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Best of the Exchange: Shorting Crude, ETFs, and Entrepreneurs


Minyans make sense of the moves in oil.


With the launch of The Exchange, Minyans now have a forum in which to express their viewpoints, comment on articles and meet other like-minded financial souls. Minyanville publishes "A Best of the Exchange" each Friday to highlight the many insightful posts and discussions going on behind the scenes.

Become part of The Exchange and let your voice be heard!

(Editor's Note: Some of the following posts may have been modified slightly from their original form.)

Toddo discussed playing the short side in crude in Oil of Oy Vey, and Minyans were happy to jump in and add their own perspective on the unusual moves.

Minyan John
: Another good risk-adjusted position (if you see the same tea leaves as I do) may be long GLD/GDX and short USO/XLE.

Minyan Neal: We all know that these prices are ultimately crippling and therefore we will force it back down eventually, and while the perception of international tension may have escalated, we certainly have had quantitavely similar news from the Mid East over the last five years. What is different in the analysis at crude 129 than there was at crude 109?

Minyan Dean: The Saudis know they don't have infinite barrels under their sand. Why would they not choose to sell as many barrels as possible at $125 vice $100?

Minyan Peter discussed how securitized debt and commodities now pose global risks in his What the ETF?

Minyan David:
Thank you for a clearly written and persuasive article. I see your point, in as much as the ETF owns the physical asset, a la GLD. Does it make a difference if the ETF/ETN owns futures on the commodity, as opposed to the physical, or does the same argument pertain, and with the same force?

Minyan Ben: Okay, what you say is true; however, that would mean that you have full faith and confidence in the U.S. Dollar! Through my eyes, gold does not intrinsically change value, only what it is measured against (does)... in this case, USD.

Minyan Eddie: You hit on a really important point here. I believe there's a lot of naive investors out there not paying attention to the potential downside in these products because they don't understand the true nature of an ETF (an accessible, highly liquid mutual fund fully subject to the whims of market timers and nervous nellies). Due to the influx of cash, many ETFs are selling at significant premiums to their intrinsic value, which multiplies the effects of rapid devaluation when investors pull out.

Prof. Depew laid out the case for the Coming Decade of the Entrepreneur in his Five Things.

Minyan Rick:
Excellent point, Kevin. I worked for a couple of decades in the corporate world and was constantly frustrated by the idiocy of "the system". The lunatics were running the asylum. I bailed out in 1999 and have been working for myself ever since. I couldn't be happier.

Minyan Thomas: As a GenXer myself, there's nothing like watching your parents get kicked to the curb by big companies and entering the workforce during the early 1990s recession to instill that special attitude of 'ironic detachment' towards your work life.

Minyan George: How would we "...shift the balance of power back to the Entrepreneur from the large corporation"? Make it illegal for War-Mart, HD, McDonalds, etc. to charge less for their goods than the competing, "entrepreneur" Mom-and-Pop store down the street?

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No positions in stocks mentioned.

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