It's not just oil, there is a worldwide commodity crash

[Lakedog]

Quote:

Originally Posted by MichaelB Nothing lasts forever. Not high commodity prices, but not low commodity prices either. Resource investments are not timely but I think they currently offer a better risk / reward opportunity than the US stock market or fixed income.

+1
I also think there is currently a lot less risk in these areas than the market in general and much opportunity if buying quality companies. I have little doubt that oil (and most commodities) will be significantly higher in the future.

[CaliforniaMan]

Quote:

Originally Posted by Senator We are in the beginning stages of global wage equalization. When labor costs are equal throughout the world, all wages will go up. It's inevitable. Along with wage equalization will also come living standard equalization. Hopefully we will all be up to western living standards, but I am not sure that will be the case.

This is certainly true at the low end, where people will be mechanized out of a job, but I don't believe it is true at the top. It may be there will just be further divergence between those on the top and those on the bottom, with education and the rapid implementation of advancing technology the keys. I think the U.S. is still up there at the top for now, but do worry that we need to get much more serious about investments in education in the future. How well and how fast we get our population educated in needed fields is the key.

[Mulligan]

Quote:

Originally Posted by Lakedog +1 I also think there is currently a lot less risk in these areas than the market in general and much opportunity if buying quality companies. I have little doubt that oil (and most commodities) will be significantly higher in the future.

I agree, but unless you are going to play this angle with pure commodity index funds (with the associated volatility and high expense ratios) you still have a load of land mines to avoid to achieve success such as which of the companies can even survive through the low trough of pricing. Companies may not even have to go bankrupt. A restructuring of bond holders into common stock shareholders can dilute the equity a person is holding is an example.
Additionally, the cyclical down period of commodities can be for an extended period of time including possibly decades, so timing and price entry points have to be determined correctly.


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[DrRoy]

Yes, I quite agree that there is a world wide crash in commodity prices. A lot of that is tied to slowing demand in China. However, for oil in particular, the Saudis have pushed the price even lower that it would otherwise be.

[Which Roger]

Quote:

Originally Posted by Sunset Throw in robotics and there will literally be less jobs available, local pharmacists can be replaced by a robot, so can bar-tenders, both are done now. In perhaps 20 years, taxi drivers will be obsolete as self driving cars will be automated to take credit cards. It just keeps on going where jobs are being removed, but most folks don't see it until it happens to them.

Many millions of farming jobs have been eliminated in the past century, replaced by automation and increased productivity. Ditto telephone operators and manufacturing and many other industries. Many retail jobs have disappeared with the emergence of the internet.

But at the same time, entire new industries have emerged, employing even more people, usually with "better" jobs. I don't see any reason that won't continue to happen.

[travelover]

I'm amazed at what scrap metal is selling for. I took an old garage door opener in and had even separated the motor to benefit from its higher copper content. Payout was 77 cents.

[devans0]

There is a lot of supply backlogged. Inventories will drop. I'm watching for those signs to jump in again. I'm digging to see which companies can last and hope to get in with value.

Oil may be a while. Some suppliers can be profitable at $6 /bbl oil. If Saudi's follow through with their promise to keep pumping for ten years, alternatives profits are going to be squeezed.

I can't wait for electric vehicles to become better.

[Ed_The_Gypsy]

I feel your pain, ha.

I only bet on O&G and healthcare, but I bet too much on O&G.

2016 will require changes.

[NW-Bound]

The OP was talking about commodity glut, but many posters also talked about the surplus of manpower. In a way, I think the two are related. The investment in machinery in all industries has boosted the production, such that we now have a surplus of everything, and prices have plummeted.

A couple of years ago, I read about the wine glut in Europe, and vintners had to sell their wine for dirt cheap to distill into ethanol. Only a month or two ago, I read about some dairy farms in the US having to dump cow milk into manure pits because they ran out of capacity to process it into cheese. And just yesterday, I read about bumper crops of corn in the US.

Huge TVs are dirt cheap, I could not believe it. We throw electronics away after using it for just a couple of years. Everything is cheap, and it's good for the consumer if he has money to buy. Meanwhile, it's tough for producers to make money, and harder for people to find a good job.

[Big_Hitter]

check out FCX stock price

[NW-Bound]

Alcoa just reported earnings. It was bad, but beat expectations. Stock jumped from $8 to $8.17 in after-hour trading.

In the ealier post, I was talking about a surplus of cow milk in the US. I recall that just recently, I happened to see a 99c store selling a pack of 12 Yoplait cups for $0.99, and of course I had to buy it. Yes, you read that right, it's 8c a 5-oz serving of yogurt. Of course they do not have that deal everyday, but I think that might have to do with producing more than people can eat.

And with the corn price going down, I am willing to bet meat prices from chicken to beef will be lower in the days ahead. But how much more can anyone eat?

[Mulligan]

If you enjoy watching train wrecks, bookmark DBC, a commodity index fund of 14 various commodities. Since funds inception 10 years ago, its annual return is now over a negative 5% per year return. At some point though, it surely will be a good buy. Unfortunately figuring that out is the hard part.


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[aja8888]

Quote:

Originally Posted by Mulligan If you enjoy watching train wrecks, bookmark DBC, a commodity index fund of 14 various commodities. Since funds inception 10 years ago, its annual return is now over a negative 5% per year return. At some point though, it surely will be a good buy. Unfortunately figuring that out is the hard part. Sent from my iPad using Tapatalk

Remember, actual commodities won't sell for $0, but this DBC might get there!

[Mulligan]

Quote:

Originally Posted by aja8888 Remember, actual commodities won't sell for $0, but this DBC might get there!

I love watching, researching, and discussing, these types of things,but I never seen to have the stones to follow through. Even if it got to $5, I would be thinking..."Im only $2.50 away from losing half my money". My last 3 oil investments were way over a year ago and here were their results... Bought Xom at $98, sold at $95, Bought Shell at $78, sold at $74. Bought Suncor at $27 and sold at $28. Had no clue they would drop as much as they have. I worried they may drop $5 bucks so I bailed.


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[aja8888]

Quote:

Originally Posted by Mulligan I love watching, researching, and discussing, these types of things,but I never seen to have the stones to follow through. Even if it got to $5, I would be thinking..."Im only $2.50 away from losing half my money". My last 3 oil investments were way over a year ago and here were their results... Bought Xom at $98, sold at $95, Bought Shell at $78, sold at $74. Bought Suncor at $27 and sold at $28. Had no clue they would drop as much as they have. I worried they may drop $5 bucks so I bailed. Sent from my iPad using Tapatalk

It's a good thing you didn't place winning bets on the Texans!

OK, having stops on the above oil stocks was smart. One must know when to sell and cut losses.

[Mulligan]

Quote:

Originally Posted by aja8888 It's a good thing you didn't place winning bets on the Texans! OK, having stops on the above oil stocks was smart. One must know when to sell and cut losses.

Yes, I am an odd ball... I love to gamble.... With my sports betting money bucket... But its "widows and orphans" in my investing bucket... In fact my betting account has done so well, I let my investing account borrow money from it to make a few preferred purchases... And dont give me any credit on knowing when to cut losses. It was just luck or somebody switched my "T" pills with estrogen.


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[haha]

Quote:

Originally Posted by Mulligan If you enjoy watching train wrecks, bookmark DBC, a commodity index fund of 14 various commodities. Since funds inception 10 years ago, its annual return is now over a negative 5% per year return. At some point though, it surely will be a good buy. Unfortunately figuring that out is the hard part. Sent from my iPad using Tapatalk

Is it invested in futures contracts? A hard thing is that when commodities are cheap, they are almost always in contango. So every time you have to roll, you lose cash. As AJA said, this can indeed go to zero, though the commodities never will. That is why they have tank farms, and salt domes and grain elevators etc. for the big players.

Ha

[Mulligan]

Quote:

Originally Posted by haha Is it invested in futures contracts? A hard thing is that when commodities are cheap, they are almost always in contango. So every time you have to roll, you lose cash. As AJA said, this can indeed go to zero, though the commodities never will. That is why they have tank farms, and salt domes and grain elevators etc. for the big players. Ha

Yes they are futures contracts of all those commodities. I fantasize about making such exotic bets, but hopefully common sense prevails for me. I try to invest in only things I at least have an illusion of understanding. So with my cranial capacity, that narrows the investing world to a fairly small level to begin with.


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[Sunset]

Quote:

Originally Posted by NW-Bound ....And with the corn price going down, I am willing to bet meat prices from chicken to beef will be lower in the days ahead. But how much more can anyone eat?

You have not seen my neighbor

Especially if the Ethanol laws are changed now that gas is cheap. We will have better gas as in more energy per gallon with pure gas vs the diluted gas.
This will also force down the price of corn, beef and chicken.

[Mulligan]

Chesapeake Energy 2020 due date bonds now yielding almost 40% a year...What a steal...Back up the truck! They will never be 40% again...Because they will yield 50% soon...


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