I am one of those who don't agree with the view that a dramatic fall in oil price will help stocks. Why? Very simple. The global stock markets have been going up and up for several years until the 2nd half of 2007 and during such bull period, oil prices have been going up even faster! So if you can see a dramatic fall in oil prices, the stock market must be in deep trouble. Try to look at things from a different angle:
- The unending rise in oil prices has benefited many speculators and oil holders.
- Powerful countries are trying to use oil as their chief reserves. Why? USD has been sinking for a long time and indeed too long. As for gold, you can't really use it like the black gold.
- The gigantic size of oil money has been the main force driving up equities and other investments in the last few years. Why? Look at capitals from the Middle-East and Russia.
- Despite the general lip service from politicians, economists and investors that we must do something to keep oil and food prices down, you can always hear a basic contradiction. They all agree that oil and food prices should remain high! They know the true reasons behind the high prices and they are part of the true beneficiaries.
- We have not yet seen violent protests against high fuel and food prices. I mean protests like physical rebellion. No, the poor consumers on the street are mostly silent and obedient guys. They cannot fight for their rights and dare not do so. They take inflation and high prices as the conditions of their lives. Yes, this is the situation in Hong Kong and our Mainland China.
- Who is hurt by high oil prices? No one except the poor. So don't expect the rich ruling elite will .....
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