Everyone thinks energy stocks are doing really poorly. But look at the charts of these energy companies—they’re at 52 week highs:
They’re kind of similar aren’t they? That’s because they belong to the same energy sub-sector.
There are three main sub-sectors in energy:
- Upstream – the oil and gas producers and service companies that revolve around drilling; getting the hydrocarbons out of the ground
- Midstream – companies that transport oil and gas by land and water, and the companies that support them—pipeline companies, trucking, railroad, barge, tankers, transloading comapnies all fit into this category
- Downstream—refineries and companies that support them, including petrochemicals
No matter what is happening in the energy sector, one of these sectors is in a bull market. The problem for investors is that they see the oil and gas sector as too narrow—meaning, it’s just the producers.
And North America has the most vibrant, transparent, well-funded and technically savvy junior producer market in the world—by far. But it really is a small part of the market. If you’re determined to only play in that sandbox, you will suffer long periods of…ambivalence at best, and depression at worst.
Plus, I like my money to be working for me all the time. When I see stock charts like the ones above, I know I’m in the right spot where my money is working best.
There’s actually a set-up right now in the oil markets where this sub-sector can’t lose the next period of time. That’s the real secret of investing—finding a sector where everything is going your way.
I outline my thinking, and the actionable investment idea that I’m using to increase my net worth right now.
You can see them on the charts above—it’s working great this year while other investors are crying in their oil.
Keith Schaefer
