Yikes: $2.85 a gallon (mortgage, get credit, bankrupt)

[mathjak107]

Originally Posted by businezguy

Let me also clarify by saying that this summer should see higher oil/gas prices, but not as much as so many are predicting (we will not see $4 oil prices) and if there was a terrorist attack, that could actually bring oil prices down since this nation is having such a problem with their economy already.

Point is, for the next 9 months, this issue will probably continue, and than....well, let's just say I wouldn't want to keep my investment in oil come the fall, especially if the temperature is neither hot or cold.

my own take is high oil is here to stay and always 1 political or geo event from going higher. world demand is getting just way to high with no suitable large scale alternate yet. just this 2500.00 car introduced in india will increase world demand greatly.

one thing about commodities they never taught us in school is supply and demand are very different things and not just one word as we learned

world supply right now is okay but demand is not and since markets run more on future perception than the hear and now its the growing demand pressuring oil prices and thats hear to stay. i started touting 100 a barrell oil last year when it was 60 and everyone laughed at me and said i was way off.

i figured out almost 2 years ago that if you cant beat em join them and started to add USO to my list of investments. USO is an exchane traded fund which trades like a stock and holds millions of barrels of oil . its been like the rebate plan ever since. at least everytime oil prices rise and suck the money out of my wallet there is something rising other than my blood pressure that puts the money back in my other pocket

[mathjak107]

not wanting to start a financial discussion but for anyone looking to hedge themselves against rising energy and food prices and at least get something back the following exchange traded funds are pretty good. think of it like your home insurance, you want this fund to go down, down is better overall for all of us ,you almost hope to loose a little money in it as it means food and energy are cheaper saving us far more than our investment drops. . but if not at least you have something to add a little kicker back to you. so heres my top pics

USO --- THATS OIL ONLY

GSG A MIXED COMMODITIES FUND OF ALL THE POpULAR GROUPS

DBC A NOT VERY MIXED COMMODITIES FUND HEAVILY CONCENTRADED IN ENERGY BUT DOES HAVE EXPOSURE TO A FEW POPULAR GROUPS

these trade like stocks but are not investments in companies, these are actually the commodies themselves. unlike buying commodities futures where you buy on margin and your losses are endless these are like mutual funds and you can loose no more than you put in

[TERMINOLOGY]

Alaska Stoker. Had a small hopper on the back. 1 x 5 gallon pail per day, is all it would take to fill it.

[businezguy]

Originally Posted by mathjak107

my own take is high oil is here to stay and always 1 political or geo event from going higher. world demand is getting just way to high with no suitable large scale alternate yet. just this 2500.00 car introduced in india will increase world demand greatly.

one thing about commodities they never taught us in school is supply and demand are very different things and not just one word as we learned

world supply right now is okay but demand is not and since markets run more on future perception than the hear and now its the growing demand pressuring oil prices and thats hear to stay. i started touting 100 a barrell oil last year when it was 60 and everyone laughed at me and said i was way off.

i figured out almost 2 years ago that if you cant beat em join them and started to add USO to my list of investments. USO is an exchane traded fund which trades like a stock and holds millions of barrels of oil . its been like the rebate plan ever since. at least everytime oil prices rise and suck the money out of my wallet there is something rising other than my blood pressure that puts the money back in my other pocket

The thought that "it's here to stay" is so common, and the mistake is made over and over again. When gas prices were high during the 70's and early 80's, they were here to stay, along with high inflation. When the economy did so well in the 90's folks were talking about there never being a recession again because our technology was so "advanced". During the 7 years after 9/11 when home prices were booming, that was here to stay also.

To quote the Bible, "There is nothing new under the sun."

Oil could very well hit $100 a barrel. It could get higher. However, it will also fall. Time will tell who's right. Of course, time always does prove people right who state that the status quo will be different.

Hmmmmm, let's make an argument for high Real Estate prices forever.

Due to government regulation, much land cannot be built upon. That along with surburban sprawl is creating a land shortage in many area. While folks can live further away from their job, due to high energy costs, that is less feasible, so the range of areas to build is limited.

As a result, as land becomes more scarce, and as energy costs drive up building costs, existing property values will go up, as will the cost of purchasing new construction.

Of course, what that argument is assuming is that people will just continue to get more money. Obviously money doesn't grow on trees.

With gas at $100 per gallon, how will those Indians afford the gas, let alone avoid inflation? For instance, China has low cost goods, but inflation and earnings are now pushing above 15% a year, and eating many profits. The government is making out well in this deal, but the common citizen is pretty much keeping the same standard of living while working tons of hours. As inflation and the cost of higher folks is driving up, the cost of goods will go up, and with the dollar declining, the cost of our goods will decline.

Americans will begin to purchase from themselves and export products to other nations, making more jobs, increasing the dollar of the value, and declining China's demand for oil. High oil prices aren't here to stay. Just like everything else, they will go down, and I'm sure go up again following decades from now, and back down again.

Life isn't "here to stay", it really is cycles. It's just hard for folks to perceive how powerful market cycles are.

Just to take your own assumptions, and throw them back at you, we are just one crises or terrorist attack from very low gas prices. Isn't that what happened after 9/11? Middle East emergencies don't ALWAYS have to mean an increase of gas. That only works when folks BELIEVE that high gas is here to say. Eventually you'll catch on to this, just like you did about ever increasing real estate, and investing in tech companies that were losing money, but somehow would make a profit despite not having a good market, or a business model.

This time say to yourself, "I won't be fooled by the experts, even though they have nice suits, and spent a lot on their hair piece."

[mathjak107]

well remember one thing about markets , they have no memory. remember the first time iraq invaded kwait? markets plunged. i would have bet anything if we went to war a 2nd time with iraq we would have had a major sell off. well the day after we attacked iraq markets sored.

we all have no crystal ball but looking at major differences today in the world we have much greater energy usage by the brick countries than we did back in the early 2,000's. if i had to guess i think we are in for a future of 75 to 100+ as the new level. i think theres a better chance of us hitting 125 then 60.00

markets always seem to have higher highs and higher lows with each cycle except for interest rates.

only thing we can all do is plan for the worst and hope for the best. i would love nothing more then your theory to pan out even at the risk of me being wrong

[I LOVE PA!]

I SOOOOOOOOO hope he is right too.
Gas prices are one of the reasons why I am selling my home. It's killing us just getting back and forth to work. My daughter rented an apartment because her gas was costing as much as her rent now is.
Did gas pirces in the 70's triple though?

[businezguy]

Originally Posted by mathjak107

well remember one thing about markets , they have no memory. remember the first time iraq invaded kwait? markets plunged. i would have bet anything if we went to war a 2nd time with iraq we would have had a major sell off. well the day after we attacked iraq markets sored.

we all have no crystal ball but looking at major differences today in the world we have much greater energy usage by the brick countries than we did back in the early 2,000's. if i had to guess i think we are in for a future of 75 to 100+ as the new level. i think theres a better chance of us hitting 125 then 60.00

markets always seem to have higher highs and higher lows with each cycle except for interest rates.

only thing we can all do is plan for the worst and hope for the best. i would love nothing more then your theory to pan out even at the risk of me being wrong

Yeah, I'm not so sure you quite understand what I'm stating here. See, oil is really needed to grow an economy. Since we cannot afford to continue to consume oil at the rate we are (and since much of our oil is used by other nations that supply us with consumer goods; and incidentally are responsible for much of our nation's consumer debt), the economy will shrink.

Oil is really only a part of the issue, and the housing market and the credit issues will be the more serious aspects, but combined this will mean job losses, a shrinking economy, and for a bit, a weaker dollar, and inflation. It could really also mean stagnant incomes which, combined with inflation, will essentially mean lower incomes. The scary part is this could become a cycle, although there's usually a positive outcome due to market forces that aren't anticipated.

In the year 2007, we consumed less oil then in 2006, which is the first time this has ever happened. I'm not sure I can even begin to explain how powerful market forces are that caused this, and will continue to do so for the year 2008. These are historic times, and the drive down in oil will be very powerful, and while ultimately should be GOOD for this nation, should be a very painful experience over the next three years.

[businezguy]

Originally Posted by I LOVE PA!

I SOOOOOOOOO hope he is right too.
Gas prices are one of the reasons why I am selling my home. It's killing us just getting back and forth to work. My daughter rented an apartment because her gas was costing as much as her rent now is.
Did gas pirces in the 70's triple though?

Gas prices in the 70's more than tripled, and folks had to fork out about 5 percent of their income. Today we fork out around 3 percent (of course nobody mentions that a lot of this is because more households have two incomes).

[mathjak107]

Originally Posted by businezguy

Yeah, I'm not so sure you quite understand what I'm stating here. See, oil is really needed to grow an economy. Since we cannot afford to continue to consume oil at the rate we are (and since much of our oil is used by other nations that supply us with consumer goods; and incidentally are responsible for much of our nation's consumer debt), the economy will shrink.

Oil is really only a part of the issue, and the housing market and the credit issues will be the more serious aspects, but combined this will mean job losses, a shrinking economy, and for a bit, a weaker dollar, and inflation. It could really also mean stagnant incomes which, combined with inflation, will essentially mean lower incomes. The scary part is this could become a cycle, although there's usually a positive outcome due to market forces that aren't anticipated.

In the year 2007, we consumed less oil then in 2006, which is the first time this has ever happened. I'm not sure I can even begin to explain how powerful market forces are that caused this, and will continue to do so for the year 2008. These are historic times, and the drive down in oil will be very powerful, and while ultimately should be GOOD for this nation, should be a very painful experience over the next three years.

yes i agree a slow down in our growth will effect world demand as well, without us going full steam the emerging markets will hurt as well. the point is that when we go thru these economic cycles we tend to get higher highs and higher lows each time. the bar get raised in price each time. and while the last downturn in the 90's we saw 10.00 oil our low may be some rediculiously high price. . but as the markets so typically do , they rarely play out the same way. our markets have telegraphed 67 of the last 11 recessions. we would all think a plunge in price was a given especially in a recession but my feeling is some economic or political events throw a spin on that. im just guessing here, boy i wish i knew but one thing i did learn from my 20 years of being in the markets is never count on anything playing out the way you think. so i think the whole point was that an etf holding a commodities index was at least a way to hedge against these price increases at least short term. because regardless of whats ahead these increases are real right now.

i just happened to notice that since jan 1st the deutch bank liquid (tracks food )index is up an incredible 18.1 % it tracks major food and farm products. that i got a feeling is going to be another rough area for price increases.

[MermanMike]

It's interesting to read your perspectives on this topic. It is clearly so important and I'd venture to say that most of us do not really have the kind of academic awareness of the markets that you both do, so I am interested to hear this discussion go on! And if possible, dumb it down a little for me! ;o)

I saw a youtube video of Glenn Beck talking to some financial guru about how our country is already bankrupt and that the recession has already started but most won't acknowledge it until it becomes more intense.

I have heard opinions ranging from slightly pessimistic to downright apocalyptic in terms of where we are headed over the 4 or 5 years and I always like to be prepared!

Hey, on the topic of rising food prices...is anyone in Wayne county part of a CSA that they like? I have heard of a few different ones around but don't know anyone participating so would like some feedback if you're out there.