notpom

Christmas present

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    Please read this.

     

    http://www.bloomberg.com/news/articles/2015-12-22/extreme-oil-bears-bet-on-25-20-and-even-15-a-barrel-in-2016

     

    In a nutshell, more and more people are buying oil's put options on the market as low as $15 per barrel.

     

    There is plenty of explanations on the internet wabout option trading, but what you need to know is simple

     

    1. People spend their money to make money, not to lose money

    2. People would not make any money if oil price does not drop below the mark they bet on.

    3. If you do not trade oil options and do not know anyone who does, you can safely assume that people who bet have done their homework.

     

    Why it would be a Christmas present? First, ACCC is actually grinding their paper tiger teeth at the petrol retailers. Dollar is still high, oil price plunging - but petrol prices ... Well, with the current level of oil prices and a dollar they shall be no more than 70 c per liter for unleaded.

     

    Of course, saving at the bowser is a great thing. But fuel price is the thing that affects the whole economy, because bulk of transportation is automotive.

     

    Which translates into cheaper prices across the board. Cheaper prices translate into drop in the "inflation" (how it is understood by RBA). Inflation dropping below RBA target translates into interest rate cuts. Interest rate cuts translate into many things, like smaller interest on mortgages, improved housing affordability and soaring property prices.

     

    Last year if lived in Sydney - your house would have earned 3-4 times the amount you earn at your day job.

     

    If you do not have a house - you earned nothing, and house has slipped further out of reach.

     

    In other words, if you are the homeowner, I do not wish you Merry Christmas, you would have it anyway. Renters - you would need a LOT of wishes to feel slightly better.

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    ZZZzzzzzzzzz..., are you in great demand as a Christmas guest? :eek:

     

    More than I would like. Wasting time on gatherings where people:

     

    1. Overeat

    2. Overdrink

    3. Yapping about nothing

    4. Whinge about lack of money

     

    is kinda boring.

    You have got one life after all. Why turn it into misery by setting yourself such a petty goal like being on the "party demand list"? You shall worry if you are. That means that you are spending way too much time pleasing other people instead of doing right thing by yourself.

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    Some people's homes have reduced in value though. As always buyer beware.

     

    If you mean reduction in the median price, it often means directly opposite. Prices grow, but people first of all snap cheaper properties. The more cheap ones sold, the lower is the median.

     

    Real reduction in value is rare. When public toilet is built at front of your house, or house damaged by termites for example.

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    So negative equity is a myth then?

     

    Technically it is achievable, especially if you have got a special talent.

     

    Say build $20m house somewhere near Broken Hill. You will be lucky to get $300K if you sell.

     

    In Adelaide happens more often than in any other capital. People spend just under half a million to buy "brand new" in the housing estates. Only to find out that they have got housing trust tenants next door. This is instant reduction of minimum 20% in value.

     

    Units are a sad story as usual. Developers can build number of high rises nearby and create an awful oversupply before you can blink.

     

    But for people in their right minds who buy houses (or land) in established areas "negative equity" is a myth, yes.

     

    In Adelaide there is an additional rule - "never buy anything that does not have water views".

     

    Price wise Adelaide is 7-8 years behind Sydney. If you do not buy rubbish, you can rest assured what your house(s) will be worth in near future.

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    But we have just been gouged with a 20 cent per litre price increase!

    I picked up my parents from the airport yesterday and they were surprised by the price...not too different since their last visit although the Dollar price of fuel has plummeted...too many taxes and it's a cash cow!

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    Christmas is still here.

     

    http://www.smh.com.au/business/markets/oil-extends-slide-into-sixth-session-as-hope-for-recovery-fades-20160111-gm3qfj.html

     

    It is worth asking ACCC why is that you pay more than a dollar for the petrol when price should have been in the region of 60 cents.

     

     

    Even more of Christmas.

     

    http://money.cnn.com/2016/01/16/investing/iran-sanctions-lift-oil/

     

    One million barrels a day added to the markets in an instant.

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    Paper tiger barks angrily:

     

    http://www.news.com.au/finance/markets/accc-chairman-rod-sims-has-slammed-petrol-companies-for-failing-to-pass-on-low-oil-prices-to-motorists/news-story/1bf6df2aac6ae0d0856ae54792d1b995

     

    Very scary paper teeth.

     

    What they can do when Lib Government is eager to cherish super profits of their multinational mates.

    It is safer to rip off vulnerable - old and ill people, especially disabled.

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