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its peak in June 2014. Check out the chart to the left... This is what’s possible when you buy during a crisis . The biggest gains don’t happen after a bad situation is already better... They happen when a market looks terrible, but is actually
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Energy Select Sector SPDR Fund (XLE) XLE went on another triple-digit run from 2009 to 2014
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starting to improve. That’s the classic “bad to less bad” setup I love to find... when expectations are so low that any positive news can drive prices higher. And when it happens in the energy market, life-changing gains can follow. In a lot of ways, today’s oil crisis is even worse than what it was in 2008. It’s been a multiyear gutting, topped off by the devastation in 2020. So our upside potential could be even larger than what we’ve seen in the past. But we still have to consider a couple of lingering questions... Is the oil market really going to survive this? Or is this bust different? Let’s take a look at the oil market as a whole. As you’ll see, oil ain’t dead yet... TODAY’S ENERGY BUST WON’T LAST FOREVER Are you familiar with the Baker Hughes Rig Count?
Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. Pull quote. It was a massive contrarian bet... one that few had the guts to make. Yet it was exactly the right call. Energy stocks rallied hundreds of percent over the next six years. This wasn’t the only time this scenario has played out. We saw a similar opportunity during the 2008 financial crisis... That was the worst economic crisis since the Great Depression. The U.S. banking system was on the brink of collapse. The unemployment rate ultimately skyrocketed to 10%. And the mortgage default rate hit 28% in July 2008. Importantly, oil prices also crashed in late 2008, falling 78% in a little over five months. Each of those reasons on their own would have been enough to keep you out of the energy market. It was bad out there. But if you stepped up to buy energy stocks during the crisis, you could have done darn well over the next few years. XLE rallied 192% from early March 2009 to
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January 2021
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