I guess one could argue that speculators drive the price of oil to it's "proper" price too fast; and that consumers need to adjust commodities like Oil, foodstuffs, etc. at a slower rate to moderate their spending, etc. accordingly. That is the more volatile pricing is for consumables the harder it is to plan spending patterns and that creates inefficiencies in spending. This is one of the arguments for watching inflation and keeping it steady. When you have an idea what the price of a product will be next year and today you can plan your spending appropriately.
I am looking at oil prices EMR. Crude has now dropped 8 dollars since I made that comment. You are perhaps one of the best indictors ever discovered. Do you have any views on other mkts we all can fade and make mucho dinero ? Let us know when you get back from your cub scout trip.
Yeah, I've been trying to make that point, too. No one was screaming about "greedy speculators taking oil to a 'ridiculously' low price of just over $30/b." It only works in one direction, so that's why the politicians/press/ignorant masses whine about high prices.
This price discrepancy can not only be attributed to lack of shorts or derivatives on the underlying stock. It may very well be that ADR's price is boosted artificially.
To be fair, you were cheerleading the S&P at 1371 on Sunday night like a newbie on the Bin Laden hype. Any updates?
I agree with what you are saying but you are missing one point. When physical oil comes to market from futures market with HIGH price, the spot price will follow this HIGH price. Thus, we as end users are paying for speculation. If shorting, options, futures are all banned and only spot trading is allowed, we will see $10/ barrel overnight. Of course, Goldman Sucks will oppose to this.
no one said it only works one way. speculative bubbles always pop leaving a trail of bagholders in its wake. the problem is a speculative rise in oil can do serious economic damage before it pops. what is the value of letting a few smart speculators profit while leaving a trail of wreckage in the end? some of you dont know much about history or the market if you dont think speculators can move prices out of realistic norms.
That would be you. There aren't any pre-set "realistic norms." Read Extraordinary Popular Delusions & the Madness of Crowds . Markets have always been about speculation; about making money as they go to extremes and when they reverse. That's why we play this game. If you want "realistic norms," see if you can set up a simulated trading community where no wild speculation takes place. It will be the equivalent of "no-score, no-competition" T-ball for kids. Sheesh. If you're worried about economic damage, go after those setting up the pre-conditions for these things: the Fed, draconian regulators and anti-drillers, mega-deficit spenders, etc. There will always be speculation and "unrealistic" norms, but much less with a sound currency and better fiscal discipline.