WSJ blogger’s predictions for ’09
Evan Newmark sticks his neck out at Mean Street with 9 predictions of what’ll come to pass next year. At least one is relevant for Caterpillar watchers:
Prediction No. 7: Oil will trade at around $30 a barrel for most of 2009
OPEC isn’t happy with $30 oil. But it will be even more unhappy if Obama goes ahead with all his nutty antifossil-fuel schemes. So OPEC will keep oil prices low until America is lulled into again thinking that $1.50 gas will last forever. That should take about a year. Oil will close 2009 back at $50 a barrel.
Well, I guess this one would be good for all of us if came to pass:
Prediction No. 9: The S&P 500 will close 2009 at 1200, up 30%
In this weekend’s Barron’s magazine (also published by Dow Jones), 11 of 12 “savvy” Wall Street strategists targeted the S&P to close 2009 somewhere between 975 and 1100. The consensus is nearly always wrong. By late summer, third quarter earnings will turn up, investor greed will replace resignation and a late year rally will take the S&P to 1200.
I’d rather not consider how bloody it has to get to trigger a 30 percent rally.
The Market is still headed downwards. Purchasing puts without owning shares of the underlying stock is a purely directional strategy used for bearish speculation. The primary motivation of this investor is to realize financial reward from a decrease in price of the underlying security. This investor is generally more interested in the dollar amount of his initial investment and the leveraged financial reward that long puts can offer than in the number of contracts purchased.
Experience and precision are key in selecting the right option (expiration and/or strike price) for the most profitable result. In general, the more out-of-the-money the put purchased is the more bearish the strategy, as bigger decreases in the underlying stock price are required for the option to reach the break-even point. Alexander Shlepakov
Permalink | Posted January 16th, 2009, at 7:38 am