Did You Just Short Oil At The Bottom?

We hope you didn't. Because WTI and Brent are up some 42% and 48% from their January lows, respectively. We can only imagine the multitudes of traders shorting crude all the way up from $25 to the current $40 on Brent. It must have been painful, utterly jaw grindingly painful. We feel for you, because we were once part of group. A group which had collectively been betrayed by those oh-so-smart pundits calling for $20 oil, pundits with absolutely no track record, casually appearing on financial TV advising everyone and their pet dogs to short oil because the "fundamentals have never been more bearish".

You've been trolled big time, and the market doesn't even care. Ain't that going to make you mad? 

  "This is CLASSIC MARKET PSYCHOLOGY at play.    Oil markets are absolutely TROLLING traders, investors, and most certainly analysts who think they know where prices are going to go.    If we had free time, we'll take great pleasure in listing down the hundreds of news headlines calling for lower prices.    To wit: "Buy when everyone's selling, take a step back and laugh your a** off as they've sold to you at the bottom.""   Business Of Finance on Facebook, 10 March 2016

"This is CLASSIC MARKET PSYCHOLOGY at play.

Oil markets are absolutely TROLLING traders, investors, and most certainly analysts who think they know where prices are going to go.

If we had free time, we'll take great pleasure in listing down the hundreds of news headlines calling for lower prices.

To wit: "Buy when everyone's selling, take a step back and laugh your a** off as they've sold to you at the bottom.""

Business Of Finance on Facebook, 10 March 2016

Yup, ignore the FACT that OPEC has for the first time in over a decade, expressed some tact of solidarity amongst themselves to freeze and cap production.

Ignore the FACT that there has finally been a concerted effort to address the global glut in excess crude supplies.

Also ignore the FACT that speculative market positioning has hardly ever been more one-sided, and that actual commercial end users of oil have been building up long hedges of historical magnitudes.

Ignore all of those and buy the opinions that the fundamentals will remain as bad as they have been for more than 15 months. Ignore the facts but buy into the punditry of those wit absolutely zero idea of what harm they're doing to those who follow their words (and not necessarily their actions).

We've come across way too many assertions such as "oil WILL trade lower", or "we WILL see $20 before year's end"

Now, there's one screaming problem with those assertions.

HOW THE HELL DOES ANYONE KNOW WHERE THE PRICE OF ANY FINANCIAL ASSET WILL BE AT IN THE FUTURE?

Well, no one, and we repeat NO ONE knows where oil will trade at a week down the road, let alone a year.

So if you, or if you know of anyone who's shorted oil when it ripped off the faces of even the boldest of bears, let this be an invaluable lesson in understanding that the markets don't give one damn about what you or anyone thinks it should do. The markets will do what it does, and that is trade on a price that buyers are willing to buy at, and on a price that sellers are willing to sell at. 

It's as simple as that. But why did crude oil catch so many with their pants down naked? We call that good ole classic market psychology; most are wrong when they think they're right.

"Buy when others are fearful..." - Warren Buffett