Can someone draw the lines for me that show why cheap oil = lower markets? The energy sector is just one part of the market and the rest should be doing better with the fuel savings. Is the cheaper oil mainly due to lower demands and a slowdown globally?
Cheaper oil equals other countries suffering from increased competition. Russia, for example is in the crapper and cut their space budget by 40%.Can someone draw the lines for me that show why cheap oil = lower markets? The energy sector is just one part of the market and the rest should be doing better with the fuel savings. Is the cheaper oil mainly due to lower demands and a slowdown globally?
That said, futures are up ~1%. Not that that means anything. Seems we're having waves of large drops with mediocre gains, rinse, repeat... I don't think we have seen rock bottom yet.
Can someone draw the lines for me that show why cheap oil = lower markets?
You should be thrilled. The stock market will eventually bounce back, so those are just temporary paper losses. Then the $250 that you put in will buy you ~10% more shares than it would have a couple weeks ago. That means you gain an extra ~$25 for every paycheck you have until the market returns.i put in $250 into my roth ira today since it's pay day and my account had dropped $4k since 2.5 weeks ago when i put the previous $250 into it
But since the entire commodities complex is collapsing, it is a de facto global depression. We are looking at 2 or 3 housing bubbles worth of debt defaults, and none of it can (legally) be bought by the US or European central banks.
If you cant buy a house in San Francisco, how much are you going to spend at Home Depot? Not much. That dynamic is what is plaguing our entire economy.
I saw the market dropping and dumped more into my roth this week. I figure I have 30+ years to retirement, might as well get in a little cheaper on the downswing.i put in $250 into my roth ira today since it's pay day and my account had dropped $4k since 2.5 weeks ago when i put the previous $250 into it
I saw the market dropping and dumped more into my roth this week. I figure I have 30+ years to retirement, might as well get in a little cheaper on the downswing.
You should be thrilled. The stock market will eventually bounce back, so those are just temporary paper losses. Then the $250 that you put in will buy you ~10% more shares than it would have a couple weeks ago. That means you gain an extra ~$25 for every paycheck you have until the market returns.
As long as you aren't withdrawing (and assuming it doesn't lead to a massive economic failure), this drop is probably a benefit to you.
meh.. I 'dollar cost avg' annually.
now worth my time to try to time $5k into a 500k retirement portfolio
japan up %5.5 so far today, and most other markets up %1-%3
Yep, everything is perfect again. All is forgotten.
The movie Idiocracy isn't realistic. Luckily intelligence and skill sets aren't inherited (meaning a newborn baby from a lower class is the same as a newborn baby from the upper class). Then, we only have to deal with poor parenting and lack of opportunities that often tags along with the lower class.
First of all you have to make a distinction between "cheaper oil" and severely depressed oil. What we have now is a severe depression in all commodities, not just oil. Oil has lost roughly 70% vs its previous 5 year average, but commodities in general have lost 60%. This is shaping up to be one of the biggest commodity crashes in all of history.
If it was just oil collapsing, it wouldnt be that big a deal. In that case, we would only be dealing with a few hundred billion worth of defaulted debt. The key threat there is that the Fed cannot (legally) buy oil market related securites. But then again, the Fed could not legally buy Fannie/Freddie paper, but it did anyway. I don't think the Fed would get away with buying oil industry debt though. That right there makes this a potentially bigger problem than the housing bust. Many people assumed that the Fed would have their back on the mortgage backed securities, and they ended up being right despite the fact that Fannie/Freddie debt was not government backed debt, it said so right on the prospectus. Nobody is making this same assumption with oil. So, this debt is going to default and there will be no bailout, except from Congress. If it was oil collapsing in isolation, it would only result in a couple percentage points of GDP lost.
But since the entire commodities complex is collapsing, it is a de facto global depression. We are looking at 2 or 3 housing bubbles worth of debt defaults, and none of it can (legally) be bought by the US or European central banks. The worst part of all this is that these oil company assets will be worth next to nothing when they go to auction. So that debt is going to almost completely disappear. The same will hold true across the entire commodities complex. This will be far more deflationary than the housing bust, which was almost entirely papered over by the central banks with relative ease.
As to why commodities are collpasing, that part is the simplest. The distortions created from the printing of tens of trillions in paper wealth have fueled an asset bubble so large that the masses cannot even access these assets. With no access to assets, the demand for commodities will and must fall. When you're spending all your discretionary income on housing and car payments because asset prices are pumped up to the moon, you are left with nothing else to buy. If you cant buy a house in San Francisco, how much are you going to spend at Home Depot? Not much. That dynamic is what is plaguing our entire economy.
Not to mention every key economy went from knee-deep in debt before the massive waves of QEs to forehead-deep in debt now.