I am now almost down 30% and was almost 50% at 1 time , however due to re-allocation of stocks into energy sector recently, actually pure oil play, somehow manage to gain back some of the lost sheep from super growth stocks.
In the parallel world we are living compared to 1970s where the Middle East use oil as a weapon and cause surge in oil prices. I am of the opinion Russia thingy is kind of eerily similar and the worst is yet to be.
And strongly believe oil is yet to peak. However when it does peak and starts to drop, It will signal mother of all decline as it will drag S&P to the bottom since by then all growth stock would have been crushed. That is why the market bottom will be and it probably signal the recession train have left months ago.
But that is where we all cry at a corner. For now, energy just represents 5% of S&P whereas in 1972, it was 7% and goes tot he roof of 28% by the time oil peak $120.
As for the fear of recession caused by oil inflation, as quoted by one analyst:
”
The rule of thumb I learned from auto industry economics in the 1990s is that if oil prices go up 100% in a one-year period, expect a recession,” he says.”
That would mean $130 or so range over a persistent period before demand destruction starts kicking in and gravitate us into the recession hole. As a matter of fact, $130 is not even an inflated figure consider we hit $120 in 1980s and that was 40years ago.
With all renewable sources not able to pick up faster than the oil sources, and EV population not growing faster the ICE can be put to sleep, the oil price will continue increase as Covid measures continue to be relax across the world including China not withstanding, eventually.
I am holding my current full allocation of oil stocks till I see oil price reach at least average of $120 for at least 1 quarter.
And of course my bet for a market bottom is that Idk but a VIX above 50 is probably a good indicator to begin with, for those who still hv faith in growth stock theme.
My question is how many of you actually rotate to oil or energy sector and intent to stay how long , if that is the case.
If you are Warren Buffet, pls do not bother to reply.
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