Tuesday, September 16, 2008

Oil Pirce and Nasdaq

Perspectives Research Magazine. 3rd quarter 2008. Article by Jacob Schochli.
Interesting corollary showing the similarity between oil price and the Nasdaq index in the 1990's. Will oil price follow the same path of the tech bubble burst? It seems to be heading in that direction.


pendolino said...

i think they may be trying too hard to find parallels. for one if you look at the time scale (x-axis) it seems to indicate we are not looking at comparable time series. this would make it much clearer if we compared five years to five years, etc. got the details?

the other, more relevant point, is that oil is a finite resource and NASDAQ tech stars could be minted endlessly with new money that can be printed endlessly. until we have alternatives for all and until the world stops growing, the long term trend for oil prices is up.

and please keep in mind that i am fallible and also that the long term should be considered to be at least ten years and even more in commodity cycles so it is plausible to see a steep pullback before the trend continues.

finally, it is not good for the psychology of the region to be dependent on high oil prices forever so reality checks are always prudent.

Bu Ziyad said...

pendolino: even though the comparison might not have proper basis as you mention, it is a worthwhile reminder of what goes up could come down even more drastically.