December 5, 2014 Leave a comment
Originally posted on Wall Street and Beyond:
When asked by a journalist what he most feared, British Prime Minister Harold MacMillan answered “Events, dear boy, Events!”
The same fear is palpable in the oil markets right now. Following weak manufacturing data out of China and Europe and a disappointing OPEC meeting, crude oil prices are down by over 25% in the past 3 months.
As is often the case in event-driven markets, stock movements have been quite violent. Oil majors have taken a beating, while oil services companies, with higher perceived leverage to the oil price, have been hit even harder. News flow has taken over from objective analysis, creating huge volatility across the sector. The current situation reminds me of a Benjamin Graham quote:
“the prices of common stocks are not carefully thought out computations but the resultants of a welter of human reactions. The stock market is a voting machine rather than a…
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