It’s Time To Get Greedy In The Energy Sector

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 and the gold miners ETF (GDX) has doubled.

Looking at the energy sector today, I’m reminded in so many ways of this 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.

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.

Investors have clearly become very fearful of this sector, consistently pulling tons of money out of the sector. 

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Disclosure: Information in “The Felder Report” (TFR), including all the information on the Felder Report website, comes from independent sources believed reliable but accuracy is not ...

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Moon Kil Woong 1 year ago Contributor's comment

The energy sector is a good place to be safe in this market, although I don't think it will make you rich which is why so many have fled this market. If there is too much of a buying frenzy it will only encourage weak players to issue more stock and overspend which will lead to more overproduction. This is why it is more a gradual play than a potential grand slam.

Carol Klein 1 year ago Member's comment

Your cautious words make a lot of sense Mr. Kil Woong.