Joseph Dancy's Contributions

Overall it appears that 2013 will be another year of attractive market dynamics for companies and investors, with Brent crude oil prices averaging over $100 a barrel and domestic supply continuing to ramp upward...

The technological revolution on Wall Street has enabled superfast computers and networks to execute high frequency trading (HFT) strategies. Estimates are that 65 to 70 percent of market volume is now attributable to high frequency traders, with the average holding period 22 seconds.

Over the last five years natural gas production in the U.S. has increased by roughly 20% as the impact of horizontal drilling, hydraulic fracturing, and robust exploration efforts have led to what some have referred to as a ‘glut’ of natural gas.

Over the last decade there has been a very close correlation between the price of crude oil and the price of food – both are in long term uptrends due to increasing global demand. Western agricultural practices require around 10 calories of oil or natural gas to produce one calorie of food according to studies.

Researchers at the New England Complex Systems Institute (CSI) studied periods of social unrest in the Middle East and North Africa to attempt to explain the underlying causes of the riots that swept these areas in 2008 and 2011.

Rubin makes an excellent argument that demand for crude oil and energy in general continues to expand with China’s, India’s and Asia's rapid economic growth.

Even amid a rising stock market individual investors in the U.S. continued to pull money out of equity mutual funds in July, handing those funds their 15th consecutive monthly net outflow.

Developments in the energy sector last month remain positive in our opinion – especially for domestic crude oil producers.

While oil prices have declined over the last several months to roughly $98 a barrel for Brent grade crude oil. Bloomberg notes that the median estimate for the third quarter of 32 analysts it tracks for Brent crude is $114.50 a barrel.

The ongoing “Arab Spring” in the energy-rich Middle East has been fueled by rising food prices and economic stagnation – two factors that continue to play a major part in political developments in that part of the world.

Last month Atlantic writer Derek Thompson shared some interesting data on how much the American economy has prospered over the last century. Using Census Bureau data, Thompson showed how the percentage of income an average American household spends on various goods.

The 200 day moving average price for Brent crude oil set a record last month as concerns about global crude oil supply and demand continue to grow (see chart, courtesy of the Economist).

Those interested in market history have reviewed the years where the markets have performed the best and found several factors are usually present. Generally, the consistent themes are that (1) credit conditions are easing, (2) corporate profits are rebounding, and (3) excess pessimism moderates or inexplicably gives way to optimism. The very best performance occurs when stock prices are depressed and when the credit easing is sudden and unexpected. The current conditions certainly have a bullish cast, meeting most if not all of these criteria.

Measured by the percentage of large-cap stocks that have risen or fallen in sync with the S&P 500 index the correlation of individual stocks to the index itself reached record levels last month - 85 percent of the movement of stock prices was statistically explained by the movement of the S&P 500 index.

Max Gunther’s The Zurich Axioms defines twelve fundmental axioms for investors to manage risk. The goal of the Axioms is to maximize personal wealth, return on investment, and personal satisfaction. Most people don't obtain wealth from low-risk savings strategies. Those individuals who are financially successful have generated their wealth through investment in real estate, stocks, or some other type of enterprise where risk played a major element in the investment decision making process.

Bloomberg radio featured an energy expert late this week who claimed the ‘world was awash in oil’ and prices were being manipulated upward by ‘Wall Street speculators’. We are not sure what data he is looking at, but global inventories and demand/supply metrics point to a tight crude oil market in our opinion.