Do You Need More Energy?

JC Parets
January 22, 2023

It's not a secret around here that Energy stocks have been doing well.

No one here cares that some investors got caught holding the bag in those growthy tech stocks, and didn't have anywhere near enough energy exposure over the past couple of years.

It's not my fault that the S&P500 was only 2% Energy but 26% Technology.

It's not my fault that the Nasdaq100 has 0% Energy and 50% Tech.

And now Energy still only represents closer to 5% of the S&P500, although still near the 0% mark in the Nasdaq.

It's up to us as investors to go get the energy exposure. We can't leave it up to some random index providers to do it for us.

And as well as Energy has done, and as happy as we have been to both see it and participate along the way, it's the more recent price action that has me the most impressed.

Look at the Energy Sector Index pushing up against new all-time highs, despite a historic decline in Crude Oil prices:

Think about it like this. With Energy stocks pushing up against new all-time highs, Crude Oil would need to appreciate by 60% from current prices, just to get back to last year's peak.

So the way I see it, if Energy stocks couldn't correct in an environment where Crude Oil prices are collapsing, how will Energy stocks do with more stable Oil prices?

And what if Oil actually goes up again?

There are Energy stocks we've been buying.

There are even more that we're buying now.

This has been the place to be for quite some time. Just because other sectors like Technology are now participating to the upside doesn't mean Energy can't keep doing well.

In fact I think it does.

All the details on our trades are outlined here

Let me know what you think!

- JC

 

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