Quote:
Originally posted by jkarolyi
Common sense would tell me that if my oil tanks were full, I need to start lowering my price to move inventory.
|
Why? Demand drives the price as much as the supply...and demand for oil is very high.
You are selling Porsches. It's a pretty constant business but demand lately has gone up and the factory really can't build anymore than they are. Maybe they will build additional production capacity, but that is going to take a while and they are having problem finding a place for the plant. Your instinct tells you that the supply of Porsche's will only get tighter because demand will continue to grow while supply will not improve.
So, even though the lot is full today, are you going to lower your asking prices to clear out the lot? Probably not because you think you will be able to ask a premium tomorrow. In fact, if you are quick about it, maybe you can snap up some Porsches from other dealers TODAY and make even more money TOMORROW.
That's what speculation and futures contracts are about
: How much is going to cost TOMORROW.
That's the idea.