Gulf Oil CEO says gas could hit $1 next year: On Wednesday, Gulf Oil CEO Joe Petrowski said that the price of oil could sink to $20 per barrel, and there is a chance gasoline prices could drop as low as $1 per gallon by early next year. Petrowski said speculators drove oil prices up and there is a chance that the market will overshoot on the way back down, resulting in much lower prices at the pump than we have now.
Oil Prices Per Barrel courtesy of Stockcharts.com
On Saturday July 12, 2008 Bob Brinker commented on oil prices:
The price of oil AND the stock markets have crashed so the "inverse relationship" is not valid at all.
Here we see oil having closed the week at an all-time-record-high, close to $145 for a barrel of oil………..And there is an inverse relationship that has developed between upward spikes in oil prices and the stock market, and that inverse relationship has really been showing up now for some time.Since March 2003, Bob Brinker was fully invested in the stock market with all in buys for the S&P500 in the mid 1400s, mid 1300s and even the mid 1200s as shown on this graph.
Now why is there this correlation – we see the S&P 500 sitting in in the 1240 area. We see the Dow sitting in at 11,100 area. We see the Nasdaq Composite trading in the 2200’s. Why is there this correlation between the price of a barrel of oil and what goes on in the stock market? I think the answer to that question is easy, and that is consumers, wind up with less money to spend when they get pounded with these higher costs of energy, costs of gasoline, all the products in the energy complex. And that weakens the status of the consumer and also delays the potential for economic recovery.
"The stock market wants to see an economic recovery scenario. It does not want to see an increased oil price scenario, which is was it’s seeing right now. Now I wish I could tell you what the price of oil is going to be in a week, a month, a year. I don’t know. I have no way of knowing and I think only a fool would try to forecast the price of a barrel of oil in the world we live in…….”
The price of oil AND the stock markets have crashed so the "inverse relationship" is not valid at all.
What Brinker said in June was nonsense and is nonsense today as the clear link between economic growth and the price of oil demonstrates.High oil prices were due to booming global economies creating huge demand with speculators piling on to push prices higher. This was not rocket science but simple economics of supply and demand.
Likewise, today we are plunging into a global recession with many fearing depression. Obviously the demand for oil is plunging which leads to plunging oil prices.
Now the market is at:
| 12/05/2008 ET | Last | Change | As of: | |
| .DJIA | 8,130.53 | -245.71 | 10:46am | |
| NASDAQ | 1,409.73 | -35.83 | 10:46am | |
| S&P500 | 819.34 | -25.88 | 10:46am | |
Maybe one day we will hear Bob Brinker say on the radio that predicting the price of the stock market is just as hard as predicting the price of oil. Can you imagine if Brinker said:
I think only a fool would try to forecast the price of the stock market in the world we live in…….I am not holding my breath. It is very hard to sell a newsletter called "Marketimer" when your market timing has you wildly bullish with a "gift horse buy" in the mid 1400s just before the biggest market crash since the Great Depression!
Asia is up nicely tonight
ReplyDeleteSee the charts at: Asia at a Glance
I haven't heard people talk much about a "Santa Clause Rally" given the markets have been so horrible the past few months. Maybe it will surprise some.
I had an interesting idea to stimulate the economy. Find a way for SUV buyers to buy gasoline futures. Buy the gas guzzling SUVs that are on huge discounts now and invest in gasoline futures such that if gasoline returns to high prices again, then you make enough on the futures contracts to pay for the gasoline. If gasoline stays low, then the money lost on the futures contract is like money lost on insurance and would simply be added to the purchase price of your auto, a one time expense.
It might work better to stimulate demand for the US Government to give the futures contracts to anyone buying autos NOW than give money to the auto companies which will not stimulate demand.
Could it work?
Thank you for the comments. I am really hoping Bob Brinker reads yours posts. He has been horribly wrong this year with his stock market predictions. He supposedly is a "market timer", yet he missed the worst bear market since the Great Depression.
ReplyDeleteYes, many investors have been wrong this year, but the way in which he ridiculed "the cassandras" and the arrogance he has shown in the past about how right he has been, calls for him to eat alot more crow than most. Bob mentioned that "the cassandras" "bad advice" about risk in the market caused alot of people to lose money, and how sad that was. Well, I am sure there are literally billions if not tens of billions of investment dollars that move to different asset allocations based on Bob's recommendations. How many of those listeners did not move their money to safer invesetments because Bob was calling for new highs in the market the whole way down? He really hurt alot of people, including me! - and "the cassandras" were right.
I just cant wait to hear the spin he will create on his terrible call in the future (calling the end of the secular bear market right before the market crashed and lost all the gains of the most recent bull market, and then some). In time, most of his listeners will be new listeners and many of the others will have forgotten how wrong he was. If he is still doing his show in 10 years, he will be claiming he had been warning of a recession and recommended dollar cost averaging during this time. I hope you will still be here to call him out.
Tom
Thank you for the comments. I am really hoping Bob Brinker reads yours posts. He has been horribly wrong this year with his stock market predictions. He supposedly is a "market timer", yet he missed the worst bear market since the Great Depression.
ReplyDeleteYes, many investors have been wrong this year, but the way in which he ridiculed "the cassandras" and the arrogance he has shown in the past about how right he has been, calls for him to eat alot more crow than most. Bob mentioned that "the cassandras" "bad advice" about risk in the market caused alot of people to lose money, and how sad that was. Well, I am sure there are literally billions if not tens of billions of investment dollars that move to different asset allocations based on Bob's recommendations. How many of those listeners did not move their money to safer invesetments because Bob was calling for new highs in the market the whole way down? He really hurt alot of people, including me! - and "the cassandras" were right.
I just cant wait to hear the spin he will create on his terrible call in the future (calling the end of the secular bear market right before the market crashed and lost all the gains of the most recent bull market, and then some). In time, most of his listeners will be new listeners and many of the others will have forgotten how wrong he was. If he is still doing his show in 10 years, he will be claiming he had been warning of a recession and recommended dollar cost averaging during this time. I hope you will still be here to call him out.
Tom