Actions speak louder than words July 2, 2008
Posted by mylastresort in analysis.Tags: commodities, investment, Oil, Short
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Based on my previous post Coming Soon: “A massive decline in oil” I would like to announce that oil prices are too high and that i have begun my endevour of shorting oil until the $99 mark.
—– UPDATE 21/07/08
I shorted Crude Oil @ $144.50 and covered @ $129.3 for a total profit of roughly 10.5%
(Prices are approximated since I was using an ETF for my trading strategy)
Coming soon: “A Massive decline in oil prices” June 29, 2008
Posted by mylastresort in analysis, sovereign funds.Tags: analysis, Crude Oil, Decline, Decline in Oil, Energy, Finance, Futures, investment, Low, Margin Requirements, Oil, Prediction, Record Level, speculation, Speculators
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An emergency meeting by OPEC, a decision to raise output, rumors of prices well above $170, and news agencies covering the latest developments of oil prices all the while I am thinking of shorting! The price of oil, I beleive, will continue crawling at a steady pace upward and it might reach the levels predicted by the big investment firms and generate another 20% in the next couple of months. Again yes, I want to short oil. I am not contradicting myself!
I could do as most have done and follow the trend and be satisfied with the 20% return. On the other hand, if the market price declines we could see well above a 40% decline in prices. A closer look at the price of oil shows a decline in the making. I will explain my thoughts in the following points:
First, lets dissect the price of oil. Today, if oil is trading at $140, 29% ($40.60) of the price is composed of actual physical oil receivers, the remaining 71% ($99.40) are speculators in the market purely betting to make profits and then rolling over their positions never receiving the oil traded.
Second, oil is traded on the futures market. To trade crude in the market all you need to pay is a margin requirement of $10,000 for every 1000 barrels of crude oil (worth $140,000). Oil is sold in lots of 1000 on the exchange. The margin requirements for the exchange may change (and do change) periodically depending on market volatility. (Crude oil futures margin requirements have changed from $8000/1000 lots to $10,000/1000 lots four weeks ago)
Third, all investment portfolios are diversified in such a way that percentages are dedicated to sectors regardless of the amounts of dollars invested. For instance a hedge fund manager (major players in the market) running a $1,000,000,000 portfolio beleives that oil prices will increase therefore designates 20% of his portfolio to oil futures and the remaining to different sectors. They purchase oil until they satisfy the requirements of the 20%. An initial payment of $200,000,000 is needed to purchase the 20,000 lots required. (Equivalent to buying $2,800,000,000 worth of oil!)
My prediction is that the margin requirements of crude oil futures will (drastically and without warning) increase from $10,000/1000 lots to $20,000/1000 lots (even more) forcing speculators to sell half their holdings to meet margin requirements and new funds to purchase half the amounts they are purchasing today, leading to a 50% drop in the 71% ($99.40) of the price of oil taking it back down to atleast $90.30 [price including physical buyers of oil] instantaneously!
Waiting for the decline will pay more than the rise will, therefore I am going to start selling at $155 (approximate & may change) and cover once the price reaches $90.30.
Kuwait’s future is (blank) June 18, 2008
Posted by mylastresort in analysis.Tags: analysis, Corruption, Crisis, Education, Environment, Future, investment, kuwait, Parliament, Police, politics, Security
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To those who said we have reached the bottom (and it cant get worse) I suggest we DONT wait and see who is right:
Politically incorrect policies implemented by the Parliament
One of the best examples is the politician who was accused of vote-buying in elections joins the committee on safe guarding public funds. The same parliament initiates a committee to overlook and enforce Kuwaiti customs and traditions (I have yet to meet a family who has the same customs and traditions as mine?)
Bureaucratic government policies
Government policies have proved so inefficient that a miniscule sector was created to fill the gaps. This small sector is run by friends, or acquaintances, of government sector employees who complete various tasks rapidly in return for a fixed sum.
(This example is borderline corruption/bureaucracy)
Corruption
Extreme cases of corruption exist on all levels and through every sector and industry. Instead of fighting corruption in the country, Kuwait actually managed to raise its annual corruption index ratings. Money and influence (via wasta) are major sources of facilitating the damaging nature of the country.
Investment Dar to Sell Cham Bank June 3, 2008
Posted by mylastresort in analysis.Tags: banking, Central Bank, Cham Bank, Commercial Bank of Kuwait, investment, Investment Dar, Syria
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As previously reported as a rumor but now confirmed, Investment Dar has agreed with Commercial Bank of Kuwait (CBK) to sell its 12.5% stake in Syrian lender Cham Bank for $7 million. The deal was done but still pending approval by the Central Banks of Kuwait and Syria.
Interesting Notes from previous posts:
- In the previous unsourced statement Dar Investment was was said to gain KD 2 million on the sale
- Commercial bank of Kuwait showed intent of raising its stake in Cham bank to 30% from 10%
- CBK has raised its stake to 27%, this year, buy purchasing shares from Syrian & Kuwaiti investors
Oman index at record highs June 2, 2008
Posted by mylastresort in analysis.Tags: Amwal Investment, Gulf, investment, oman, Omani Index, Ominvest, Record, Shantonu Roy, Shell Oman Marketing, Stocks
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“There are reports in local newspapers that Voltamp’s IPO is oversubscribed six times”– Shantonu Roy, Amwal Investment
Oil and Wheat fall victim to investors greed May 27, 2008
Posted by mylastresort in analysis, sovereign funds.Tags: commodities, economy, Greed, investment, Managing Member, Masters Capital Management, Michael Masters, Portfolio Manager, Senate
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In a rare move, a portfolio manager, Michael Masters approached the senate last week to prove that the main contributing factor(s) of the sharp rise in global commodities (eg. oil, wheat, corn, etc…) was caused by institutional investors greedily entering the market.
I am speaking with you today as a concerned citizen whose professional background has given me insight into a situation that I believe is negatively affecting the U.S. economy. While some in my profession might be disappointed that I am presenting this testimony to Congress, I feel that it is the right thing to do.
– Michael Masters, Managing Member/Portfolio Manager, Masters Capital Management
The claims that Michael is trying to prove is that their is ample supply of all commodities in the market, even over-supply (proven to be true), and he claims that the expensive prices are solely caused by greedy investors seeking greater riches on behalf of civilians basic necessities.
In this testimony I will explain that Institutional Investors are one of, if not the primary, factors affecting commodities prices today.
Basically he is accusing investors of being greedy, duh. You don’t need to approach the senate to claim that investors raised prices (or else why would they invest?). It is a phase, among many others, that investors enter into:
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In the late 90’s it was the technology boom and bust of silicon valley.
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Early in the millennium was the real estate sector and the abuse of leveraged capital (derivatives).
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Today, it is the commodity sector.
It will take another few months or possibly a year for investors to realize they are buying into a market that is over-supplied (physically), over-priced, with physical demand for products being constant. Then the decline in prices will occur, and investors will seek a new market to strip riches from. That’s the cycle, any law implemented will result in a loop-hole and greater emphasis by more investors on the sector.
Fitch rating on Saudi banking sector May 20, 2008
Posted by mylastresort in analysis, saudi arabia.Tags: banking, Fitch, investment, Outlook, Saudi, saudi arabia, Sector
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Fitch ratings has just released a special report detailing the Saudi banking sector outlook in 2008. It states that the Saudi banking boom briefly stalled in 2007 due to lower sector profitability. Future outlook for the sector remains promising due to expanding private sector credit volumes and sustainable revenue growth.
Some interesting facts:
- Economic risk remains moderate
- Rising inflation could have negative implications on consumer spending, private sector investment, asset growth, loan repayments
- Sector challenges include the Saudi Arabian Monetary Agency’s restrictions on consumer loans and the increasing competition from foreign entrants
- Saudi banks are delaying new debt issues, this has not caused any funding pressure
- Higher cost of funding and pressure on margins are major concerns
Charts & Numbers 
