Back in May, I discussed the oil bubble. I stated that, although increased demand (or its forecast) was the impetus for the rise of oil prices, speculators and dollar hedgers were pushing the price ever higher. Defenders of high oil prices (those with the most to gain from higher oil prices) stated that it was all demand driven. Anyone who has been in trading circles as long as I have (20 years) knows a bubble when they see it.
The reason bubbles happen are due to fear greed and trader turnover on Wall Street which results in a new crop of decision makers every five years or so. These new experts have never seen a bubble before and can't recognize the one they are in until it bursts.
I am most disappointed with Wall Street strategists. Again, many are in their early 30s and have not been through a bubble and could not grasp the reality that prices were driven higher by eager investors looking to capitalize on the oil run.
Unfortunately in this elitist society (mutual fund wholesaler jobs now require MBAs and CFAs) those of use without advanced degrees are ignored for not being qualified in spite of our many years of trading experience. Read Newt Gingrich's editorial in today's WSJ.
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