"CRUDE" oil, an absolute must see program !!!

[Meanz Beanz]

In my view housing is in for a big adjustment, again its the debt levels that will fuel it albeit a slower moving market than stocks. There is already significant signs of stress out there, add higher fuel, food and money costs and it will take its toll. Basically we are to far from the historical ratios, housing is up to 8x average income, 3x being more normal. On top of that rental yields are low, but I guess improving. Anyway wages will have to rise to cover higher rent OR prices will have to fall in nominal terms until we get back close to the time honoured ratios. In reality it will probably be some combination of this but both are a devaluation in real terms, basically I believe there are better things to own for investment purposes. If you want land, its my opinion that productive farm land will be the thing to have.

Consider this, real estate is the baby boomers investment of choice and they are leveraged into it. The boomers as a generation start to retire this year so they will be looking to cover exposure to debt, selling down a bit consolidating etc. Making sure that income covers debt with a safety margin as they move into a more conservative retirement mode. Things are getting tougher, as they do the boomers collectively will have to sell more in order to keep head above water. Basically there is a lot of supply to come to market if the pressure is turned up. Now look at the following generations, they don't have the wealth that the boomers have and have a very different attitude to debt and housing. They are more mobile, live more for today (borrow & spend on fun... deposit? what deposit?) and as you get younger they are less willing to be slaves to mortgages. Add to that the boomers are 25% of the population and closer to 33% of the working population, the follow up generations are smaller even if you discount their financial status. So just the basic demographics tell you that what ever the boomers like is a sell at the moment.

Once this debt situation is resolved RE will come good but other things will do better across that period. We are looking at inflation, capital I. That means that non debt based tangible assets will have a distinct advantage, did I hear, "oh yeah commodity boom!" in the background? These cycles run 18 to 20 years but I think this one will be longer. Either way it kicked off in 1998 so we are ten years in. It might take a serious break soonish with Asia recession fears but the tidal wave of money being chucked at the scene will make sure its a shortish break in the scheme of things. I reckon by the end of this you will see ETF's on everything tangible being traded like stocks where in the 90's. The financial industry will be spruking copper this, coal that, zinc this... you get the picture. When that happens start planning your exit strategy because by then things will be getting silly and the banks will be making big dividend sense again.

Anyway beyond owning a house that meets ones basic needs I am very cautious on residential real estate at the moment. For that matter I don't own a house at the moment but plan to buy some time in the next couple of years.

In a way I hope that is a bad call, it will mean way to much social distress but hey no one forced people to loan to the eye teeth in a competitive house buying frenzy. Some of us just walked away shaking their heads when ACA started housing stories and reality T.V went to town on the whole thing.

All JMO and DYODD... not licenced to give financial advice and all the rest but you asked.

Buderim with a view does sound nice

[masalai]

Both will be on the market some time - own both... Mc Mansion will go within a year for Au$750k? - - Any takers?

[the1much]

i could live without oil,,,but then i'd start smellin like frosty looks ,,,and it may keep my wife away,,,,,what a life
the only reason oil hit 100 bucks a barrel was because some freak millionaire wanted to be the first person in history to pay $100,,,,,,their (gov.) is looking into pressing some stupid "traders" law crap.,,hehehe,,then everyone hit the band wagon and it never recovered,,,,,man i should of invested in "shares" not freakin equipment.

[the1much]

and wind turbine is begining to be a big biz. here,,,in fact, they generate more electric then the transmission lines can handle,,,and a company just leased a BUNCH of "land,,,,water,,? heh) of the east coast to put a few thousand out in the middle of the big blue for drunk sailors to hit hehe

[masalai]

Depends which oil, Coconut oil used to be the base for premium aromatic soaps (because, in pure form does not smell, & of its capacity to hold perfume) Richard Branson even used Coconut oil to fuel one of the engines on a jet plane

[Meanz Beanz]

A prudy smelling jet plane, what a wonderful thing and it didn't even flame out.

[masalai]

Gives a strange meaning to "Mile High Club" no grass up there but sure smells sweet...

[the1much]

why drink and drive when ya can smoke and fly ; )-~~~

[Meanz Beanz]

Oil closed @ 102.59 today and the futures market is in "backwardation" (now that's a word worthy of a US politician) and has been for a while now. Basically backwardation means that people will pay a higher price for near dated contracts, contango is the norm and the opposite. Backwardation is a good indication of supply shortage which runs against what we are being told. All the while OPEC are talking about CUTING production. The cynic in me wonders if they simply can't pump anymore so politically the logical thing to do is construct a positive spin for a cut.

Attached is an oil chart in Aussie dollars, as you can see the price is falling a little for us at the moment and $102 oil is to do with the US dollar falling out of bed as much as it is tight supply. When oil starts to run from these levels against the Aussie, Swissie and the Loonie then we start to really worry.

Apologies for being serious and doubly so for posting a chart on a boat site but its worth it if a few of you go find out more about peak oil.

[Meanz Beanz]

Had curry last night, don't smell purdy but I reckon I could run one of them wind turdbines, prolly over load my grid. Now that's India's power needs taken care of and there seems to be plenty of political hot air available in the US so what to do with China?

[masalai]

Impregnate their fuel (coal, diesel & petrol) with the active ingredients of marijuana and they would all be happy & laughing....

[Meanz Beanz]

A gazillion peeps wid da munchies Would make a locust plague look like a church picnic. They'd use all the rest of the oil in one day just frying chips!

Hmmmmmm... M I think you better rethink that one... I mean what if they got horny?

[masalai]

OK, I do not know drugs, You pick the chemical?

[Petros]

Coconut oil...seems to me if we switch to a sweet smelling coconut oil economy we would use up the world supply in perhaps a few days. I do not think there is any future there. there is not enough land to grow enough coconuts to supply our needs. Then what? Try again with something else? lets just stick with crude oil, there is perhaps 700 years worth of known and estimated supply. There is about 100 years worth of known reserves, why hurry to consume all the coconuts in our cars and airplanes?

[the1much]

hmmmmmm,,,,,hungry, high women,....hmmmmmm,,,, sounds like my kind of woman, swallow anything that gets past their lips heh