Oil and energy investment opportunities
Posted by jdavis on April 21, 2015
We see two distinct equity investment opportunities with a rising oil price as well as another energy commodity opportunity.
"Did he say a rising oil price? Hasn't oil been crashing?" I did and it certainly has. But the price of oil, on global markets, is up about a THIRD since just last month! As we have often reminded, nothing goes in a straight line. Also, anything that crashes or soars will eventually reverse.
You can see the (US) oil price crash, from last Summer. You can also see the price steadying since the beginning of the year and soaring these last few weeks.
This is putting significant strength into energy shares and also Emerging Markets' shares.
In late March we invested into Global Energy shares and we increased our investments in Emerging Markets' shares. The former is already up around 12% and the latter 7%. In Emerging Markets, some 50% is energy related within the diversified portfolio of countries.
If oil continues rising, these will likely prove excellent investments and most timely.
Also, we see opportunity in US Natural Gas which we have held and continue to do so. We invested in this after a c 90% fall in the price, since 2008.
So, currently our recommended exposure to energy and related is c 20% of portfolios.
One of our two investment philosophies is seek out quality assets that have crashed or even collapsed in price. Buying cheaply invariably reduces investment risk.