. Yields that high are less popular than terrorism.

[Benny Profane]

So basically, oil investors are having to sell their stocks to make up for their losses. This in turn sends stock prices tumbling, which then in-turn causes companies to dump their workforces, which then in turn sets us back another 5 years? Is that what I'm seeing right now?

Oil and gas isn't that important outside of the Dakotas and western PA.. Besides, if anybody involved thought that was going on forever, than they know nothing of the history of commodity bubbles and boomtowns, which is quite extensive by now.

[4matic]

Ten year T-Note down to 2.10%. Complete collapse in interest rates. Crude and gasoline down again. Hang on to your hat in stocks. German Dax down another 2%. That's a big move.

I show support for the DAX around 8500 and 1840 on SP500. If it doesn't hold there then another 100 SP points down.

[mud]

Talking head on booBberg said average cost input to a barrel of WTI is ~$70, plenty of buffer.



Said differently, why would stocks continue to falter when their relative mis-pricing is much less pronounced than the main alternative, fixed income? Increase in volatility triggers a flight to safety. Only to flow right the fvck back into equities because they offer not only protection against inflation long term, but more opportunity in a flat to slightly up trending macro environment.

The 30 Year MBS is up nicely this year and pushing mortgage rates to their lowest level of 2014.

[Benny Profane]

Uh oh. This is not going to be pretty.

[Benny Profane]

The 30 Year MBS is up nicely this year and pushing mortgage rates to their lowest level of 2014.

There is no inflation. The problem is deflation, and it's coming on with a vengeance.

[4matic]

Junk bonds are down today too. Not good in the face of much lower treasury. This is one of the biggest up moves in treasury bonds I can recall. Nothing like 1987 but it's big.

[4matic]

Sp500 negative on the year. All major indices negative for 2014 now.

[4matic]

dead cat

[mud]

There is no inflation. The problem is deflation, and it's coming on with a vengeance.

Deflation is coming to the EU which will hurt US exports and overall GDP.
Core PPI and CPI inflation is still running just below the Fed's target and if it moves lower the Fed will start raising the prime rate before any deflation hits here. If the core readings drop any lower plan on the Fed bumping rates in spring '15 instead of fall '15.

[Benny Profane]

If this shit continues, you'll never see rates rising in the next decade. How the fuck could that happen. Europe is falling into a serious depression, Japan is on the edge of a cliff, and the mother of all credit bubbles in China is now popping.

The banks may be paying people to take out a mortgage if this continues.