Mr Market speaks softly

Beware those who profess to catch his every word, says Bill Bonner.

Oil has continued its historic slide. In our view, this is one of the many unforeseen consequences of Federal Reserve policy. By encouraging US oil producers to borrow at ultra-low interest rates, the Fed exaggerated the usual boom-bust cycle of the commodity markets. Cheap credit made it possible to overinvest in production, which made it possible to overproduce, which caused prices to collapse. Others have a different explanation. They believe that $30 oil proves the genius of mankind always able to find new sources of energy and to overcome the problems we make for ourselves. Who's right?

As scriptwriter William Goldman said about predicting winners and losers in Hollywood: "Nobody knows anything. Not one person in the entire motion picture field knows for a certainty what's going to work. Every time out, it's a guess and, if you're lucky, an educated one." Nobody knows anything in the financial world either. At least, that is what the old-timers say. The young guys know what is going on. The old guys know they don't. Bloomberg columnist Barry Ritholtz recently reminded us of a well-known market forecaster who was spectacularly wrong: Joe Granville.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.