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hindsight

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Hi Hindsight ( or anyone else),

Was wondering if you could help me with this. Sorry that it is off topic as i need to untangle some misconceptions i probably have on insurance.

I have always read that i should buy term and invest the rest and that whole life policies are not worth it and that insurance actuaries actually themselves buy term (hearsay).
As my baby is due, im deciding on what to do for him.

I was quoted for a sum assured of 100k Death/TPD/CI, accelerated benefits
Option 1-Term: $220 pa from 1 year old till 65 years old. Term coverage till 65 years old only.( total outlay till 65 is 65 x $220= $14300)
Option 2 - Pay 5 year Whole Life insurance: $1751 pa for 1st 5 years only. Thereafter, TPD till 70 years only and Death/CI will be till 99 years old.( total outlay is 5x $1751= $8755)


Even after calculations using time value of money, It seems to me pay 5 years whole life is vastly more superior as my baby( or rather his claimants) will definitely get back $100k as death is a certainty when its covered till 99 years.

Could i have your opinion on this as i may be missing out on something as i do feel whole life is better in this case but just the chorus of BTIR is too loud!

Or are insurance companies increasing the premiums for term just to level the competition?
( term is AXA term protector by the way)

I was in shipping actuary, not life insurance but I will take a stab at this.

I'm going to say that whole life isn't better, even if the payout looks like a certainty because the risk of your child surviving past the age of 65 with no triggers is roughly offset by the risk of early coverage triggers.

In both cases you'd have "lost money" if there are no coverage triggers by the age of 65, for term insurance the reason is obvious, for whole life insurance your loss is the opportunity cost i.e you would have gotten higher returns from investing in stocks over the same 65 years.
 

bakuten

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So statisticians have a tool called "seasonal adjustment" that they use to smooth out these regular, seasonal peaks and troughs. The Wikipedia article explains it really well; every statistical agency in the world uses it to smooth the intra-year fluctuations and unmask the underlying trends.

The seasonally-adjusted employment numbers over here have been generally pointing up for the last two years now. This growth in American employment - and the American economy - is not a seasonal effect. It's the real thing.

It sounds from your question like you might be making an assumption about the American economy, and then looking for evidence to fit your view. That's... not a good idea. As soon as you start saying "the data doesn't fit my hypothesis, therefore the data must be wrong!" you've got a huge problem.


Yep, you're absolutely right; I should have clarified "hyperinflation will not happen in the USA" The Weimar, Argentina, and Zimbabwe were crazed kleptocracies. The US is not.


This is doomer rubbish straight out of Zerohedge: rhetorical questions where if I give you a sensible answer you'll just say "but what about ($something else)". If your entire investment philosophy is based on the principle of "buy gold and then figure out reasons to justify it" then I don't think it's worth me spending my time to try to change your mind.

If you really believe this rubbish, then go ahead and put a bunch of money into gold, but don't come crying to me when it dumps to $500/oz.

This is post is regarding the gold portion.



should we pay abit more attention to what Greenspan said last week?
Or should we, like what you say, brush it off as some Zerohedge doomer rubbish?

I admit that I am someone who believes in gold, also would tend to be more bias towards it. Hence I would like to hear your side of the story, why do you dislike gold so much and what do you have to say about Greenspan's speech above? :)
 
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hindsight

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There's nothing wrong with allocating a small portion of your portfolio in gold, afterall nearly all central banks own some gold, but to go all in on gold is just silly. Its like loading your portfolio with put options and nothing else. You are not going to do well in the long run.
 

Shiny Things

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Will you be able to back your words on why Hyperinflation will not happen?
Nope, I can't prove that it won't happen - and even if I did, I doubt I could prove it to your satisfaction. I'm just saying that the Fed is not incompetent.

Anyway, I think this is one of the things we're going to have to agree to disagree on. Unless you'd like to put your money where your mouth is with some inflation options? I'm thinking Europe is where you want to look: Eurozone inflation caps will be dirt-cheap at the moment given how inflation's falling out of bed there right now; they're running the QE printing presses for trillions of euros, so they're right in the crosshairs for your monetary-driven inflation theories; and the ECB is frankly a hell of a lot less competent than the Fed is.

How about a little bet? Eurozone inflation over the next 5 years, measured by the HICP ex-tobacco number, above or below 10% total (not per annum), even money, $100 SGD?

And why are Governments buying golds? Are their Analysts and Economists Doomers too? No government will buy gold then figure out reasons to justify it.

Yeah, actually, I am saying that - governments and SWFs are pretty much the worst traders in the world. They're just like retail traders - chasing fads, buying high selling low (I'm sure you remember Gordon Brown flogging the BoE's entire gold holdings below $300), every single trading flaw - but they're doing it in absolutely gargantuan size with their constituents' money. (The exceptions are the Fed and the RBA, neither of whom you should fight. They're both very very good.)

"But wait", I hear you cry. "The Russian central bank - the CBR - is hoovering up tonnes of gold right now at four-year lows!" So this is absolutely true, but the reason for it is fascinating.

Russia's gold miners are having a bit of a hard time at the moment. They would usually sell their gold production to the Russian banks, which would then on-sell the gold to the global gold market. But right now, Russian banks are about as popular as herpes. They can't buy the gold, because the sanctions on the Russian financial sector mean nobody will subsequently buy it from them - and that means that the Russian goldminers have nowhere to sell their gold. Which is a problem, because apparently miners do not want to get their salaries paid in gold, and heavy-equipment makers and oil refiners don't want to get their invoices settled in gold. They want actual money. (Don't tell the "gold is money" crowd, they won't like to hear that.)

And meanwhile the Russian central bank is having a bit of a hard time as well. It's done a singularly awful job stopping the slide of the Russian ruble over the course of the last year - the currency is off about 25% so far this year, and more importantly Russia is starting to run short of the foreign-currency reserves that it needs to prop up the currency. It can't buy those FX reserves in the market, because it's busily selling them, so where can it get something that it can maybe trade for foreign currency? That's right - the Russian gold-miners.

So the Russian central bank has stepped in and become the buyer of last resort for Russian-produced gold - nearly four million ounces of it this year alone. They're not doing it because they think it's a smart trade, though: they're doing it because it's convenient for both parties.

Russian gold miners, as we already established, are desperate for liquidity. They need rubles. And the CBR needs foreign-exchange reserves - it needs "anything but rubles", but it can't buy "anything but rubles" in the global FX markets because it's too busy selling anything-but-rubles to prop up the collapsing ruble. So buying four billion dollars' worth of gold (and printing the rubles to buy it) is a very clever way for them to prop up their FX reserves.

Russian gold-miners get rubles to keep the lights on; the CBR gets FX reserves to stave off the collapse of the ruble. It's a shotgun marriage of convenience, not sharp trading by the CBR.

Also, this is Russia we're talking about. It takes an awfully big leap of faith to think that the Russian central bank is the sharpest gold trader in the world and also incapable of defending its own currency.

Anyway, I'm not getting involved in this particular discussion any more. We disagree, and we're not going to persuade each other otherwise. Inflation bets above. Deal or squeal.

I think right now the low crude prices is like a coordinated move to screw up the Ruskies. But China is taking advantage of the situation by stocking up massively on crude. Look how fast Putin got the deal done with the tiongs on the gas deal. Geo-politics is so damn interesting~

Also, every time we get a poor report(take this year August NFP results for example), regardless of what, the data would be "revised". Isn't that the same thing like what you say, tweaking the data to fit their view?

Erm, So I'm not going to respond to the second point, because you've just accused the BLS of falsifying employment data; but the first one - yep, couldn't agree more. Geopolitics is great fun. And although the Saudi price cuts seem to be targeted more at the US shale-oil producers, I'm sure they aren't shedding any tears for the Russian kleptocrats either. Saudi Arabia is explicitly launching a price war.
 
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Shiny Things

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I admit that I am someone who believes in gold, also would tend to be more bias towards it. Hence I would like to hear your side of the story, why do you dislike gold so much and what do you have to say about Greenspan's speech above? :)

Oh hey, I totally missed this.

And this is a totally fair question. Why do I side with Uncle "You Can Fondle The Cube But It Will Not Respond" Wozza on the question of "is gold a good investment"? To be absolutely clear; no, I think gold is not a particularly good investment; I don't own it here, but I'd be a buyer down around $500 or $600, just small size (like 3-5% of the portfolio) for diversification.

Couple of reasons. One is a general principle. One is a monetary view. The third is a market view.

The general principle is that commodities in general, and gold in particular, are simply not a very good investment. Over the very long run (decades), they tend to pretty much match inflation, so you get a zero real return. Which is fine, except that over that same very long run, stocks tend to return 5-7% in real (inflation adjusted) terms. My horizon is decades. I know what I'd rather have.

The monetary view is that sorry dudes, gold is not money. The gold standard (and currency pegs in general) makes it impossible to run a country, that's why everyone gave up on it. It basically amounts to tying your inflation rate and your monetary policy to how much shiny yellow stuff some blokes in South Africa or Australia can dig up. No serious economy is going to return to a gold standard - and even if they did, they wouldn't peg it at $10,000 an ounce or some ridiculous number like that and deliver an instant windfall to a bunch of yeehaws whose houses are packed with guns and canned goods. They'd peg it at whatever the market price was, and then you'd be stuck with an asset that never moves.

Thirdly, and this one is my market view - gold prices in the medium term (years, not decades) respond to the level of real interest rates, so, the difference between inflation and short-term interest rates. Inflation goes up, gold goes up; short-term interest rates go up, gold goes down. I think short-term interest rates are headed up over the next few years (and for that matter so does everyone else in the world); that's going to send inflation down; so gold gets whacked from both sides.

Basically, if you're long gold here, you have to think that the Fed is not going to hike for multiple years and they're going to let inflation run rampant. You're basically short the Fed. This is not an entirely stupid view, if you think the Fed is secretly a pack of doves, but it's also probably not going to be a particularly profitable view, because the fed has to hike eventually (and please don't reply telling me "but I think they're going to launch QE4"; that's fine, but you already know I disagree with that view, if you think that's what's going to happen then go buy some Dec 2016 eurodollar calls, if you're right you'll make enough money to retire. The Dec'16 99.25 calls are 10 pips offered on Globex, that's $250 per contract and your absolute worst case is that you lose the $250; but if you're right that there're no hikes until the end of 2016 those will go out at 50 pips and you'll make four hundred percent returns. And even if you're wrong I'll respect you a hell of a lot more for putting your money where your mouth is).
 
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bakuten

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Nope, I can't prove that it won't happen - and even if I did, I doubt I could prove it to your satisfaction. I'm just saying that the Fed is not incompetent.

Anyway, I think this is one of the things we're going to have to agree to disagree on. Unless you'd like to put your money where your mouth is with some inflation options? I'm thinking Europe is where you want to look: Eurozone inflation caps will be dirt-cheap at the moment given how inflation's falling out of bed there right now; they're running the QE printing presses for trillions of euros, so they're right in the crosshairs for your monetary-driven inflation theories; and the ECB is frankly a hell of a lot less competent than the Fed is.

How about a little bet? Eurozone inflation over the next 5 years, measured by the HICP ex-tobacco number, above or below 10% total (not per annum), even money, $100 SGD?



Yeah, actually, I am saying that - governments and SWFs are pretty much the worst traders in the world. They're just like retail traders - chasing fads, buying high selling low (I'm sure you remember Gordon Brown flogging the BoE's entire gold holdings below $300), every single trading flaw - but they're doing it in absolutely gargantuan size with their constituents' money. (The exceptions are the Fed and the RBA, neither of whom you should fight. They're both very very good.)

"But wait", I hear you cry. "The Russian central bank - the CBR - is hoovering up tonnes of gold right now at four-year lows!" So this is absolutely true, but the reason for it is fascinating.

Russia's gold miners are having a bit of a hard time at the moment. They would usually sell their gold production to the Russian banks, which would then on-sell the gold to the global gold market. But right now, Russian banks are about as popular as herpes. They can't buy the gold, because nobody will subsequently buy it from them - and that means that the Russian goldminers have nowhere to sell their gold. Which is a problem, because apparently miners do not want to get their salaries paid in gold, and heavy-equipment makers and oil refiners don't want to get their invoices settled in gold. They want actual money. (Don't tell the "gold is money" crowd, they won't like to hear that.)

So the Russian central bank has stepped in and become the buyer of last resort for Russian-produced gold - nearly four million ounces of it this year alone. They're not doing it because they think it's a smart trade, though: they're doing it because it's convenient for both parties.

Russian gold miners, as we already established, are desperate for liquidity. They need rubles. And the CBR needs foreign-exchange reserves - it needs "anything but rubles", but it can't buy "anything but rubles" in the global FX markets because it's too busy selling anything-but-rubles to prop up the collapsing ruble. So buying four billion dollars' worth of gold (and printing the rubles to buy it) is a very clever way for them to prop up their FX reserves.

Russian gold-miners get rubles to keep the lights on; the CBR gets FX reserves to stave off the collapse of the ruble. It's a shotgun marriage of convenience, not sharp trading by the CBR.

Also, this is Russia we're talking about. It takes an awfully big leap of faith to think that the Russian central bank is the sharpest gold trader in the world and also incapable of defending its own currency.

Anyway, I'm not getting involved in this particular discussion any more. We disagree, and we're not going to persuade each other otherwise. Inflation bets above. Deal or squeal.





Erm, So I'm not going to respond to the second point, because you've just accused the BLS of falsifying employment data; but the first one - yep, couldn't agree more. Geopolitics is great fun. And although the Saudi price cuts seem to be targeted more at the US shale-oil producers, I'm sure they aren't shedding any tears for the Russian kleptocrats either. Saudi Arabia is explicitly launching a price war.

I didn't accuse BLS for falsifying numbers.

it is a fact that August reports that 180,000 jobs were created....and everybody was stunned by that number...which missed the expectations by a big amount. Stocks tumbled....

it is also a fact that after revision, the number became 210,000. This is an upward revision of 16.67%. Stocks then recovered.... coincidence?

These are facts....however people want read into it doesn't change that it happened. So lets leave it as that.


Now for Putin, this is really 1 interesting guy. Wonder what the Tiongs and Ruskies next move will be. Tiongs have a huge bubble brewing in their backyard....and Ruskies are being hit hard by the drop in crude price.

With the increase in pace of new direct currency swap deals all over the world.....think US must be panicking somewhat....wonder what stunt would they pull next.... :D
 

bakuten

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Oh hey, I totally missed this.

And this is a totally fair question. Why do I side with Uncle "You Can Fondle The Cube But It Will Not Respond" Wozza on the question of "is gold a good investment"? To be absolutely clear; no, I think gold is not a particularly good investment; I don't own it here, but I'd be a buyer down around $500 or $600, just small size (like 3-5% of the portfolio) for diversification.

Couple of reasons. One is a general principle. One is a monetary view. The third is a market view.

The general principle is that commodities in general, and gold in particular, are simply not a very good investment. Over the very long run (decades), they tend to pretty much match inflation, so you get a zero real return. Which is fine, except that over that same very long run, stocks tend to return 5-7% in real (inflation adjusted) terms. My horizon is decades. I know what I'd rather have.

The monetary view is that sorry dudes, gold is not money. The gold standard (and currency pegs in general) makes it impossible to run a country, that's why everyone gave up on it. It basically amounts to tying your inflation rate and your monetary policy to how much shiny yellow stuff some blokes in South Africa or Australia can dig up. No serious economy is going to return to a gold standard - and even if they did, they wouldn't peg it at $10,000 an ounce or some ridiculous number like that and deliver an instant windfall to a bunch of yeehaws whose houses are packed with guns and canned goods. They'd peg it at whatever the market price was, and then you'd be stuck with an asset that never moves.

Thirdly, and this one is my market view - gold prices in the medium term (years, not decades) respond to the level of real interest rates, so, the difference between inflation and short-term interest rates. Inflation goes up, gold goes up; short-term interest rates go up, gold goes down. I think short-term interest rates are headed up over the next few years (and for that matter so does everyone else in the world); that's going to send inflation down; so gold gets whacked from both sides.

Basically, if you're long gold here, you have to think that the Fed is not going to hike for multiple years and they're going to let inflation run rampant. You're basically short the Fed. This is not an entirely stupid view, if you think the Fed is secretly a pack of doves, but it's also probably not going to be a particularly profitable view, because the fed has to hike eventually (and please don't reply telling me "but I think they're going to launch QE4"; that's fine, but you already know I disagree with that view, if you think that's what's going to happen then go buy some Dec 2016 eurodollar calls, if you're right you'll make enough money to retire. The Dec'16 99.25 calls are 10 pips offered on Globex, that's $250 per contract and your absolute worst case is that you lose the $250; but if you're right that there're no hikes until the end of 2016 those will go out at 50 pips and you'll make four hundred percent returns. And even if you're wrong I'll respect you a hell of a lot more for putting your money where your mouth is).

I beg to differ.....US enjoyed the greatest growth ever in the 19th century while on a bi-metallic standard. And ever since the Fed was created in 1913....the USD has declined 99% in purchasing power.


Besides....much of the conflict in the 20th and 21st century would have been impossible on a gold standard....only our current debt based economy is capable of running armies that produces nothing and destroys everything...


Also, with today's technology....it would not be impossible to impregnate paper/plastic banknotes with miligrams of gold right? :s13:
 
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yukari_san3

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Shiny.....

I could kill myself!!!

Sold a stock at 10% up only to see it go up ANOTHER 40%.

I feel like a idiot. And feel like I'm very, very bad at finance like my experience means ****!!!

Any advise? I feel tired like my hard work and experience means nothing


Yukari
 
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w1rbelw1nd

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streamofmight

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Hi Shiny

Is it possible to incorporate REITs in your investment strategy? Or is there no point? Also, does your investment strategy clash with a dividend investment strategy like dividend warrior?
 

BiGhaPPyJer

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Due to new technology, shale oil production is revolutionary, which has resulted in oil prices going low and production esp from US is increasing.

Does this represent a structural shift in the oil industry like how smart phones took over pagers,desktops took over type writers, ipod took over cassettes that kind of thing? Will the demand for conventional oil rigs/drill ships go down or does it have its place in shale oil production?Or just some hedge funds spewing misinformation?

Asking as i have a sizeable portion in keppel and sembcorp, do not need a buy or sell advice, just an opinion on the shale oil impact on industry.

Sincerely apologise that you peeps are mainly talking about economics, index investing, QE and going off topic but this thread have people who write knowlegeable stuff!

Too much oil everywhere, too much oil products, too much gas.

Shale oil is game changer this year. Best to go long logistics companies (shipping/rail/truck) as you need to move the associated products, manufacturing industries are performing healthy as costs are declining fair bit as well.
 

BiGhaPPyJer

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That's not going to mean the death of conventional oil, though. Shale oil is much more expensive to extract than conventional, so we're not going to see the end of demand for drilling rigs and drillships - though the glut of conventional oil coming from Saudi Arabia, and the knock-on effect of higher US interest rates on commodity prices, will mean that a lot of active exploration projects become uneconomical over the next few years. I don't know if we'll see twelve bucks a barrel again any time soon, but I wouldn't be too surprised to see sub-fifty bucks (which, incidentally, will make the Russian and Venezuelan economies completely crap the bed, because their budgets won't balance without triple-digit oil).

most producers i know have hedged most of cal 15 and portion cal16, so despite naysayers the reduction in pdctn wont come anytime soon.
 

urameshi_85

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Hi Shiny, would purchasing SGS 10 year bond do the trick instead of A35 if I were to create a STI /Bond portfolio.
 

wahkao3

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Shiny.....

I could kill myself!!!

Sold a stock at 10% up only to see it go up ANOTHER 40%.

I feel like a idiot. And feel like I'm very, very bad at finance like my experience means ****!!!

Any advise? I feel tired like my hard work and experience means nothing


Yukari
why u sell
let your profits grow big big mah?
 

sgdividends

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Hi,

What is the impact of Basel III on banks and which metrics should l look at to determine which banks would benefit or not benefit from this?

I just got a hazy idea that it just requires banks to keep more capital to reduce the risk of bank runs. This in turns reduce the amount of loans banks can loan out and therefore reduce net interest fees which is bad for banks in general. I also read that Singapore banks are not as affected by Basel III due to the kiasee regulations of MAS.

For now i am just looking at p/B to determine, is there any metrics that are vital? I know i cant value them like a normal company as there is just quite many parts in banks and they are so complicated!

Any insights will be helpful
 
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Shiny Things

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What is the impact of Basel III on banks and which metrics should l look at to determine which banks would benefit or not benefit from this?

I'm not the guy to ask; I'm not a bank analyst. Start a new thread for this, see if anyone has a bit more insight than I do.

Sold a stock at 10% up only to see it go up ANOTHER 40%.

I feel like a idiot. And feel like I'm very, very bad at finance like my experience means ****!!!

Any advise? I feel tired like my hard work and experience means nothing

You made 10% and you're complaining?

So what you've got there is called seller's remorse - it's the opposite of the buyers' remorse you get when you buy something and it goes down. The only advice I have is "learn to deal with it"; it's inevitably going to happen. Be glad that you made the 10%. Go spend it on a nice bottle of plonk or a steak or something.

why u sell
let your profits grow big big mah?

You sell when you want to lock in a profit. That's trading 101. Don't tell me you've never sold a stock too early and watched it go up even further; that's just a risk you run whenever you close a position.

Hi Shiny, would purchasing SGS 10 year bond do the trick instead of A35 if I were to create a STI /Bond portfolio.

Mmmm - yeah but it's not ideal. A35 holds a few other government-linked issuers, and it holds a ladder of bonds so it's a bit different from just holding straight 10-year. If you hold the 10-year you're going to need to reinvest it every 10 years or so.

most producers i know have hedged most of cal 15 and portion cal16, so despite naysayers the reduction in pdctn wont come anytime soon.

This is VERY interesting info, thanks mate. Looks like the nosedive in Brent and WTI is going to continue. If you don't mind me asking, what kind of producers do you talk to - Asian, mid-Eastern, the big global names?

Stick around, we need more people like you.

Is it possible to incorporate REITs in your investment strategy? Or is there no point? Also, does your investment strategy clash with a dividend investment strategy like dividend warrior?

Sure you can - I personally don't, because I'm not a huge fan of real estate as an asset class, but there's nothing wrong with having a 10% allocation to REITs, especially if you're older and need to focus on income instead of capital growth.

And yes it does clash a bit. The ETFs I use do throw off some dividends, but the idea is to reinvest those divs - they're just another form of total return, in my point of view. Not that DW is wrong, though: his strategy's totally legitimate and very sensible.
 

cybercom8

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shiny,

what is your outlook on the usa stock market? just a few weeks ago, many were saying sell sell sell and although they were right and it did go down, it shot up again, surpassing the oct prices at which i would have sold.

should i buy halliburton shares at above US$50+?

thanks
 
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