Why Politicians Never Say Things That Have A Positive Impact On The Markets

The G8 is meeting in Japan and the Japanese trade minister warns of a recession based on the oil price. (Source Bloomberg)

What happens then? Of course, the markets go down. The oil price climbs and will also climb more and more over the next days due to the impact of the politician's thoughts and their need for publicity. This is not good for the markets at all.

However, this does not affect my thoughts about the oil price and its future development. It even encourages me in my thoughts about that. The markets are going crazy about oil. Nearly every single trader will tell you these days: "The price is going up - you need to have it!".

That is exactly what you should not do!

As far as the history books are telling us, politician's statements about markets and market prices never ever had the impact they thought it might have. "It always turns out different than expected" a very good old investor said some time ago. Even though most people don't want to believe that, but it is true: the price might climb some more days - and that's it.

The day all pessimists turn into optimists is "the beginning of the end". In this case: the beginning of falling oil prices and the beginning of rising option prices for me :)

Why you should go short in Oil - I do!

Well, most people right now believe the oil price will climb more and more in the next months and years. Even though it seems not to be supported by any fundamental data. Supply and demand are well balanced right now but we see it goes more and more to the state that there is more supply than demand on oil. This is technically not a good base of facts for investing into oil.

Furthermore, we have seen a huge climb on oil over the past years which even accelerated the past months. Below is a 10 year chart of the Brent Crude Oil price indication in Euro.


It is being said: "When the last pessimist becomes an optimist you should go out of your long positions!"

I still see some comments of - so called - experts who tell us this price is too high and it will go down. So there are still some pessimistic views on the oil price which means the rally might not be over yet. However, those people are getting less and less every week. This actually leads us to the conclusion that rally is getting to its end. Perhaps sooner than later!

Fortunately, I don't have any positions in oil at the moment so nothing can go wrong for me. But I would not be me if I would not consider to take advantage of the current situation by earning some money. So to be honest: I am planning to go short in oil and get some puts on this.

13 Steps Plan to Make Money with OIL

1. Be prepared that the oil price crash will not happen tomorrow or next months.
2. Find a good OIL PUT Option with a longer runtime (at least 4 or 5 years).
3. Reserve a bunch of money for this investment.
4. Make yourself clear that you might loose all of it.
   
5. Split it into 3 equal parts
1. 1/3 for an initial investment
2. 1/3 for a second investment (in case it is needed)
3. 1/3 for a third investment (in case it is needed)
6. Buy the oil put of your choice for 1/3 of your investment money, NOW!
   
7. In case the oil price is climbing more, use the second 1/3 of the money to get more puts as the price for the put will fall when the oil price climbs.
   
8. Repeat the previous point if needed.
9. Patience is your Friend: Be patient and don't get nervous.
   
10. The oil price will crash. Sooner or later.
11. Your put's price will rocket boost through the ceiling.
12. Sell your put when the oil price fell under €70 ($110).
13. Have a nice party with your friends. They might have lost the money you just made.
    

Always remember: 9 out of 10 people playing (I say playing because it is playing) with options loose their money.

Market Thoughts from a Ubiquitous Mind for Profitable Investment

What will this blog be about?

This blog is meant to be the freeway of Jack's thoughts to the world. He will publish his thoughts on the global economy and current trends which take influence on his investment thoughts. You can use these thoughts for your investment choices if you want, but Jack cannot give any guarantee on this - of course :)

Who is the hack is the author? More importantly: What he thinks he might know about investing?

Jack started investing in the stock market many years ago. He lost a lot of money already but he didn't stop investing and therefor, he also made some money over there. Over the past years his investing strategy turned into a strategy which can be summarized in: Don't doing what everyone does - and make money with that.


In case you are interested in getting Jack's thoughts with an ease to your feed reader, please feel free to subscribe to this site's feed: http://feeds.feedburner.com/MarketThoughtsForProfitableInvestment