4) Patience is a virtue.
In April 2013 (India’s Stealth Game Changer) we had highlighted that oil prices could fall owing to technological advances and new sources of oil. We had called cheaper fuel India’s stealth game changer. It took almost 15 months for our thesis to play out when oil decisively cracked in June 2014. Today oil prices are at one-third the level from its peak in 2014.
If you believe in the fundamentals behind a macro call it is very likely that prices do not follow the expected pattern for a long period of time, but when it does play out it could be swift and steep. Such was the case with oil that it diverged from other commodities like coal, iron ore and steel as it stayed higher for longer, but eventually caught.
When it comes to macro trades, patience is a virtue.
Source: Bloomberg. Data as of Dec. 15, 2015.
