Daily Speculations

The Web Site of  Victor Niederhoffer & Laurel Kenner

Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.






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The Chairman
Victor Niederhoffer

Contagion, by Victor Niederhoffer

On October 27, and October 28, a particularly virulent strain of decline in oil was released as it dropped from 54.76 to 52.17 to 50.74 . Such a 7% decline broke the back of many relatively weakly resistant longs who had not been immunized to such moves by long exposure . Shortly thereafter the disease spread to almost all others who had not previously been infected like a spider descending down from her Cobweb as she had previously descended to spread her terrible plague and killing in the areas of soybeans, corn and wheat. Regrettably but inevitably, a mutant strain of the disease spread into silver, gold, copper, and was transmitted into almost all of Euro dollar and Japanese yen areas despite the protestations and naysayings of officials. Let us hope that this terribly contagious disease will not totally demoralize and morbitize those who recently became exposed to such the disease by investing in highly susceptible areas such as funds sold and touted by white shoe firms and travelers who believe that they can find pockets of resistance to same in the event that high prices do not induce increased output of the virus.

Crude Contagion, by Ari Siegel and Victor Niederhoffer

At the close on November 29, oil was trading at $49.76. At the close on December 9, oil was $42.53, a decline of 15%. The past week has seen oilís slide reverberating through the commodities markets: since Dec 1 gold is down 4.1%, copper down 8.7%, silver down 15.8%, and platinum down 7%.

Can big moves in oil predict other commodity price moves? Taking pencil to paper, we conclude that large price moves in oil do have a leading and significant impact on the prices of other commodities, particularly metals such as gold, copper, silver and platinum.

Ari Siegel
Victor Niederhoffer
December 13, 2004

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