Discussion: Stocks Plunge As Price Of Oil Continues To Fall

Discussion for article #244906

Interesting how what affects the investment class is in headlines, and has everyone’s attention as oil prices affect stocks, RIAs, state budgets in oil producing states, but when the crisis affects the non-investment class—hunger, toxic water supplies, housing shortages, etc., you’d have to hunt for those stories. they’d be features, maybe in the Sunday editions, at most. And, it’s the same thing, really—what affects any sector, affects us all, but if you are able to hide something from your view, well, then.


The Wall Street Casino Whales are taking a bath because of this. As intended.
The big banks are especially hung out to dry with their commodities desks getting hammered and so are the big Sovereign Funds, all of which are heavily leveraged in Oil futures.
You live by the Sword, you die by the Sword.

It’s not just the whales taking a bath on this. As Krugman pointed out in his blog only (I think) last week, while oil prices dropping is initially stimulative, beyond a certain point, it gets contractionary as hell, because of the way it more or less shuts down investment/demand on the part of both highly-leveraged smaller exploratory companies and oil-dependent governments like Saudi Arabia. That, in turn, kicks other stocks in the balls, and as this story indicates, leaves the entire stock market slumping.

And while yes, the individual brokers may be tearing their hair out, the way the system’s set up so that stocks losing money doesn’t necessarily cost the big banks money - people pulling their investments does. As was so eloquently explained in the seminal economic thesis penned by Harris-Weingrod, Trading Places, “Y’all are bookies.” And absent extremely unsual circumstances, the bookies never lose money.

Shedding a tear for the oil companies is right up there with ‘thinking Donald Trump is a decent human being’ on my list of ‘Things I will never do’, but the whales are whales for a reason. They’re not gonna take a real hit on this. The real hit comes in the form of seniors who played by the rules their whole lives, invested carefully, and are using those investments to suppliment where Social Security just wouldn’t be enough. I’m watching my 72 year old mother really verging on panic over this stuff - especially since my dad died last year, so there’s no second pension/SS to sock away for emergencies. And given that her father lived to 94… she’s got a not-unreasonable expectation of needing to survive on that money for a while.


Considering that the price of oil has been steadily dropping it is a good thing that Oil companies were not permitted to “drill baby drill” as they intended. So, where are the Oil industry puppets of the GOP that proposed an even greater glut of oil activity? Oops.
Airlines are still charging exorbitant prices even though their cost for fuel acquisition must have come down tremendously.
And the government still gives subsidies to Big Oil even they are filthy rich on their own.
Wait, I know… let’s get rid of food stamps and Planned Parenthood. Let’s deport more immigrants, raise prices on medications, have everybody buy a few guns… and stop those economy-killing same sex marriages. That’ll fix things.


Ouch. Sadly, there’s not a thing anyone can do about it but watch. Personally, if this is about oil and the banking sector, I could give a shit. CEOs for those companies will still make bank, so really who cares? Maybe we can transition to renewables even more so now that the bottom is falling out of the fossil fuel industry. Unfortunately, my retirement account will barely get me over the old age threshold as it stands. All the explanations in the world for what is happening in the markets are suspect as far as I’m concerned, especially when it comes to Wall Street and their profiteers. Its hasn’t benefitted the average Joe who invests in the market for a long time now anyway. It all about corporate profit that always goes to the top executives…so why should I start giving a shit now?


…alot of cheap oil out there…just in time to gas up those tanks, airplanes, and warships for the BIG ONE!

As a mid 50s guy that has some investments but that doesn’t pay a lot of attention to the day in and day out and figure I’ll shift things to more stable investments when I get closer to say 60, it’s interesting to see all the clamour amongst my 20-30 year old colleagues that seem worried about this shit. Or am I the one missing something?

So when will the price of gasoline drop below a dollar a gallon?..That’s what I thought.

The last time the too big to fail crowd took a bath it cost us BIG time as taxpayers. The big banks are bigger and they have not changed their way of doing business so…we are in for the definition of insanity. Hold on!

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Then again. They are talking a 1.5-2% drop in the Dow (which is still way up for the year of 2015.)
That is a “correction” not a panic.
in 2008 we saw a 18% drop in one week. THAT is a panic.

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In 2008 I had my 401K diversified in every fund my employer offered – and they all went down together. A plot of all the funds looked like Niagara Falls; the only difference between funds was which day they dropped. I don’t know that there are any “more stable investments”. There was a time utility stocks were refered to as stocks for widows and orphans, they produced moderate returns year after year; but I think every “widows and orphans” stock was bought by some high-flyer, leveraged to the hilt and diversified into related high risk/high return activities. And no return on simple savings instruments like CDs. So, no place safe.

I’ve always in my mind wondered if when I hit 60 if I can like buy stock in Social Security? If not that I’m thinking more basically find something more like bonds with lower returns but more or less a guaranteed return.