They were certainly right last year, when CL went -$38 settlement price. Energy is NOT a safe way to make 1% per year.
Safest way to make 1% per month
- Thread starter tonyf
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They were certainly right last year, when CL went -$38 settlement price. Energy is NOT a safe way to make 1% per year.
It's irrelevant I'd they are or aren't, the asset class is going to continue be one of the most volatile around as it has been for decades and therefore the opposite of a "safe" investment per the OP.
IEC
A quick recap after 8 pages of back and forth - here are the 2 top ideas as of now:
1) Multiple residential units to hedge tenancy risk, LTV of 65%, periphery (out of CBD) and out of favour (requiring work). A combination of location selection and asset improvement.
2) Discount arbitrage (as called by Dest.) or buying options just before expiry and hedging the underlying to skim the premia net of delta. Transaction cost is key here but I have briefly looked into it and it works for the right underlying.
Both are work intensive but that's OK, he said safest and not laziest.
1) Multiple residential units to hedge tenancy risk, LTV of 65%, periphery (out of CBD) and out of favour (requiring work). A combination of location selection and asset improvement.
2) Discount arbitrage (as called by Dest.) or buying options just before expiry and hedging the underlying to skim the premia net of delta. Transaction cost is key here but I have briefly looked into it and it works for the right underlying.
Both are work intensive but that's OK, he said safest and not laziest.
Let me please clarify that ALL investments require some basic appreciation of facts of investing.
One those facts is that markets are Pendular (a term meaning "moving or swinging back and forth in a regular rhythm like a pendulum").
In this regard, revert to the mean is also a common term. If you are unfamiliar with that, google it.
See 40 year crude Oil chart below, shown as the Quarterly MACD.
That is a pretty decent example of pendular, maybe a textbook example?
Although some markets may be eclipsed in their pendular motion with unforeseen technologies (e.g. buggy whips to cars),
the example I proposed (AGs) would seem immune to such a technology breakthrough.
Has Elon Musk proposed an alternative to wheat? to corn? to soybeans? to sugar?
Additionally the large farming machines that are in production these days in agriculture have fuel tanks that hold ~ 400 gallons.
That one day's consumption of diesel.
Every day.
Seems unlikely those machines will ever become "electric vehicles", not in our lifetimes.
I might be wrong about investing in AGs, but it will not be from a lack of facts.
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Is it realistic to find enough of these arbitrage opportunities for 1M portfolio every month? Just curious.
Thank you for that education of basic facts of investing, thank goodness you opened my eyes to such wonders I was heretofore unaware of!
No let's talk about education in basic word definition, like "safe" for example, or "1% per month" as another example.....just to actually answer the OP instead of making up our own question and answer. It's very unclear how something that cycles around a mean could also return 1% growth per month? A pendulum's midpoint doesn't get higher and higher with every swing. If you just want to return to the point you started at, invest in treasuries.
Which is where we get to the "safe" part. If you invest in a volatile asset, like oil, then you have to commit to staying fully invest through the entire "cycle". If you had invested in oil in 2008, then you would still not have reached that pendulum swing back to even breaking even, let alone making 1% per month. How much longer will those 2008 folks have to wait? Even if it's only 2 month, that's a 12 year period and our OP asked for 10. If you'd invested in treasuries in 2008 you'd at least be even with inflation and ahead in pure dollar terms. If you had bet on your "pendular" in 2008, you probably wouldn't be giving this lecture today.
I am sorry for any confusion. Possibly, some or many here do not follow any TA signals, or MACD signals in particular.
The MACD chart of Oil that I posted has a huge "left hand crossover" in Oct 2008 (red "signal line" crosses above the black "MACD line" - a sell signal), followed by a right hand crossover (buy signal) Oct 2017 and again January of this year.
The "right hand crossover" (goes above zero) has yet to happen.
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Important to also clarify, reason for following energy prices is that AG is heavily dependent on it.
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Again, you're missing the entire concept of the word "safe" and "1% per month" and confusing it with "a good trading idea for me". Something can be a great trading thesis and not be at all "safe" or deliver anything close to "1% per month". Oil is one of those things.
"Safe" ??
Old hackneyed phrase: "The only things we know for sure are death and taxes"
Investing means risk.
Much more risk than wages.
That's the whole justification for preferential tax treatment on capital gains.
or ...
"It is not worth an intelligent man's time to be in the majority. By definition, there are already enough people to do that."
G.H. Hardy (1877-1947 British mathematician)
Old hackneyed phrase: "The only things we know for sure are death and taxes"
Investing means risk.
Much more risk than wages.
That's the whole justification for preferential tax treatment on capital gains.
or ...
"It is not worth an intelligent man's time to be in the majority. By definition, there are already enough people to do that."
G.H. Hardy (1877-1947 British mathematician)
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