Re: FEB 11


Feb 11, 2016

 


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#39079 Feb 11, 2016

Little bitlong on this post - ��go to the bottom ifyou don.t have the time.

Oil is downsharply again this morning.�� Yesterday,the U.S. Energy Information Administration reported a .surprise. decline inweekly supplies of crude oil. The American Petroleum Institute on Tuesdayreported a 2.4 million-barrel increase, according to sources. Analysts expecteda rise of 3.2 million. Prices traded at $28.09. This morning it is 26.71. Lastweek it was in the 32 range.

I.ve said itbefore but I find it amazing the market is swinging the price of oil over adifference of 2 million barrels, a small amount of .excess crude..�� Especially since the average super tankerholds two to three million barrels of oil and there are hundreds of largetankers plying the earth.s shipping channels.����I have no intent to become an oil.analyst. but I did a cursory look at the world tanker fleet to understand itbetter (there are over 4000 tankers of all sizes worldwide). Others have saidit is virtually impossible to know where the excess crude inventory erstwhile themarket latches onto any metric it can find in lieu of actually knowing theunknowable (inadvertently channeling Rumsfeld).���� ����������

Others inthis forum yesterday asked .isn.t it a good thing oil is so low.?�� ��Yes,gas prices are lower and it is the equivalent of a tax break windfall for theaverage American family.�� No, if you area company that depends on oil pricing for profits.�� Oil companies in the USA are sufferingbecause they can.t make money under $50 a barrel (the estimate varies dependingon who is asked).�� Those same companiesborrowed money from banks they now cannot afford to pay back.�� Banks lose money on those loans which is whatis happening to oil loans in European banks (less regulation than US bankstherefore more risk).�� And finally, OPECmember economies decline because they are built on oil profits.�� OPEC countries all have large petroportfolios holding banking equities among many others . they made money bothways and now the chickens are coming home to roost.�� OPEC countries are selling those equities tofund their social programs and maintain their standards of living . and we seedeclines in US bank stock prices now as they are catching the flu from Europeanbanks.�� In the USA, regional bankslocated in oil patch areas are have some portfolios tied to oil but the restare indirectly tied by virtue of their local economies suffering due to oildeclines.�� Just visit Midland, TX to seea typical US oil town in a bust cycle.

Oil is stillcoupled to equity prices for reasons above and banks seem to be affecting theworld markets also. Tying it together, my wife (not a fed) sold her longequities yesterday . capitulation in my family - while I remain G and F(heavier on G).�� I have heard experts saythis year you won.t make money in an index fund (perhaps true for TSP C/S/I) .but not altogether so; I am shorting on SPY (the S&P 500 ETF index . the downtrend volatility seems unshakable). ��Theysay instead it will be a stock picker.s year.����So what to do?�� Each must make his own determination as itrelates to the TSP but I don.t see good news anytime soon.�� I do look forward to warm weather as oneposted yesterday but only because I like the sunshine .�� stocks are notlikely to go up during the summer (historically speaking).��



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#39083 Feb 11, 2016

Nice analysis.�� I'm not shorting any of the indices yet.�� Have been shorting commodities, and buying the VIX.

With respect to the TSP, I would expect to see a significant bounce before we fall to "capitulation."�� If so, that would be a good time to get out.�� If not, I'll ride it out and ensure that I'm there for the subsequent rally, in which the S fund will lead.



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#39087 Feb 11, 2016

I think I'll just ride it out regardless, I'm not taking money out of my TSP for 20+ years



From: "sarah_oz@... [TSP_Strategy]" TSP_Strategy@yahoogroups.com>To: "TSP Strategy" TSP_Strategy@yahoogroups.com>Sent: Thursday, February 11, 2016 8:05:12 AMSubject: [TSP_Strategy] Re: FEB 11

��Nice analysis.�� I'm not shorting any of the indices yet.�� Have been shorting commodities, and buying the VIX.



With respect to the TSP, I would expect to see a significant bounce before we fall to "capitulation."�� If so, that would be a good time to get out.�� If not, I'll ride it out and ensure that I'm there for the subsequent rally, in which the S fund will lead.



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#39088 Feb 11, 2016

Thanks for your many recent assessments, Eric. They are very helpful.

Sarah, you wrote:."With respect to the TSP, I would expect to see a significant bounce before we fall to 'capitulation.' .If so, that would be a good time to get out."..



As I type this DWCPF is around 840. By "significant bounce" are you looking for something higher than the end of January price (~920), or the end of December (~1020), or the end of.November (~1050)? Looking back in time, those look.like "bounces" to me. Respectively those were ~8%, ~17% and ~20% higher than today..



Thanks as always for your.patience.and any insight you can share.



Jim



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