A GULLIBLE MARKET
August 21st 2008 03:45
Where was it again that I first read about a line that says it is the job of “the market to separate the money from a fool…?” I encountered that line quite a few times over the last several years I cannot remember anymore where I first saw it. But I think that is one of the most important things that a budding stock market player has to bear in mind, all the time.
My dictionary shows a lot of meanings for the word “fool” but here are at least two of what applies in this discussion: 1. “a person who lacks good judgement,” 2. “a person who is gullible and easy to take advantage of.”
To be relevant to the current times, let us go back to those past few days when the euphoria of the market seems to give credence to the claims that gold ‘might once again become the currency of the world” and that “oil is now in such a short supply that its price will soon touch the moon.”
Now, whatever happened to those claims?
I am quite certain that a lot of people made a lot of money buying and selling gold at the time when the markets are souring and more people made an even bigger heap of dollars when the markets believe that the price of oil will continue to go up without let up.
But I suppose, like in every kitchen, every ingredient has to be measured in cups and ounces (don’t get me wrong, I don’t know how to cook), or at least, careful calculations have to made to create a perfect mix.
Stories and rationales abound as to why all those gold and barrels of oil will continue to appreciate in prices… Until, of course, people begin to notice that the world is in fact a complicated web of opposing forces, stories and rationales.
And so, shortly after breaching $1000 USD, what happened to the price of gold? And now that the scare stories about the hurricanes and the Russia-Georgia conflict failed to produce their desired effects, where is the price of oil headed?
Oh, I am almost certain there will be more stories and rationales to try to push everyone’s vested interests, but why is it that there was such a big drop in oil prices from $147USD when, not so long ago, the prevailing stories were all about the great oil shortage?
Naturally, we cannot deny the fact that the price of oil has gone up rather tremendously (despite the big pull back) but was it really because the world’s machineries are immediately consuming every single drop of oil produced by the exporting countries, or was it because greed has found another instrument in oil to take advantage of the market’s gullibility?
My dictionary shows a lot of meanings for the word “fool” but here are at least two of what applies in this discussion: 1. “a person who lacks good judgement,” 2. “a person who is gullible and easy to take advantage of.”
Now, whatever happened to those claims?
I am quite certain that a lot of people made a lot of money buying and selling gold at the time when the markets are souring and more people made an even bigger heap of dollars when the markets believe that the price of oil will continue to go up without let up.
Antique gas pumps. Source: Wikipedia
But I suppose, like in every kitchen, every ingredient has to be measured in cups and ounces (don’t get me wrong, I don’t know how to cook), or at least, careful calculations have to made to create a perfect mix.
Stories and rationales abound as to why all those gold and barrels of oil will continue to appreciate in prices… Until, of course, people begin to notice that the world is in fact a complicated web of opposing forces, stories and rationales.
And so, shortly after breaching $1000 USD, what happened to the price of gold? And now that the scare stories about the hurricanes and the Russia-Georgia conflict failed to produce their desired effects, where is the price of oil headed?
Oh, I am almost certain there will be more stories and rationales to try to push everyone’s vested interests, but why is it that there was such a big drop in oil prices from $147USD when, not so long ago, the prevailing stories were all about the great oil shortage?
Naturally, we cannot deny the fact that the price of oil has gone up rather tremendously (despite the big pull back) but was it really because the world’s machineries are immediately consuming every single drop of oil produced by the exporting countries, or was it because greed has found another instrument in oil to take advantage of the market’s gullibility?
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Comment by Mike Landfair
Market Bugle
As for Gold, its trendline is in no danger of being broken. In fact the last major pullback was 22% and that's about where we are at this time. Painful, but no big deal.