So you lost a bunch of Rupees or Dollars or Pounds or Euros in the stock market, huh? I warned to keep some cash on the side, but you didn't listen. Anyway, if you are like me who has at least 15 years or more before retirement, you should be fine. Stocks are on sale and now may be a good time to slowly test the waters. Just be warned though, there are plenty of deadly sharks out there and if you are not careful they'll bite your head off!
I think the markets this year will be like a wild roller coaster. So if you have a weak heart this game is not for you. So how do I know if I have a weak heart or not? Well, you guessed right .... I have my own little crude methods :) - All one has to do is evaluate your bedroom performance. If you can't run a marathon or even a half marathon, you are done! And don't try going on Viagra or some other sh*t when your heart is weak ... If you haven't already figured out, there is a lesson to be learned in the current oil market disaster. Anybody who knows basic economics would agree that when the price of a product or a commodity rapidly goes up, rivals are incentivized to create cheaper alternate solutions. In this case, when the price of oil went through the stratosphere, where prices were perennially above $100/barrel for several years, nobody did anything to bring the prices down to more realistic levels. The end result was that this created a mad rush for the Americans to invent new technologies and processes to drill oil from previously un-economical situations. This is what happens when a bunch of brainless OPEC ministers run the oil business. Now that they are still unable to drive American drillers out of business they are crying foul. But I knew this was coming more than two years ago and made some money off of it (look up my old postings about this). As of yesterday, oil was almost down to my target price of $26/barrel (See https://www.mail-archive.com/[email protected]/msg113764.html). While nobody can predict exactly what's in store in our future, there are obvious tell-tale signs that if you peek beyond murky distortions, one can make a reasonable guesstimate and predict market directions. To make money in the stock markets, all that matters is that you are right, at least 60% of the time, than being 100% wrong. As you can see, it is a game of probabilities. American shale drillers aren't going to go bust just yet. Many of these guys have already drilled several wells that are already very productive. What this means is that they do not require a lot of new capital to simply pump up the oil and sell it at whatever market price they can fetch. All they need to do to survive is to service their short term loans (the long term loans can always be rolled over into the future) and cover their operating costs. Many of these guys have already shut down new projects to conserve cash and reduced or terminated their dividends. That brings us to the main question. Who is going to blink first? Is it the OPEC (Goliath) or the small shale drillers (David). For starters, the countries that make up the OPEC and Russia have to run their respective national budgets which are heavily dependent on just one or two commodities - oil and gas. These countries have millions of their citizens to feed and provide for. Many of these countries are not democracies - which means, if they screw up with the needs of their population, these rulers could be doomed via uprisings. Meanwhile, the American shale drillers have only their shareholders to worry about. It's not as if the US national security is at risk. At this point, I can't predict which side would win, but I am already seeing weaknesses in the OPEC and Russian arsenal. 1. The Russians could go bust and their currency, the Ruble could take a terrible hit by the end of next year. The main reason for my theory is that they have just $319 billion in foreign currency reserves down from $469 billion two years earlier. That's a massive $150 billion haircut in just a short two years. If oil prices do not go back up rather quickly, Russia is at risk of running low on cash. (For those that care, Indian reserves went up by about $50+ billion dollars during that same period). 2. The Saudis are contemplating putting Aramco on the block. You don't sell the hen that lays your golden eggs (or portions of it) unless you are completely stupid - especially at a time when the price of your golden eggs are at rock bottom! To be sure, the Saudis have enough money to last 4 or 5 years at the current run rate. But I think they are considering Aramco IPO to beef up their reserves in the event of a prolonged battle. 3. Venezuela is toast already. I wouldn't want to sell them anything on credit - not even oil, which they anyway don't need! 4. The Iranians and Iraqis do not have strong reserves. They'll mount pressure (along with other not-so-wealthy OPEC nations) on the Saudis to cut production. If the Saudis do not relent, there is a possibility for Saudi enemies to cause chaos inside Saudi Arabia. The Iranians could easily let loose a few "terrorists" inside Saudi Arabia and put the blame on ISIS. The unfortunate part from all these problems though, is that many Goans in the Gulf could lose their jobs. Jim Fernandes Colva/New York.
