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Friday, February 15, 2008

Speculation benefits the Economy

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $683.49
Online Savings Balance: $2.06

Ok. I've heard enough. On the news, on speeches, everywhere you turn, High Oil Prices are the fault of the speculator.


I discuss this further here.

And while a small amount of inflationary pressure is built into speculating? That inflationary pressure tends to occur at the peaks, which means the prices will come back to a rational area given the supply situation. The markets are efficient.

The end story here? Don't blame the speculator, because the SUPPLY situation is out of whack. The speculator is just trying to find the rational, fair price given that supply situation. We have all gotten ourselves into this mess with Oil and our dependency on it. Without Oil, civilization stops. It's in our clothes, computers, walls, paint, everything. It's not just about the price we pay at the pump. We are the consumer, and we have driven the problem. It is not as simplistic as blaming the very people who are trying to find a rational price.

And it's funny. When you hear people blame speculators? They never describe the process of speculation. Those people will never discuss those who SHORT Oil (Looking for a profit from falling prices). No. They just try to paint a picture of profiteers. Since our society is very pathetic when it comes to economic education? People fall for it.

But it is a false concept.

EDIT: ALSO, Challenge Accounts - Just placed an order to buy one March expiration ESH8 Put at 1.50 Limit on the 1100 Put on a Day Order. I'll see if I get a fill. Total risk is around $70.00.

EDIT: Further. Just filled on a March expiration ESH8 Put at 1.50. Now long one Put option on the E-Mini S&P 500. Very short term trade.

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $683.49
Online Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

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