# My Journey To Financial Independence



## Ariyahn2011 (19 December 2014)

Firstly, I hope you guys dont mind me sharing my investment journey with you. I saw some others doing it and I thought its a nice way to share personal experience and also welcome other opinions and cautions.

*Personal Details*

Age: 27
Status: Married, with 1 3yo. 
Salary: Personal Income $40K - Disability Sector (not including my wifes income combined income of 90K approx). 
*Assets in rank of liquidity:* 

- Cash: $530000
- Shares: $17000 
- Emergency Fund: $100 (just started one) 
- Car: $12000
- Savings per month: $2000 (split $1000 cash / $1000 Shares) 


Debt

- Car Loan $5332 (approx)


*Current Strategy * 

I have been involved in the stock market since I was 18 years old. I made some terrible choices and put alot of money into small caps with the view of holding long term. At the time it was $10,000 but my income was obviously really small AND it was on debt. 

*Stocks I failed On*

I failed on SBM, CFU, OEL and AYN (No longer listed). I have not technically 'failed' on CFU and a couple others since I have not technically sold them yet but they have lost about 97% of their value since interception lol. 

I have since been taking investing more seriously by reading "Investing for Dummies, The Intelligent Investor, etc". I realise I wont become independent by just working 9-5 given my income therefore I wanted to change my whole strategy since the hits as a young bloke and decided I would stick with bluechips/growth stocks particularly with the tech sector. And, perhaps only allocate 10% to small caps, because lets face it they fail more than suceed (at least in my experience). 

*Goals*


Build a strong portfolio in strong companies over a 10 year outlook. 
Buy on dips, particularly when major events happen such as the GFC. 
Continue to educate myself and learn from more experienced investors. 
Become a financially strong family so my son can enjoy the things I was not able to afford when I was young such as overseas travel,school camps etc. 


*Asset Allocation: *

75% Cash
25% Shares 
   - AU - $8,530.04
   - US - $6,513.98
   - Cash in account: $962 approx.

*Current Portfolio*

-/+ in %

AYN:  -99.10%
BHP:  +4.58%
CFU:  -89.71%	
EGO:  -80.65%
ETPMAG: +3.84%
FLT: +5.40%
RIO: +7.38%
STO: +13.18%
FEYE: -8.12%
NEON: +18.40%
ORB: -1.77%

I decided I would purchase in $2000 blocks which therefore means I will purchase montly, however I really want to attempt to purchase on corrections and obviously if there is a massive correction then I would get hold of the savings (such as the GFC). 

Still looking for an entry into some good tele companies (TLS comes to mind) and also some good companies in the food sector. WOW comes to mind and WES. But I am still learning and trying to be a bit more conservative. AYN, CFU and EGO were the shares that I held from 2010 and beyond. I sold out of some the other ones mentioned above which I bought when I got my first job (SBM etc). 

I realise its not a perfect portfolio and I do wish to improve on it and get into some more sectors such as food.

Currently I have been watching: TLS, WOW, WPL, WES and would love to get into some banks one day when we get some GFC equivalent prices. 

Thanks for taking the time to read, I will update accordingly if thats okay with you as there is no set rules with my stategy and I just buy whenever the markets are falling and as you cant the time market perfectly I just do the best I can . 

(Credits go to Ryan C as I borrowed your layout when presenting my information).


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## Julia (19 December 2014)

I started to have a look at some in your p/f:

According to Etrade, FEYE, ORB, NEON are not valid codes.

Of the others, what was the reason you bought them?


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## tech/a (19 December 2014)

Julia said:


> I started to have a look at some in your p/f:
> 
> According to Etrade, FEYE, ORB, NEON are not valid codes.
> 
> Of the others, what was the reason you bought them?




NYSE and Nasdaq


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## Ariyahn2011 (19 December 2014)

Julia said:


> I started to have a look at some in your p/f:
> 
> According to Etrade, FEYE, ORB, NEON are not valid codes.
> 
> Of the others, what was the reason you bought them?





FLT: Went for flight centre because I felt it was oversold on a profit downgrade on the 18th. Not sure if you had a look yesterday but it was down 10%. Not surprisingly, it was up 5% today. It is on a technical downtrend but as I mentioned before its impossible to pick the bottom. I put in an order and assumed it would not get filled. I also picked them because they very low debt and a dividend yield of 4.9% which is pretty nice to have. Its a strong company with good management. I also picked them because they are a bluechip and seem have had solid growth over the past decade. Macquarie also have FLT at a price target of A$55.85 - 12 month. It may not reach that but I went for it anyway. Not sure if I will put a stop loss on this one or hold onto it long term. 

BHP & RIO: Funny story is I kinda forgot about an order I had for BHP and it filled lol. I still like these companies because they are kinda the back bone of Australia. Although China is slowing down and IO may go lower, states will always need IO to build. India will be needing IO at some stage and I just feel personally IO is going through a healthy corrective cycle. With the AUD set to drop, this will also be good for BHP and RIO. They are also companies that can hold up strong during tough economic times given their market cap. 

STO: Some may argue STO is a risk with the whole OIL issue taking place. I got into STO @ $7.10. Again, I have the long term view tha oil will eventually normalise. I was going to go for WPL but I thought I would stay with STO and just have a stop loss on this one. I am pretty confident with STO. They are an asx200 with a decent balance sheet. Their debt/equity ratio is 56.5%. I am quite happy for them to cut dividends to keep the company going forward since I had planned to reinvest any dividend if possible. 

I am holding silver because my father has always been a silver nut. I believe silver was also at a 6 year low. I doubt i will keep averaging out on silver. But I always wanted to hold some gold/silver and I thought an EFT was an easier way of doing it for my situation. 

Cheers


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## Ariyahn2011 (19 December 2014)

tech/a said:


> NYSE and Nasdaq




Oh man I just wrote a big response and I lost it for some reason. Thanks for the responses. 

For the Australian companies I have listed some of my reasonings below. 

FLT: Low debt, solid dividend, good management, oversold on the 18th of the 12 on a profit downgrade although was expected. I also have the view that FLT has good prospects to continue to be a good company as long as they continue to be productive and innocative to compete with online competitors. I also put in a order, I assumed it would not fill. I came back home and it got filled. 

BHP & RIO: I bought BHP and RIO because they are strong companies. They are the backbone of Australia's economic success over the past years. IO is having a healthy correction. It may correct further, in which case I will buy more but as China is slowing down, naturally IO prices are slowing. When the AUD gets weaker, this will be good for BHP and RIO. Also, long term, India will eventually need IO and to be quite honest IO will always be needed as more and more emerging markets develop. Once again, a healthy correction that needed to happen regarding IO prices. 

STO: I was trying to decide between WPL and STO. Although WPL is a stronger company, I felt STO offered better capital gains long term. As mentioned I am not chasing profits and happy to wait it out as long as it takes. I am in the view that oil will eventually sort itself out. This paraphrased but the commentator in Benjamin Grahmans book "The Intelligent Investor" claims whenever it seems bad, it is generally not as bad as it seems. 

Silver: Silver is at 5 year lows, and my father has always been a gold/silver believer. Along with daily reckoning newsletter which I have always read. I doubt I will get massive amounts of silver but I shall wait and see. 

Oh and I just had some serious thought about getting into a EFT that shorts the S&P500 in case that big correction takes place. As we all know the DawJones is once again nearing historic highs. 

Found a couple that seems good. 

- ProShares UltraShort S&P 500 -X2 -X3
- SDS
- ASX: BEAR

All IMO of course. 

Cheers : - )!


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## skc (19 December 2014)

Ariyahn2011 said:


> Firstly, I hope you guys dont mind me sharing my investment journey with you. I saw some others doing it and I thought its a nice way to share personal experience and also welcome other opinions and cautions.
> 
> *Personal Details*
> 
> ...




None of my business but is the cash amount a typo? If not, then why do you need an emergency fund and why do you have a car loan


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## burglar (19 December 2014)

Ariyahn2011 said:


> Oh man I just wrote a big response and I lost it for some reason.!



Most or all of your post would have been saved by the autosave function.
Had you clicked on <reply to thread> then somewhere, you would have had an option to recall it.


I sometimes cut and paste to a document external to internet.
If I really don't want to lose it, I use a word processor in the first instance.


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## shouldaindex (19 December 2014)

Do you have 530k or 53k in cash?


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## Ariyahn2011 (19 December 2014)

skc said:


> None of my business but is the cash amount a typo? If not, then why do you need an emergency fund and why do you have a car loan




Thats quite okay. It is a term deposit so I have put it away. It makes $1950 per year on 3.75%. So the emergency fund is quite seperate - would like to build this up for unforeseen bills perhaps?. I have not touched account. I more just lock it away and try be discipline as if it did not exist. I dont ever withdraw from it. 

I have the cash account to have money on hand if another GFC occurs or perhaps maybe buy a house one day? Like i said I didnt say my way is the best way. Probably need to tweak and make some adjustments. 


OH my mistake its 53K not 503K. My apologies! 


Thanks


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## Ariyahn2011 (19 December 2014)

My current reading list as well 

Technical Analysis of the Financial Markets by John Murphy - 3
Japanese Candlestick Charting Techniques by Steve Nison - 4
The Single Best Investment By Lowell Miller (dividend investing) - 2
Stock Investing For Dummies  Paul Mladjenovic - 1
Financial Statement Analysis: A Practitioner's Guide Hardcover – July 5, 2011
by Martin S. Fridson (Author), Fernando Alvarez (Author)


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## KnowThePast (19 December 2014)

Hi Ariyahn2011,

I think documenting your progress on a public forum greatly helps the learning process.

I will be watching with interest. Good luck!


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## shouldaindex (19 December 2014)

I'm actually in a similar position as the OP, in terms of life position.

I've also got STO and FLT on my watchlist.


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## Ariyahn2011 (19 December 2014)

KnowThePast said:


> Hi Ariyahn2011,
> 
> I think documenting your progress on a public forum greatly helps the learning process.
> 
> I will be watching with interest. Good luck!






shouldaindex said:


> I'm actually in a similar position as the OP, in terms of life position.
> 
> I've also got STO and FLT on my watchlist.




Thanks for the feedback KTP. 

Shouldaindex:Thats great mate. I wish you good luck  

I have been non stop reading. Wife thinks ive become a fanatic lol!!


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## Ariyahn2011 (28 December 2014)

Hello gang. 

I have not made any new purchaes as of yet. Although, I have been looking at a Norway ETF. Norway saved their money during their boom. Their economy seems in good shape vs the rest of europe. Will let you know if i go ahead and make this purchase. I am also looking at a company called Corns Inc. They are listed on the US market. 

Stay stuned .


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## So_Cynical (28 December 2014)

Ariyahn2011 said:


> I am also looking at a company called Corns Inc. They are listed on the US market.




10 minutes of googling found nothing except Podiatry sites and Corn ETF's - futures.


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## qldfrog (28 December 2014)

if you have the cash (term deposit) why do you have a car loan, unless you can get tax advantages, it is hard to believe you would not be better off paying the car loan off with you cash, even if it means breaking your term deposit?
just 20c, sensible strategy otherwise just a bit too Australia focused to my taste with currency risk.
I know you have a few US shared but still not much exposure overseas overall


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## Ariyahn2011 (29 December 2014)

@ QLDFROG - What you say makes perfect sense. I will actually pay it off. It does make sense, I think it was a bit of a physiological attachment to not messing with my savings despite having a loan. 

I still make silly decisons. I am still learning and I am the first to admit a mistake. In regards to the AU exposure. I agree, which is why I made another purchase in the US equities market with a decent AUD$ before it goes down to 75cents possibly?? 

@So_Cynical - Sorry about that I didnt give you the full name. Here is the ticker for Corning Inc https://au.finance.yahoo.com/q?s=GLW 

Current Positions 

(I have attached my portfolio) 

I have also recently purchased 83 GLW $1,935.56	. 

*Corning Incorporation*

Corning Incorporated is an American manufacturer of glass, ceramics, and related materials, primarily for industrial and scientific applications

I am still a bit concerned about the equities market next year. Therefore, I will probably look to buy every 3 months or if there is a lot of concern then at the 6month point. I am basically sitting at 25% equities and 75% cash (Benjamin Graham's advise as per his book). I wont be changing this position unless there is another GFC-like crash. 

You will see i got smashed by CFU/AYN/EGO. All small caps. I learnt my lesson. I should have had stop losses or better yet stayed away from small caps. 

On a side note, I am pretty frustrated with etradeAU for overseas exposure. Half the time I dont know if my orders are filled. I recently had a order in for NQ mobile. It did not fill and obviously I could not adjust my order in real time. Anyway, NQ mobile went on to close about 35%+ lol. As a result, I have done a bit of research and I found optionsxpress might suit me. I have submitted an application and awaiting it to be approved.

I also found ubank offered some really good interest rates regarding savings if anybody cares! 

Cheers guys 

(PS if anybody is interested in the Norway ETF check out https://au.finance.yahoo.com/q?p=finance.yahoo.com&s=NORW)


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## Ariyahn2011 (29 December 2014)

*Companies of interest *

FMG - FMG went up 7.5% today alone. They have a fair bit of debt to be honest from what I understand. Although, alot of it is long term debt so if IO recovers they should be fine. However, if it does not they may be in trouble. Might be a good pick up in the year if we get some new lows. 

RIO - Maybe pick up some more if I see some new low's. I like how you can reinvest dividends in this company compared to BHP. 

TLS - Would love to get into TLS at a good price. I am just not prepared to pay the current prices. 

NVDA - Still want to get into Nvidia, I am right into my gaming. I have always bought Nvidia cards and I believe in their technology. They are a good company imo. Will keep an eye on them in 2015.

ORG - Another company I feel may present itself for good opportunities. My father always told me to be prepared to buy when there is fear. Kinda like the 2009 GFC.

WOW & WES - Still looking for an opportunity to get into these companies to get into some other sectors.


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## pinkboy (29 December 2014)

Ariyahn2011 said:


> *Companies of interest *
> 
> FMG - FMG went up 7.5% today alone. They have a fair bit of debt to be honest from what I understand. Although, alot of it is long term debt so if IO recovers they should be fine. However, if it does not they may be in trouble. Might be a good pick up in the year if we get some new lows.
> 
> ...




pinkboy


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## Ariyahn2011 (29 December 2014)

pinkboy said:


> pinkboy




Yeah true regarding FMG, could be good for some short/med term trades i suppose. They used to be a massive company. I mean they are still pretty big. It is crazy how much they have dropped off. 

Yeah TLS is a good company. I have a friend who works there, they are constantly looking at ways to branch out towards the tech sector and find new ways to generate income. I think you got in a nice price. Good job.


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## So_Cynical (30 December 2014)

Ariyahn2011 said:


> You will see i got smashed by CFU/AYN/EGO. All small caps. I learnt my lesson. I should have had stop losses or better yet stayed away from small caps.




I have a small cap dominated portfolio, a few losers, a few more that haven't done much and a few winners, and a couple of big winners...small caps are not a problem, just have to pick some good ones.

CFU for example was never ever a stock with potential, never ever...i had a big look at it 3 or 4 or 5 years ago, the technology was just never going to fly - AYN just another explorer with nothing, its important to focus on stocks that have something.


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## Ariyahn2011 (31 December 2014)

So_Cynical said:


> I have a small cap dominated portfolio, a few losers, a few more that haven't done much and a few winners, and a couple of big winners...small caps are not a problem, just have to pick some good ones.
> 
> CFU for example was never ever a stock with potential, never ever...i had a big look at it 3 or 4 or 5 years ago, the technology was just never going to fly - AYN just another explorer with nothing, its important to focus on stocks that have something.




I see. Good job on picking some great winners then! I will stay on the back foot with the small caps for a little while longer until I get a bit more confident and experienced .


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## Ariyahn2011 (1 January 2015)

G'day all, 

Just updating my movements.

I have sold out of FLT. I mainly got out because I personally cant see their business growing that much over the next 5+ years. I am 27 and I am not investing for dividends at this point as I only had about $1500 invested in FLT. I managed to make about a $60 profit to cover brokerage. I instead decided to add SBB. Again, I had a look at their balance sheet. They made solid gains on their last earnings. Low debt. Good ROE. Hoping they can continue their healthy balance sheet reports. The only down side is I could really only check 1 years performance. 

I know I mentioned I didnt like small caps, but at least this company did make money opposed to some of the other companies that I invested in the past (CFU and EGO come to mind). I bit the bullet on this one, hoping the business in China can continue to boom and healthy divs keep coming out of them. 

I also sold BHP and recently bought FMG. I sold BHP because it firstly did not have a dividend investment plan like RIO. And I was already invested in RIO so I thought I would go for FMG. I still hold the long term view IO will recover over the long term. I am happy to wait it out. If IO continues to drop then I will most likely buy one more parcel in the IO sector. Most probably RIO and then leave it at that.  


I will post my unrealised P/L below. 

*Current Portfolio*

*Australia*
RIO  
AYN  
EGO  
FMG
STO
SBB

*US*
Neonode
Fire Eye
Corning Inc
Orbital Sciences 

Total Value: $18,953.23 AUD

Shares - AUD: -22% (note CFU and EGO and AYN still holds me back overall hope to recover these losses one day) 
Shares - US:  +13.28

US: $+1,102.17
AU: $ -2,103.75	

*Companies and sectors of interest*

OASIS Petroleum - US
Nvidia - US
MND - ASX 
Norway ETF - US
Silver ETF - ASX
WES - ASX
WOW - ASX
AKAM - US
Russian Bluechip ETF - US (maybe after the oil lows hit rock bottom and russia rebuilds over the next decade) 

I am overall still worried about a stock market crash in 2015. Although, I still remain 25% stocks and 75% cash (approx). 

Thanks and happy new year.


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## Ariyahn2011 (3 January 2015)

Sometimes I wonder, if you have made say 50-60% on one stock is it worth just taking the profits although your in it for the long term? 

I have made a return on NEON of 64.62% 	

Returns like that are great right? 

Thoughts?


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## pinkboy (3 January 2015)

Ariyahn2011 said:


> Sometimes I wonder, if you have made say 50-60% on one stock is it worth just taking the profits although your in it for the long term?
> 
> I have made a return on NEON of 64.62%
> 
> ...




3 options:

1. Continue to hold. Might go up, might go down.  It's only a profit if you take it.

2. Sell. Take the profit and move to another opportunity.

3. At 66% profit, you could sell down 2/3 of your holdings and continue to hold the other 1/3 unencumbered (ie enough profit taken to cover your initial outlay, holding a portion 'free').

This is not my area as I don't trade, so don't take this as advice.

pinkboy


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## hhse (3 January 2015)

Ariyahn2011 said:


> G'day all,
> 
> Just updating my movements.
> 
> ...




If you sold call options on your stocks, you would made made less of a loss or would have made a profit instead. Just saying... Your positions are all bullish trades anyway.


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## Ariyahn2011 (3 January 2015)

pinkboy said:


> 3 options:
> 
> 1. Continue to hold. Might go up, might go down.  It's only a profit if you take it.
> 
> ...




Yeah I think I will do that. I think I will sell out 1/3 and just hold. There is a big expo for this particular stock on the 4th of Jan. So hopefully it does well showing its technology. The problem with selling for me at the moment is I use etrade. It costs $100 to sell/buy. I am moving my US stocks to optionsXpress where the brokerage is alot cheaper thus increasing my profits. 
Keep you posted.


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## Ariyahn2011 (3 January 2015)

hhse said:


> If you sold call options on your stocks, you would made made less of a loss or would have made a profit instead. Just saying... Your positions are all bullish trades anyway.




I am yet to fully understand options. I know it is a good way to hedge yourself. I will be ordering a book to fully understand it. My father used to do it. He did really well until Sep 11


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## burglar (3 January 2015)

Ariyahn2011 said:


> ... Thoughts?




Remember why you bought them!


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## Ariyahn2011 (3 January 2015)

burglar said:


> Remember why you bought them!




Another good point. I like them!! Ahhh my brain lol!


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## tech/a (3 January 2015)

Ariyahn2011 said:


> Another good point. I like them!! Ahhh my brain lol!




Wrong answer
Should be that you anticipated profit!

That's the only reason----


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## galumay (3 January 2015)

tech/a said:


> Wrong answer
> Should be that you anticipated profit!
> 
> That's the only reason----




Maybe that is why he likes them!?


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## Ariyahn2011 (3 January 2015)

galumay said:


> Maybe that is why he likes them!?




Indeed lol!

Check this out 

If you all feel like a read, this will scare some and comfort others,,but still no one knows where oil will end up.
Sams2k...

Who is to blame for the staggering collapse of the price of oil? Is it the Saudis? Is it the United States? Are Saudi Arabia and the U.S. government working together to hurt Russia? And if this oil war continues, how far will the price of oil end up falling in 2015? As you will see below, some analysts believe that it could ultimately go below 20 dollars a barrel. If we see anything even close to that, the U.S. economy could lose millions of good paying jobs, billions of dollars of energy bonds could default and we could see trillions of dollars of derivatives related to the energy industry implode. The global financial system is already extremely vulnerable, and purposely causing the price of oil to crash is one of the most deflationary things that you could possibly do. Whoever is behind this oil war is playing with fire, and by the end of this coming year the entire planet could be dealing with the consequences.
Ever since the price of oil started falling, people have been pointing fingers at the Saudis. And without a doubt, the Saudis have manipulated the price of oil before in order to achieve geopolitical goals. The following is an excerpt from a recent article by Andrew Topf…
We don’t have to look too far back in history to see Saudi Arabia, the world’s largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.
It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.
The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.
Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC’s refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.
If the Saudis wanted to stabilize the price of oil, they could do that immediately by announcing a production cutback.
The fact that they have chosen not to do this says volumes.
In addition to wanting to harm U.S. shale producers, some believe that the Saudis are determined to crush Iran. This next excerpt comes from a recent Daily Mail article…
Above all, Saudi Arabia and its Gulf allies see Iran ”” a bitter religious and political opponent ”” as their main regional adversary.
They know that Iran, dominated by the Shia Muslim sect, supports a resentful underclass of more than a million under-privileged and angry Shia people living in the gulf peninsula ”” a potential uprising waiting to happen against the Saudi regime.
The Saudis, who are overwhelmingly Sunni Muslims, also loathe the way Iran supports President Assad’s regime in Syria ”” with which the Iranians have a religious affiliation. They also know that Iran, its economy plagued by corruption and crippled by Western sanctions, desperately needs the oil price to rise. And they have no intention of helping out.
The fact is that the Saudis remain in a strong position because oil is cheap to produce there, and the country has such vast reserves. It can withstand a year ”” or three ”” of low oil prices.
There are others out there that are fully convinced that the Saudis and the U.S. are actually colluding to drive down the price of oil, and that their real goal is to destroy Russia.
In fact, Venezuela’s President Nicolas Maduro openly promoted this theory during a recent speech on Venezuelan national television…
“Did you know there’s an oil war? And the war has an objective: to destroy Russia,” he said in a speech to state businessmen carried live on state TV.
“It’s a strategically planned war … also aimed at Venezuela, to try and destroy our revolution and cause an economic collapse,” he added, accusing the United States of trying to flood the market with shale oil.
Venezuela and Russia, which both have fractious ties with Washington, are widely considered the nations hardest hit by the global oil price fall.
And as I discussed just the other day, Russian President Vladimir Putin seems to agree with this theory…
“We all see the lowering of oil prices. There’s lots of talk about what’s causing it. Could it be an agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.”
Without a doubt, Obama wants to “punish” Russia for what has been going on in Ukraine. Going after oil is one of the best ways to do that. And if the U.S. shale industry gets hurt in the process, that is a bonus for the radical environmentalists in Obama’s administration.
There are yet others that see this oil war as being even more complicated.
Marin Katusa believes that this is actually a three-way war between OPEC, Russia and the United States…
“It’s a three-way oil war between OPEC, Russia and North American shale,” says Marin Katusa, author of “The Colder War,” and chief energy investment strategist at Casey Research.
Katusa doesn’t see production slowing in 2015: “We know that OPEC will not be cutting back production. They’re going to increase it. Russia has increased production to all-time highs.” With Russia and OPEC refusing to give up market share how will the shale industry compete?
Katusa thinks the longevity and staying power of the shale industry will keep it viable and profitable. “The versatility and the survivability of a lot of these shale producers will surprise people. I don’t see that the shale sector is going to collapse over night,” he says. Shale sweet spots like North Dakota’s Bakken region and Texas’ Eagle Ford area will help keep production levels up and output steady.
Whatever the true motivation for this oil war is, it does not appear that it is going to end any time soon.
And so that means that the price of oil is going to go lower.
How much lower?
One analyst recently told CNN that we could see the price of oil dip into the $30s next year…
Few saw the energy meltdown coming. Now that it’s here, industry analysts warn another move lower is possible as the momentum remains firmly to the downside.
“If this doesn’t hold, we could go back to price levels in late 2008 and early 2009 ”” down in the $30s. There’s no reason why it couldn’t happen,” said Darin Newsom, senior analyst at Telvent DTN.
Others are even more pessimistic. For instance, Jeremy Warner of the Sydney Morning Herald, who correctly predicted that the price of oil would fall below $80 this year, is now forecasting that the price of oil could fall all the way down to $20 next year…
Revisiting the past year’s predictions is, for most columnists a frequently humbling experience. The howlers tend to far outweigh the successes. Yet, for a change, I can genuinely claim to have got my main call for markets – that oil would sink to $US80 a barrel or less – spot on, and for the right reasons, too.
Just in case you think I’m making it up, this is what I said 12 months ago: “My big prediction is for $US80 oil, from which much of the rest of my outlook for the coming year flows. It’s hard to overstate the significance of a much lower oil price – Brent at, say, $US80 a barrel, or perhaps lower still – yet this is a surprisingly likely prospect, the implications of which have been largely missed by mainstream economic forecasters.”
If on to a good thing, you might as well stick with it; so for the coming year, I’m doubling up on this forecast. Far from bouncing back to the post crisis “normal” of something over $US100 a barrel, as many oil traders seem to expect, my view is that the oil price will remain low for a long time, sinking to perhaps as little as $US20 a barrel over the coming year before recovering a little.
But even Warner’s chilling prediction is not the most bearish.
A technical analyst named Abigail Doolittle recently told CNBC that under a worst case scenario the price of oil could fall as low as $14 a barrel…
No one really saw 2014’s dramatic plunge in oil price coming, so it’s probably fair to say that any predictions about where it’s going from here fall somewhere between educated guesses and picking a number out of a hat.
In that light, it’s less than shocking to see one analyst making a case””albeit in a pure outlier sense””for a drop all the way below $14 a barrel.
Abigail Doolittle, who does business under the name Peak Theories Research, posits that current chart trends point to the possibility that crude has three downside target areas where it could find support””$44, $35 and the nightmare scenario of, yes, $13.65.
But the truth is that none of those scenarios need to happen in order for this oil war to absolutely devastate the U.S. economy and the U.S. financial system.
There is a very strong correlation between the price of oil and the performance of energy stocks and energy bonds. But over the past couple of weeks this correlation has been broken. The following chart comes from Zero Hedge…
[​IMG]
It is inevitable that at some point we will see energy stocks and energy bonds come back into line with the price of crude oil.
And it isn’t just energy stocks and bonds that we need to be concerned about. There is only one other time in all of history when the price of oil has crashed by more than 50 dollars in less than a year. That was in 2008 – just before the great financial crisis that erupted in the fall of that year. For much, much more on this, please see my previous article entitled “Guess What Happened The Last Time The Price Of Oil Crashed Like This?…”
Whether the price of oil crashed or not, we were already on the verge of massive financial troubles.
But the fact that the price of oil has collapsed makes all of our potential problems much, much worse.
As we enter 2015, keep an eye on energy stocks, energy bonds and listen for any mention of problems with derivatives. The next great financial crisis is right around the corner, but most people will never see it coming until they are blindsided by it 


Reference

sams2k11 (HC) 
*
Opportunity for further Oil investment perhaps? *


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## Julia (3 January 2015)

Is the above a copy and paste from someone called sams 2K11 from Hot Copper?

I note this paragraph in particular


> Whether the price of oil crashed or not, we were already on the verge of massive financial troubles.
> But the fact that the price of oil has collapsed makes all of our potential problems much, much worse.
> As we enter 2015, keep an eye on energy stocks, energy bonds and listen for any mention of problems with derivatives. The next great financial crisis is right around the corner, but most people will never see it coming until they are blindsided by it



That echoes what was warned by  Satyajit Das about a week ago.  Anyone interested can google him:  financial analyst, ex banker, author or many books on financial markets.

He suggested the oil situation could trigger the next GFC.


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## Ariyahn2011 (3 January 2015)

Julia said:


> Is the above a copy and paste from someone called sams 2K11 from Hot Copper?
> 
> I note this paragraph in particular
> 
> ...




G'day Julia. Indeed it was, I made sure i referened him at the bottom. Interesting article isn't it. I will google the fella you speak of. Thanks.


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## Ariyahn2011 (21 January 2015)

G'day all,

Been a while since I have made a post. I thought it was about time to update you on my holding as I have made a few changes and purchases. 
*
Current Australian Portfolio*

NCM  
RIO 
SBB 
STO 
CFU
AYN
EGO

*US Portfolio*

FEYE 
ORB
NEON
WATT
GLW 

The cybersecurity industry is pretty exciting. As you are probably aware there has been an increase in cyber attacks and the problems is becoming an issue throughout the world as more and more users get connected through improved technology. Obama is tipped to set new reforms to increase funding towards internet security. 

I have also recently purchased WATT. They are a new company which is basically attempting to make electronic devices charge wirelessly. Meaning, you could use your phone at home whilst not having to physically plug it in. It is pretty incredible. They won a few awards at the recent CES festival. 

Looking forward to the next 5 years.

ASX  -22%
US   +2.16%


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