The StockTwits® Edge: 40 Actionable Trade Set-Ups from Real Market Pros

CHAPTER 37

Macro Setups at the Crest of Structural Change

Gregor Macdonald, @GregorMacdonald

Gregor is a great friend, a huge brain, and a fantastic writer. He can be structurally bearish but maintain a long portfolio. He can look at the world's serious problems and see the possible outcomes that produce simple portfolios and low turnover. I believe you have to keep it simple when investing. Low turnover is of the utmost importance, and trend following with consistent risk management can produce superior portfolio results. Gregor's research and portfolio allocations are things I watch closely.

BEGINNING OF PEAK OIL

In the spring of 2004 a young woman would appear most mornings on Bloomberg Television to explain why oil, should it ever rise as high as $40 a barrel, would quickly fall from such a level as the world would surely pump like crazy to capture those prices. What the young oil analyst from Boston did not understand was that roughly two years earlier a broad but imperceptible shift had taken place, which we now understand as the transition from cheap oil to expensive oil. In the early part of 2004, however, because the global oil supply had indeed made such a big upward move coming out of 2001, it was understandable that oil industry veterans thought that would continue. But consider this: As oil prices were trading in the 30s in the spring of 2004, and as the Russian government made its first move against Yukos, sending oil through $40, oil production was reaching a plateau. ...