Sequence of events

Another thing folks ask me about is, "When will it end?" or "When will the market crash happens?" Well, I don't know the whens about all these things, but I would take a guess about the general sequence.

First, the easy ones:
1. (Continued) rise in oil and commodity prices, with increasing price volatility.
2. (Continued) fall in the value of the dollar / increase in inflation. This is true both from a relative sense (ie. vs. other currencies), and an absolute one (ie. price changes regardless of other currencies)
3. (Continued) rise in U.S. national debt, including government debt
4. (Continued) U.S. housing collapse

Next, a little more of a stretch:
5. A significant rise in alternative vehicles, especially electric vehicles, with major advances in battery technology and affordability
6. A significant rise in renewable electricity
7. Current countries who are oil exporters significantly reduce exports
8. Current oil-producing countries reduce their oil extraction to extend the life of their wells.
9. Mexico and its currency plummet alongside Cantarell's production levels (ie. short the mexican peso & the mexican economy)
10. The oil market becomes even more of a bidding war
11. All transportation costs rise an order of magnitude from current levels.
12. China lets the yuan fully float and stops supporting/buying U.S. dollars

A little later down the road:
- Current oil exporters stop exporting
- Temporary gasoline (and propane, and kerosene, etc) shortages in the US, eventually turning more and more frequent
- Major job losses in the U.S. and world economy - massive unemployment
- Lapses in public services, including firefighters, police officers, hospitals, garbage, etc.
- A lot of suburbs and/or exburbs turning to slums
- Electric vehicles outnumbering gasoline vehicles
- Noticeable global population decreases, esp. in countries where there are current food shortages
- Increase in interest in supporting domestic railway system (although ??? re: funding)

(hopefully) way down the road:
- U.S. and China directly conflict, air & land war
- Massive poverty & significant starvation within the U.S.
- Virtual halt of international travel (let's call it a 95%+ decrease from current levels)
- Massive global population reduction from current levels
- Significant decrease in obesity and related deaths in the U.S.

have a nice day

TK

latest update

boy i'm not keeping up on this at all... OK, where are we at today:

Description	Qty
CRUDE OIL DEC 2015	2
CRUDE OIL DEC 2016	2
EURO FX JUN 2009	2
NATURAL GAS JUN 2013	1
NATURAL GAS DEC 2013	2
S&P 500 INDEX SEP 2009	-1
RBOB GASOLINE DEC 2009	1

Looks like all I've done compared to last time is buy one gasoline contract. I did that on June 20th, made about $5k on it though with the recent rise in crude.

Here's what I'm currently thinking:
- I'm feeling I've missed at least part of the boat ride on other (esp. food) commodities. I bought DBA (a powershares commodity) and have done well on it, but I haven't gone whole hog into food like I should have.
- I think most food commodities will be valuable. I'd like to figure out which ones have the highest way to go. However, that seems like gambling, whereas buying a commodity ETF or mutual fund seems like a safer way to go.
- Despite gasoline's rise, I'm thinking about buying another one. There's just one way to go for gasoline. I just re-read stephen leeb's little mental exercise in gasoline vs. oil: In a nutshell, he shows how as oil rises, the price impact of oil on gasoline will rise. This is important because peak oil would suggest higher volatility in oil, thus impacting gasoline in an ever-increasing way. In addition, I think gasoline may not fall as much as oil in the downsides of prices bouncing around. Just a feeling...
- Speaking about buying more - natural gas. That has gone up to be sure, but that market is messed up. More and more I think there are traders out there who are taking calendar spreads, long in the near-term, short in the far-term. I see this because of the increasing spread between near-term and far-term prices in that market. Those guys have to cash in and leave those short positions eventually, and it will have a disproportionate impact because those far-term futures are traded so thinly. Buying opportunity when that happens. Overall prices would have to tank to lose money here.
- I'm toying with the idea of selling most if not all of my position in GLD (an ETF that buys gold bullion) and buying futures. But unlike oil, natural gas, & gasoline, the gold market is in permanent contango (far-term is more expensive than near-term), so I'm thinking to heck with it and staying put.
- Industrial metals seem tantalizing though. I recently purchased some palladium stock based on the recommendation of a seeking alpha blogger, Mark Anthony. I might go the next step and buy a commodity ETF in industrial metals.
- Speaking of commodity ETFs, I'm pretty leery about them given my experience with USO. But I've looked into them and most have seemed to performed admirably. I'm really thinking about ETNs, which promise to stick to the benchmarks. The problem with ETNs though is if the writer/underwriter of those ETNs goes belly up, they won't pay them off. ETFs will pay off in the event the financial institution goes belly up because they are secured by actual securities (ie. the futures).

Lastly, people who know I've been trading futures ask me what to invest in. Can't promise anything, but here's what I'd say:
- Oil. Sure you've missed part of the ride, but it's still going to go up. Buy a little USO at least. Use dollar cost averaging if you like. When you have enough, sell all your USO and buy one far-term future.
- Natural gas - same thing.
- Gasoline. This is such an obvious hedge for americans it's ridiculous, yet no one I know is doing this. You may not ever directly consume 42,000 gallons of gasoline in your car (although many will consume more than that). But if you count all the gas used in imports, busses, fire engines, police cars, army trucks, and all the other things you pay for that directly consume gasoline, then it will be far more than 42,000 gallons.
- Food commodities. It's high, sure, but this is also a hedge.
- Metal commodities. Same thing.
- Gold if you don't have GLD already. Do this one sooner rather than later, as gold is near or at the floor right now. It'll be over $1000/oz again within 12 months.