Monday, September 17, 2012

Why You Ought to Invest

Investing has become increasingly important over the years, as the future of social security benefits becomes unknown.

People require to insure their futures, and they know that in the event that they are depending on Social Security benefits, and in some cases retirement designs, that they may be in for a shroud awakening when they no longer have the ability to earn a steady income. Investing is the answer to the unknowns of the future.

You may have been saving funds in a low interest savings account over the years. Now, you require to see that funds grow at a faster pace. Perhaps you have inherited funds or realized some other type of windfall, and you require a way to make that funds grow. Again, investing is the answer.

Investing is a way of attaining the things that you require, such as a new home, a college schooling for your children, or expensive toys for your kids. Your financial goals will decide what type of investing you do.

In the event where you require to make lots of funds rapid, you would be more interested in higher risk investing, which will give you a bigger return in a shorter amount of time. But in the case where you are saving for something in the far off future, such as retirement, you would require to make safer investments that grow over an extended timeframe.

The general purpose in investing is to generate wealth and security, over a timeframe. It is important to keep in mind that you won't always be able to earn an income you will finally require to retire.

You also cannot count on the social security method to do what you expect it to do. As we have seen with Enron, you also cannot necessarily depend on your company's retirement plan either. So, again, investing is the key to insuring your own financial future, but you must make smart investments!

Saturday, May 7, 2011

As Predicted, the Oil Price Reverses

by Andrew Butte

Identifying bubbles is not (very) hard, what’s hard is predicting at what price and when they will pop. Two weeks ago I wrote an article titled “FAO Food Index Predicting a Reversal in Crude Oil Prices”. I’d say a 15% decline in Brent from $127 to $110 qualifies as a “reversal”. Outside of noticing that food prices slightly lead oil prices, the logic behind that argument was:

1: The Libya thing was a Red Herring used by the speculators to instill a bit of panic into the market; there never was a short-fall of oil compared to demand (short-term) and there still isn’t.

2: The Saudi’s might have a sulk about what they perceived as misinformed and impolite comments from various corners of the US Administration about the human rights of minorities and all that baloney. But ultimately, they know that the alternative to sucking up to America (making sure oil does not get too expensive for America’s taste), is not an option, and they know America knows that and America knows they know America knows that. Perhaps it wasn’t a coincidence that oil prices tanked soon after Osama bin Laden was in the news (hopefully for the last time), and as that subject hit the headlines, memories were jogged that 14 out of the 19 terrorists in 9/11 were Saudi’s?

3: The correct price of oil right now valued according to what the world can afford to pay (without suffering unduly), is about $90 (Brent). So at $127 oil was a 40% bubble, bubbles do have a habit of popping once they get to 40% over the “fundamental”.

Where Next?

Well, according to the theory, if oil was 40% too high, and if no one is taking the spectre of peak oil too seriously (in which case the “fundamental” value is the replacement cost (i.e. what it will cost to find and produce more oil)), then at some point in the not-too distant future the price of oil “ought” to explore $90/1.4 = $64 (Brent). Whether it does or not, will be a good test of how much the “Peak Oil” idea is gaining traction.