The Energy Famine Has Become a Feast

The Dividend Cafe

The Dividend Cafe - The Bahnsen Group

Dividend Growth Investing, Investing, Estate Planning, Monetary Policy, Wealth Management, Business, Retirement Planning, Macro Economics

4.9 • 572 Ratings

🗓️ 28 January 2022

⏱️ 25 minutes

🔗️ Recording | iTunes | RSS

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Summary

I understand it may seem odd to devote a Dividend Cafe to the particular subject of the Energy sector in a week of surreal market volatility and media obsession over the Fed. But in fairness, I write about the Fed almost every week, plus four days a week in The DC Today, and the entire subject of monetary theory underlies all that we do in capital allocation at The Bahnsen Group. Our nuanced views on the role the Fed currently has in financial markets are known, and to co-opt my planned Dividend Cafe subject yet again to cover the thrilling story of the Fed moving interest rates exactly how we knew they would, is not going to happen.

But the Fed was not the only story (non-story) this week. Markets are in a pattern of daily incoherence as traders, algorithms, novice investors, speculators, and other such inconveniences work through the challenges of a paradigm shift. What the futures say at night has nothing to do with what they will say in the morning which has nothing to do with what they will say at the open which is fully disconnected from intra-day activity which then leads to a totally unpredictable market close. Then, rinse and repeat.

So I’ve written about our low opinion of “shiny object” investing, and the avoidance of such has a lot to do with the way our January has (thus far!!??) gone. But the energy sector is up +18% this month as of press time in a YTD market that has a Nasdaq down -15% and S&P 500 down -10%. We need to look at that. Is Energy becoming a new “shiny object”? Is the sector a trade or a long-term opportunity? What aspects of energy investing appeal to us right now? Where do environmental, political, and macroeconomic concerns fit in? These subjects all deserve their own Dividend Cafe, and that day is today.

So jump on into the Dividend Cafe …

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Transcript

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0:00.0	Welcome to the Dividing Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life.
0:12.8	Well, hello and welcome to another edition of the Dividend Cafe.
0:17.2	I am extremely excited about this week's Dividendon Cafe because I am extremely excited about this week's Dividing Cafe because I am successfully resisting
0:25.6	the temptation to want to talk more and more about market volatility and shiny objects and all the
0:31.2	things that have been in the market. But I really do feel that me writing about it every day
0:36.2	in D.C. today dedicating last last week's dividend a cafe to it.
0:40.5	Not to mention, pretty much everything has come out of my mouth about the subject for well
0:44.1	over 20 years, I think ought to be enough for now.
0:48.7	So, yes, a lot of volatility, a lot of incoherence and a lot of erratic stuff going on in the markets.
0:56.4	And yet I really think that we are wise to stick to our plan this week to discuss the subject of energy.
1:05.1	And so the energy sector is a topic that's near and dear to my heart and has been for quite some time.
1:12.3	It's been a big source of client portfolio activity for good and for bad for a long time.
1:20.2	And I want to unpack where I believe we are in the U.S. energy sector and what that means to investors.
1:31.2	The energy sector has traditionally been a large part of the S&P 500.
1:36.0	It's been a large part of the American economy.
1:39.1	There have been times when one of the largest energy companies in the sector was one of the largest companies in
1:47.1	the world and in our country, of course. And yet the entire energy sector put together now has
1:54.6	become a very, very, very small part of the market. And much of that has to do with a lot of changes that have taken place over the last
2:05.0	decade that I'm going to unpack for us here today.
2:08.5	But what we do know is when I mentioned this market volatility we're dealing with
2:13.8	and for some people, what feels like market distress, the NASDAQ being down,
2:21.4	as I'm sitting here recording, about 15% since the year started. And the energy sector being
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