Friends.....
I am surprised to see that no one is bearish on Crude…..why? Because no one play in crude? People become bearish only when one is there in that market?
Why can’t there be reaction in speculation of Crude and other commodities? Because we wants stocks cheaper?
Crude has given 40% return in just 5 months and that can be the fastest return in crude history…I don’t know it has happened in past.
We use to discuss that stocks are running up ahead of fundamentals and hence it is speculation that they are going up….so they will come down..
Now I don’t think that oil demands has gone so much up in last 5 months that crude can go from $100 to $140!Just think what I mean to say.The oil demand has risen by 40% in last 5 months and hence the runup of 40% in crude….Is that possible?When USA is bleeding which is the biggest consumer of world oil, which is 30% of the total oil produced(maybe more), how can demand rise so much.Indian economy has slowed down according to figures ,China is raising the int rate to cooloff their economy then how can the demand rise so much so fast ?
Is anyone here to buy this theory that demand has rose that much and hence crude is rising?If the answer is no then why we are still not bearish on crude?Does the answer lies somewhere else?Like we wants to bring Sensex to back 8000 level so that we can buy stocks at the cheapest valuation and again FII’s start buying at that level at P/E 10 or below? Aren’t we playing in the hands of Bears like Shankar Sharma while not thinking of crude crash…..I have absolutely no doubt that crude is only going up due to speculation which I wrote here much earlier maybe then anyone else has written.
Do we again wants to let FII’s buy our stocks at the cheapest rate and let them sell in profit and again annihilate our market next tine?
It is obvious that this bearish phase in our stock market is more a reaction of crude running up and US subprime issue.Edven though some so called economics GURUS(likes…Mark Faber, Jim Rogers etc) are spelling Dooms day for US economy ,the wisest person in world stocks market is buying stocks?Warren Buffet has increased his stake in Kraft Foods and also took stake in Wringly Products and even funded to buy stake to someone else……So if USA economy is going in doldrums and further downside is there then why this Master is buying stocks? Can’t he buy them cheaper at later stage ? Why ? Can anyone answer me this puzzle that this legend is not waiting for further down side?
I think the answer lies here only……
While you may be right in hinting that the crude bubble us primarily created by the speculations in commodities, and has to burst, we choose to be bearish because the big guys are still bearish. They drive the markets, and we ride the waves they leave behind.
ReplyDeleteDear Vikram,
ReplyDeleteI do not believe in this theory that big guys are bearish and hence we ride waves they leave behind.
Maybe in ST that can happen like we are seeing now but they can’t take a call forever and not atleast in Indian Market.
FII's know they are selling and hence they can give a sell call but I can give numerous examples where Big Guys has proved horribly wrong in predicting market course.
Like we use to see Morgan Stanely and CLSA and JP Morgan always bearish on our market.I don't think they made any profit here and if they have made then they fooled small investors while speaking bearish view.These 3 entities hardly spoke about bullishness in Indian Market since the Bull Run started since May 2003...They were always bearish and market defied their view and went up from 4000 to 21000…..
Local Big Guys like Shankar Shrama and his wife Devina have been bears since sensex 6500 as they thought that new high made in KP’s time can never be sustained but even from 6500 market has come long way.
I remember only once SS was bullish and that was last year in Aug he gave a target of 25000 but then he made a volt face and said we are in now a bearish phase…..
I still write here that we will make a new high this year itself.
Just hold everthing…..
MARC FABER view on OIL
ReplyDeleteERIK SCHATZKER: Marc, I just want to confirm. Are you suggesting that investors should get out of oil and should get out of all the other commodities such as agricultural commodities, whether it be rice, wheat, or corn et cetera?
MARC FABER: I think that investors have to be aware that the price of oil has gone from $12 in '98 to now roughly $140. And so, the increase is a 12 times. I don't think that oil will go up another 12 times. Can it go up another $20? Of course, it can. But the big upside is now gone.
And so, I would be a little bit careful about blindly buying commodities, I think they are on the high side, the way the real estate was on the high side, and the way the stocks were on the high side. I am not saying this is?I would certainly be careful about buying them here.