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Cahya Ibrohim
Dec 12, 2019 12:49AM ET
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It’s Time To Get Greedy In The Energy Sector
www.investing.com/analysis/its-time-to-get-greedy-in-the-energy-sector-200491953
It’s Time To Get Greedy In The Energy Sector
By Jesse Felder | Dec 11, 2019 05:20PM ET It feels like yesterday but it was over four years ago that I wrote, “It’s Time To Get Greedy In The Gold Market.” Gold was under $1,100 an ounce at the time and, for a number of reasons, it felt like there was the proverbial “blood in the streets” that marks a great time to buy.
As I wrote at the time, “It’s very easy to say, ‘be greedy when others are fearful,’ but it’s another thing entirely to actually do it.” And it was not easy to be a buyer of gold while it was so deeply out of favor but it has paid off since. The gold price recently hit $1,550.
Looking at the energy sector today, I’m reminded in so many ways of this recent opportunity in gold. This looks to be the third losing year in a row for energy stocks, a pretty rare feat for any sector or asset class. And it comes after the back-to-back losing years of 2014 and 2015 (only 2016 kept it from being a six-year streak!). Gold had nearly gone four straight years of losses when it bottomed in 2015.
And, according to my friend, Meb Faber, it’s just this sort of persistently painful performance that typically sets up a terrific rebound.
Felder Tweet
The relative performance of energy has been so painful that it now makes up the smallest share of the S&P 500 in over two decades.
Felder Tweet
Investors have clearly become very fearful of this sector, consistently pulling tons of money out of the sector.
Felder Tweet
But there are signs of hope. Typically, inversion of the yield curve, as we saw over the summer, is a good sign for the relative performance of the energy sector.
Felder Tweet
And as my friend, Eric Cinnamond, points out, energy stocks have also become really cheap.
Felder Tweet
So cheap, in fact, that they now offer their highest yields in history which, as my friend Louis-Vincent Gave points out, should help to put a floor under the shares.
Felder Tweet
Finally, the smartest of the smart money appears to be circling the sector as they smell a rare opportunity.
Felder Tweet
To paraphrase what I wrote about gold four years ago, I’m fairly certain that energy stocks are now the most hated group in the markets. For that very reason, they are likely the most attractive opportunity an investor can find today.
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It’s Time To Get Greedy In The Energy Sector
Comments (5)
Sanjay Kumar
Dec 11, 2019 10:47PM ET
sir tell what we do sell or buy ?
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Mike Okane
Dec 11, 2019 10:47PM ET
$XLE as a core and I like $MPC $SU $DOW
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Michel Mery
Dec 11, 2019 10:39PM ET
but you didn't mention any stocks or group of stocks
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Eric Haberman
Dec 11, 2019 8:35PM ET
This is my type of story! slowly buying strong energy companies
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Ken Homberger
Dec 11, 2019 8:18PM ET
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