Asset management, Central banking, Economics, Market research, Policy, Politics, Stock market, Uncategorized

Investing in the age of unprecedented monetary experiments

Since the 2008 financial crisis, world’s largest central banks have unleashed a program of monetary stimulus that dwarfs anything we’ve experienced in history. With no historical precedents, how should investors navigate the risks and events that will likely exert extreme stress upon political, economic and social fabric of nations across the world. Altana Wealth’s founder Lee Robinon offers some unorthodox insights in a 45 minute interview with Real Vision TV with Grant Williams. You may not hear similar thinking from academics or CNBC-vetted pundits. Lee has the remarkable capacity to keep a mind-bogglingly detailed mental map of what’s going on in the world of business, finance and politics within a clear historical perspective and isn’t shy about laying it out as he sees it. The video is below: Continue reading

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Asset management, Market research, Market trends, Stock market, Trend following, Value investing

Value investing vs. trend following: which is better?

In spite of the undeniably impressive track record of many trend following funds, most investors are more at home with the idea of value investing. Value investing is intuitively appealing: we all like the idea of buying something when it’s inexpensive and selling it when overvalued. To boot, value investing counts Warren Buffett and Benjamin Graham as its proponents, arguably two among the most successful investment managers ever. However, a more careful analysis of Graham’s as well as Buffett’s writings and investments turns up a big surprise… Delving into this subject, below is an excerpt from my recently published book, “Mastering Uncertainty in Commodities TradingContinue reading

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Commodity price, Energy crisis, Hedging, Market research, Market trends, Oil market, Trend following

5/5: $500 oil and how to manage the looming uncertainty and risk

Let us recap what we covered in parts 1, 2, 3 and 4 of this report. In spite of the low price of oil (just below $50 at the time of this writing) and predominantly bearish market sentiment, the “big picture” suggests that we are facing a grave energy predicament. Petroleum producing countries, especially members of OPEC, have been vastly overstating their oil reserves. Production of oil from conventional sources is in an irreversible decline. Over the next 15 years, the EIA projected that production will fall over 40% short of demand. New drilling technologies, and this includes fracking, are unlikely to impact this shortfall in a meaningful way.  These conditions have led the UK’s Ministry of Defence to predict in 2012 that oil price could rise to as high as $500 per barrel over the next three decades, causing crises of unforeseeable proportions. For the oil market participants, the trillion dollar question is how to cope with the looming uncertainty and risks. Continue reading

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Commodity price, Energy crisis, Market research, Oil market

3/5: Revisiting the peak oil hypothesis

As we discussed in part 1 and part 2 of this series, the world is facing a dire energy predicament; world oil reserves are fast dwindling and new extraction technologies won’t be able to reverse global production declines. By all accounts, it appears that we are past the point of peak oil and today we take another look at the peak oil hypothesis. One of the key thoughts in this report is that, as oil production becomes more expensive in real terms, it must also become more expensive in nominal, or dollar terms. That it has recently become cheaper in dollar terms can only be a temporary aberration. Continue reading

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Commodity price, Energy crisis, Market research, Oil market

2/5 Oil production and the evolution of drilling technologies

Technology is another element comprising the happy talk about the world’s inehxhaustibly abundant oil supplies. As with Saudi Arabia (and other nations’) reserves, the reality is quite different from what is commonly presented. The argument is that oil reserves calculus changed in the last decades as drilling technologies iproved. That, in part, is how the mushrooming oil reserves numbers are justified even in absence of large new oil field discoveries. Unfortunately, experience hasn’t borne out this optimism and the idea that drilling technologies may have turned Saudi Arabia’s 110 billion barrels of proven reserves into 790 billion barrels is unrealistic, to put it politely. Continue reading

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Commodity price, Economics, Energy crisis, Hedging, Market research, Oil market

1/5: Making sense of Saudi Arabia’s oil reserves and production capacity

UPDATE: This article is part of a 5-part series posted in 2016. Latest oil market related article is here: “The coming oil price shock

So, the question is, why did oil prices suddenly collapse in 2014 and continued slumping into 2016? Neither U.S. fracking boom nor the slow demand growth can explain the event’s timing. We’ve known about fracking since at least 2009 and the “boom” part became quite apparent by 2011. The weakness in global demand wasn’t news either, so what did happen in June 2014 when oil prices collapsed? Supposedly, this had something to do with Saudi Arabia’s refusal to curb excess production for whatever reason – there has been no shortage of explanations. Saudi Arabia is the world’s biggest oil producing powerhouse endowed with virtually inexhaustible reserves of the black gold and the capability to switch the taps on or off and move global oil supply and prices at will. That, at any rate is what the mainstream media narrative would have us believe. However, if we scratch the gloss off that narrative, the situation appears starkly different: Continue reading

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Commodity price, Hedging, Market research, Market trends

Do markets move in trends?

Do markets move in trends – I find it baffling and fascinating that this question is still even debated, but there are individuals – usually in the academia – who, in all seriousness, will maintain that price fluctuations are random, and that we essentially hallucinate trends. I’ve tackled the issue in some detail in my book Mastering Uncertainty in Commodities Trading, but perhaps a few charts could help settle the issue: Continue reading

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Commodity price, Economics, Market research, Oil market

Market facts vs. market narratives

So the economy is in the doldrums globally and demand for oil languishes. At the same time, oil producing countries are pumping the stuff out as hard as they can with no let-up in sight. So how does it make sense that oil price surged nearly 60% from its January lows? Today’s news and rumors may explain today’s advance, but what about previous three months’ rally? The answer is that over time, it is the price that leads the narrative, not the other way around. I’ll try to elaborate.

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