Last year's hurricane season was very bad for cities, people and markets (especially energy markets, in that prices spiked very aggressively).
Since last year we have heard commentary from strategists and analysts warning that this year's hurricane season could also be disruptive in a similar manner. Regardless of how bad the hurricane season might be for cities and people it is very unlikely to have as big or long lasting an impact on the energy markets. All of the chatter about the bad season coming has allowed the market to price in what may come.
Last year, coming into the hurricane season there was virtually no concern expressed about hurricane season's impact on the energy markets.
This is the sort of thing that repeats over and over in the markets. People talk and talk and worry and worry about something so much that when it comes it is a non event. August 2002 when CEOs would have to start signing off on earnings is another example of this. Changes in accounting for option grants could be another example but might be the exception that proves the rule. I don't think there have been any single stock blowups caused by options accounting but the tech sector has been lagging badly. While I don't think the lag is from options accounting, who can say for sure?
Wikinvest Wire
1 comments:
Yep, everyone is fighting the last war. Still I've seen some fairly high estimates for the risk premium built into oil prices, $20/bbl or even more (e.g., http://www.wtrg.com/), and there does seem to be a growing inventory of crude no matter what the refining situation is so it seems possible a significant positive event such as milder hurricane season or an accord with one of the more fractious oil producing countries could take out a lot of price support for oil in a reasonable hurry. Personally I wouldn't bet on it one way or the other but, unlike many financial assets where too little risk premium may have existed (until recently at least), it seems possible the opposite could be the case for some commodities.
That aside I've seen some good arguments for expensing stock options (e.g., http://tinyurl.com/pyb9g) as well as against (e.g., http://tinyurl.com/p4wlc) and have little doubt that expensing will make some companies look less desirable to a value investor but am more inclined to believe the real issue WRT tech lies in consumption/capex and not in how the balance sheet is constructed; IOW consumption is falling and corporate capex does not appear to be kicking in as in other recoveries so tech stock prices lag. Otherwise, like S-OX, I suspect everyone will get used to options expensing (assuming it is implemented per FASB recommendations) and we'll just move on from there.
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