Slump in oil price hits WOR, page-33

"Can't understand the 2nd part of yr post."

It gets to the issue of causality, i.e., what are the real determinants of share price performance?

It sounds to me like WOR's share price has fallen due to the oil price having fallen. And certainly the tone of the commentary here, in the media and by broking analysts is consistent with this observation.

Ipso, an investment in WOR becomes predicated on an opinion on the direction of the oil price which, as is empirically evident, moves in a random cycle.

Therefore, an investment in WOR is predicated on trying to forecast a random variable.

Meaning, that absent any rare and unique insights into the oil industry and/or markets, an investment in WOR - like any commodity related business - boils down largely to chance.

And my experience having lived through numerous cycles is that - sadly - the element of chance actually becomes skewed against the investor because he or she gets consistently tripped up in by the Recency Bias, i.e., he or she cannot resist being overly bullish when everyone else is, and vice versa.

And its not just the layman who falls casualty to this phenomenon of human nature. Go and audit the commodity price forecasts of the most eminently qualified mineral economists and commodity analysts who - despite being aided by teams of assistants and substantial databases and supply-demand models - have a recurring track record of being mostly wrong (not just 50% wrong, which what one might expect under a scenario of mere random guesswork, but overwhelmingly mostly wrong [*].)


[*] Of course, no one will actively draw public attention to this sort of professional negligence, not do these "smart" folk ever get the sack or have their bonuses predicated on how accurate their forecasts are. No, their role is not to be right, it is to generate opinion - any opinion as long as it generates activity by which brokers and investment banks might profit.