By: Dominic Mazzone, Managing Partner, Regent Global Funds

Today’s Idea is just a quick thought about the current market schizophrenia.   On July 12^th I saw a headline that read “Oil Hits Record High on Supply Fears” “.  If you were living in a cave and saw this headline you would probably think that there is a shortage of oil and rightly so.   However, yesterday I saw a headline read,” Oil hits 7 week low on demand worries.  Wait a minute, how can that be possible if only 17 days ago we had a supply issue?  In fact on Monday there were additional supply concerns due to bombings in Nigeria.  The fatal fault causing market schizophrenia lies in the market,  and its traders fascination with daily news that has given them a minute by minute perspective instead of the long term one they should have.  Now don’t get me wrong, they are traders and that is what they are supposed to be doing to a degree.  However we have come to a point where it is affecting the direction of the market with such force that is may become habit even after the smoke clears.  The commodities seem to be the ones that are moving the most, and it is no wonder that investors in commodities are starting to get skittish and looking into alternative investments. Because trying to gauge how political, scientific, logistic, geographic, financial, supply, and demand  issues will affect the price of oil and the market as a whole, is like trying to predict the long term health of the global economy.  Lots of people talking about it, lots of people tinkering with it,  but without any real foresight into what to do about it.

Copyright: Dominic Mazzone Regent Global Funds 2008