We have been in a bull market powered by fiat currencies printing and leveraged on debt.
Agree to some extent, but growth in some places, e.g., China and India, is IMO real and organic. Growth in the US is slowing and I think a very large part of it has been driven by easy cash dropping from helicopters. Financial wizardy not based on healthy underlying economic activity has propped up US markets for some time to some extent, though you must not forget the ever-increasing role foreign operations have in American corporations' profits. For all the hoopla about Chinese manufacturing, the profits from the sales of Chinese manufactured goods go mostly to the designers, brand owners and retailers, i.e. American and European companies.
Should my worst fears and best hopes come true, energy will fall, because energy is a bull market play.
Disagree, energy and commodities are macroeconomically and growth driven. If the US or any significant economies start slowing growth or end up in recession, energy and commodity prices will fall for lack of healthy demand.
In the case of Black Gold, there is another consideration: supply. Everything I see and read suggests capacity constraints everywhere. Peak oil is either here or approaching. If so, energy will continue to be a very healthy sector. Geopolitics is another significant factor. If the wacky headhacking MadMullahs, Wahabbis, and tinhorn dictators of the world like Hugo Chavez have their way, oil might be in shorter supply than we ever imagine. The Cuddly Canadians are of course excepted and they have the most oil of all in their Alberta and Saskatchewan sands. Even the Chinese are kowtowing to our Canadian cousins, thus far not very successfully.
Because there is geopolitical risk and constrained supply, I see Black Gold at worst staying level. If the helicopters continue to dump cash and some semblance of growth takes place, energy will continue to do very well.
My thesis has worked well so far with XOM, MRO and VLO.
I took a healthy dip on Friday the Thirteenth into what I thought was an undervalued Canadian sands play, BQI, and was pleasantly surprised with a 23% return in a week.
But, yes, there is a rumbling in The Force. The US markets horrible day Friday presages something not good. The Dark Side is getting closer and stronger. Perhaps a good time to take profits, monetize. |
