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

[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]

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

 

[Mulligan]

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]

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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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]

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]

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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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]

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]

....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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[Fermion]

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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Only 40%? The 2019 bonds I own from a copper/gold mining company now yield 70%.

40% is widow and orphan stuff. Wimps.

 

[Mulligan]

Only 40%? The 2019 bonds I own from a copper/gold mining company now yield 70%.

40% is widow and orphan stuff. Wimps.

I dont think I want to know what you think of my 6%-7% yielding stuff.


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[NW-Bound]

Where's the photo I linked in earlier in another thread about deep-sea fishing?

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

So, that stock rise was a head fake. Alcoa is now at $7.26. Good thing I did not buy any. I am going to stay put for a while, before I start to nibble again in anything, not just commodity producers. Need to conserve my cash. There's no more where that comes from.

 

[DrRoy]

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...

There's always Greek bonds, or the roulette wheel.

 

[MichaelB]

Venezuelan debt. The 1 year is yielding 50% and you can get 20 years at 27% annual interest rate. That'll give you a nice withdrawal rate, boyo.

 

[FUEGO]

Is it that bad? SP 500 is back to June 2014 levels, and internationals are doing a little worse. Yes, commodity prices are cheap but that's not entirely bad news (lower producer input prices = higher margins for many companies).

 

[RISP]

This is certainly true at the low end, where people will be mechanized out of a job, [...]

I'm not even sure about that, at least not on a large scale. The majority of low-end jobs is in the service industry. While it may be technically possible in the future to replace bartenders, waitresses or nurses with robots, I'm not so sure customers will accept this. Maybe I'm just old-fashioned, but I for one prefer to deal with a human being.

I noticed something similar when Germany introduced a minimum wage for the first time last year. The expectation among economists was that a significant portion of low-end jobs would disappear due to outsourcing, but that has not materialized so far. You just can't move most warehouse clerks to China, and customers are not willing to travel to Poland for a haircut. Same for the services provided by cleaners, elderly care nurses, short order cooks, newspaper carriers, ...