Ok, so aside from the fact that something very good happened at work today that I can't talk about, the market did pretty well for itself too. It's about time too. When things looked bad last week I started thinking, "The Dow will probably dip below 11,000, stay there for a couple of days, and then slowly start to go back up." Well I don't know if you noticed, but that's EXACTLY what happened. Ok, so I might not be a great financial expert, but lets look at the facts and see why this is happening and where things should be going.
The price of oil is down to about $134 per barrel. High, but significantly off it's most expensive point. A new gas station opened on my way to work about a two weeks ago they started selling gas at $4.10 for regular only to LOWER, that’s right LOWER it to $3.98. I know I said before that prices wouldn't go down until the supply exceeded the demand and that, that day was a long way off. Now I'm starting think I may have been a little off. I think the demand in the past 6 or 7 months was thought to be higher than it really was. Steal prices have increased in the last 6-7 months also 100% and that actually helps the US because it brings so much money to US business from foreign firms, but now those prices have started to level off. So I believe that yes, there was huge jump in global demand of oil and commodities towards the end of 2007, but the problem came when people expected that trend to continue much longer than it really did. Now the demand isn't decreasing, but tapering off and the current supplies suddenly seem to be enough to meet the demand. (I talk a lot about supply and demand don't I?) But as oil futures look to be coming down, they have left a trail of destruction behind it. But it may not be all 
that bad.
The fed is getting ready to raise rates, which although may put a strain on some thing's in the short run, it makes the dollar stronger. And there's been talk about Fannie May and the mortgage crisis and a possible bail out by the government. Well the truth is, Fannie May has more money then is required to have by US law and although they have been losing money, who hasn't? When the market is down and the dollar is weak, people lose money. Big business loses a lot of money. But they're not going bankrupt and banks are not going to fail at horrendous rates as some people are talking about.
I think today, after the 276+ point gain on the Dow, people went "Oh hey, it's not that bad." So if I had money, I would buy buy buy! But I don't have money because the markets have sucked for the past few months! But you know what, some people still do have money and if they have a clue about what's going on, they'll start to buy.
I know this seems like a very crude and simple opinion on a very large and complex issue, but for arguments sake, it makes the point. Google what I said and you'll find out I'm not making anything up, but it's past 5:00 and I want to go home.
No comments:
Post a Comment