VitalAccurateThinking

Terrorism Trumps Corrosion

In an email forum I participate in from time to time, a poster asserted the following late on Sunday night (8/6/06) in response to the BP pipeline story:

Y'all: if I understand this correctly, go fill up your gas tank right away -- your last
time under $ 3.00 / gallon? ever?

Of course, oil spiked up $2.27 on the news. Oil then declined $0.77 over the next two days.

Today, the Brits broke a terrorism ring.

LONDON - British police said Thursday they thwarted a terrorist plot, possibly just days away, to blow up U.S.-bound jetliners over the Atlantic and kill thousands. Chilling accounts leaked by investigators described a plan on the scale of Sept. 11 that would use liquid explosives concealed as everyday carry-on items and common electronic devices to bring down 10 planes in a nearly simultaneous strike.

This resulted in oil prices falling after the thwarted attacks

Crude oil prices fell more than $2 a barrel Thursday as thwarted airplane attacks led many carriers to cancel flights, which could mean dampened jet fuel demand and weaker consumer confidence.

So, a spike of $1.5 on the BP news is then trumped by a $2.28 dip as a result of thwarted terrorism.

Here is a chart.


And you know what it all means?

Absolutely nothing!!


All of this is just meaningless movements and the herd mentality that the media attempts to explain. Good news is bad news and bad news is good news. And the traders just laugh all the way to the bank. If you follow or believe the daily stories attempting to explain the daily movement of the market (any market), then you fall victim to the herd mentality. There is no easier way to become broke if you then trade based on fear or joviality.

That is my market rant for the day.

posted by Jim VAT @ 11:58 AM