This is an extremely crude (no pun intended) assertion…but… Every single time I open up a financial newspaper/website theers someone talking about how Oil is going to go much higher than the current prices…or how all commodities are going to go much higher than the current prices… Well, wouldn’t that be the first sign of a bubble forming (or having already formed)?
Why do you look at behavioral aspects of a bubble first? Why not look at some inventory, production, supply/demand stuff… then look at the behavioral stuff? IMHO, the last 2 bubbles I’ve experienced you had people who were believing in new, false fundamentals (a story) at the expense of “old” fundamentals. I look at fundamentals for natural gas, something within my circle of competence, and maybe I see some momentum in the price movement but I don’t see a bubble. It costs a lot to produce gas and there isn’t that much in storage. People need it more than (almost) anything else when it’s either cold or hot outside.
^ The glut of production coming on late 08 early 09 worries me a little bit fr Natural gas. I 'm still net long natural gas by a lot. But it definitely worries me. Natural Gas is not easy to transport and more importnantly other countries do not have the infrastructure to consume it. THerefore it is not a ‘real’ global commodity. My opinion is that convergence to historical ngas/oil price wont happen for a long time if ever, but still even in US energy demand story is compelling enough to be long NGAS. Net-net, my guess is no better than anyone else’s
I don’t know, I suppose the most dangerous words in all of finance ARE “…it’s different this time” and yeah I’ve heard this kind of tail before, but wouldn’t the BIG money be allocate to those PMs who really believe that this time might be different? Willy
^ did anyone catch Boone Pickens on cnbc this morning? he seems to be on board NGAS as well
^ did anyone catch Boone Pickens on cnbc this morning? he seems to be on board NGAS as well
That guy is THE BEST. I always watch him. I mean that slow southern “draw” you KNOW he has to know what’s going on. Willy
isn’t it a drawl not a draw? Ole T.Boone is quite a character. I really enjoyed his autobiography.
It’s not a bubble yet…but as much as I love them, ETF’s will cause them to one day become one probably. They’ve already shown indications of the begginings of one at times due to these. They’re just so easy to go long with these…the ETF providers are going to be a big part of the commodity markets if things keep going in this direction It really depends on the commodity though. Something like gold has no real economic value especially on paper, other than to look for capital gains…so, I think we could see it there much quicker. Just my 2 cents. But I love commodities, but they are only going to get more volatile as per above.