The Truth is Powerful
Energy inputs are always going to be cyclical with the economy. This is the primary topic of this week’s “ETF Report” on Yahoo Finance . VettaFi’s financial futurist, Dave Nadig, was on hand to discuss how the energy sector has shifted, considering where things are in the market.
As Nadig states, “When people think the economy is doing well, oil tends to run up. On the contrary, when people think we’re heading for a recession, oil tends to come down. However, digging under the hood, funds like the Energy Select Sector SPDR ETF (XLE) are sitting with four-month lows, making it an obvious bottom call to say now.”
With that in mind, energy companies are pretty disciplined. They are returning cash to investors through dividends and buybacks instead of chasing oil prices. There shouldn’t be a push for vast swaths of investments chasing short term price swings, Nadig notes, as that leads to even worse bus cycles. Focusing on the energy companies that are putting up pretty solid yields is an excellent place to start for investors, as opposed to eschewing energy from one’s portfolio.
“We’re going to be in the midst of a major energy transition for the rest of my […]