Black-Gold Investing in hated energy sectors.

Learning how to invest in Black-Gold, hated energy sectors, this is value investing 101. Firstly it will challenge you to buy when the market seems to hate this energy sector and wait for the blackness of the sector to turn to gold as the real demand and profits compound.

Supply and Demand

Two factors that move the price of any commodity, and they are supply and demand. From a macro level, we see governments artificially decreasing the supply of certain carbon-emitting energy sources which are the lifeblood of our economy.

Government regulations create monopolies.

Pop quiz: what was the top-performing commodity from 1990-2010? If you said Tobacco you would be correct.

During the 1990s and forward tobacco has been demonized. And to some degree, we all agree that it is a toxic and harmful vice but adults have free will. Do we still have free will? Tobacco was regulated, taxed, and fined to the hilt. No one predicted that it would be a good investment.

But Supply and Demand.

They demonized the hell out of tobacco and put poison stickers on the boxes but demand still only grew. They taxed the industry heavily and the manufacturers got restricted but they just passed the cost onto the consumers.

Regulation Restricted New Start-Ups.

What they did to the tobacco industry caused a very big barrier to entry for new competitive companies to come in. This caused prices to go up because the supply was limited but the demand and competition were squelched. The old companies could set the price of the market. Remember earring smokers complain about the price of Camel or Marlboro’s cigarettes but go out and buy them. Remember smoking sections inside restaurants and in all bars. I’m dating myself but I do.

So why does this matter?

If you are going to buy low and sell high, you must buy low. Duh, but that comes from buying depressed sectors and holding them till they appreciate and are fairly priced or overpriced and sometimes picking up dividend profits along the way. And so making a large profit selling them when they are overpriced.

This strategy is not for everyone.

It’s essential value-investing. Buy what is hated and loathed. The average 401k investor or mutual fund buyer is an emotional buyer, not a long-term thinker. Throwing some money at an index fund and holding it for thirty years but what if they end up in a depression when they are nearing retirement age? The stock market doesn’t only go up.

Be a proactive investor and stock speculator.

“Rich people don’t sleep eight hours a day!” he said while forcefully clapping his hands. “That’s a third of your life. It ain’t but 24 hours in a day. You cannot be sleep eight hours a day. You can’t live in L.A. and wake up at 8 o’ clock in the morning. It’s 11 o ‘clock on the east coast.  The stock market been open two hours. They already making decisions about your life and your ass was asleep.”

Steve Harvey

Go get differing ideas, and make your educated opinion. In this day and age savers are screwed. They can’t stuff money into a savings account or in bonds and see it accumulate when inflation is eating their lunch and interest rates are nil. Don’t take my word for it.  Get educated.

Go where you think the puck will be and not where it is right now.

Rich people, wall street and the media, big tech and the government, and your boss all have default plans for your life. If you do not have a clear definite plan they will give you one but you will not like it! The prize goes to the fighter. The reward goes to the hunter. What makes people so easily give up control of their own brains when it comes to money?

Back on topic: Black Gold- Investing in the hated energy sector.

Black Gold- Investing in the hated energy sector. So what we have some would say is a perfect storm. A powerful force in the world is pushing the green new deal-type agenda. This is the renewable energy sector. The plan is to fine companies for carbon emissions and tax the hell out of them. Promising to dismantle coal energy and oil and fossil fuels.

The Catch 22

The new world order wants the green new deal. FYI, in my opinion, they are using this cause as means of promoting personal power and totalitarian control. But the short-sightedness of governments and special interest groups is causing a decrease in the supply of energy and a simultaneous increase in demand.

Sectors to watch and why.

Oil and Gas, Uranium (Nuclear Power), and Coal. Oil and gas because politics has put the supply of oil and gas low. We have given up energy independence to the Middle East again. Even with the growth of EVs, Electric Vehicles, the majority of vehicles on the road today are powered by gasoline or diesel. The increase of EVs into the market will slow demand at some point but how fast and to what degree?

Electric Vehicles create other energy sector problems. The batteries needed to power electric vehicles are much larger and contain much more silver and copper metals and these industrial metals are mined by heavy machinery that at this time require fossil fuels aka oil and gas to fuel.

Then these EVs must have their batteries charged on a sunny day at home if you have a solar farm in your backyard that is great but if not you will need to go to a fueling station that will be powered by the grid. Grids in Texas got schooled when a blizzard hit in 2021 causing a large portion of the state using green energy to be blacked out for over a week.

Uranium

Many experts are saying that unless the lights go out the price of Uranium must go up or it won’t be produced. Demand is going up but the supply of energy has stayed the same or gone down in many cases. Relying on green energy at today’s level of technology can not sustain the power grip but only supplement it. Europe has been forced to buy oil and energy from Russia because their green energy plans have not been sustainable. Yet some European countries like France have embraced Nuclear power as green energy and have a surplus of power. We are now seeing many more countries recognizing Nuclear power as a new green energy source.

Oil and Gas.

In march of 2020, the sector went negative with the crash of covid19, but the smart money picked up bargains and made a short-term windfall and may see even a lot more growth potential in the future.

At that point in March of 2020 Value Investors were able to buy at near a twenty-year low price, while the company was paying a dividend to its stockholders of close to 9%.

Coal

Probably the most hated energy sector, but the third world and developing countries are dependent on coal. India is not going to be able to scrap its power grid of coal, any time soon. Companies like Peabody, BTU have seen massive discounts in their stock prices while still being profitable businesses with assets.

Start doing your homework.

Start researching some of these sectors that should continue to grow with inflation. Inflation going up will increase the cost of energy and cause prices to continue to go up.

Get on Webull and start checking the charts.

I recommend opening a Webull account and start comparing charts and doing research on multiple companies in the sectors till you find the ones you believe will have the most investment return potential. Companies like: Peabody Energy Corp, trades under the stock ticker BTU, Exxon Mobil, trades under the symbol XOM, Valero Energy trades under the stock symbol VLO, Cameco Corp trades under the ticker CCJ, Sunoco LP trades as SUN.

Do not be passive and weak.

The above are not stock recommendations but instead ideas to start looking at. Do your research and find out where you can profit. The rich are getting richer and the poor are getting poorer. The key is to do what the rich do on payday and buy assets and investments. As inflation grows the asset prices get off the sidelines and into the game of your life. Learning the great life lesson: “It sucks to suck.” 

“For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away.”

Jesus Christ -Matthew 25:29

For more on this topic read Cash is King or is it? Click here to read more.