You don’t need me to tell you that the last few months have been a time of massive volatility in energy, indeed in just about every imaginable tradeable market. With massive volatility, though, comes not just increased risk but also massive opportunity, in both short- and long-term trades.
The short-term ones involve spotting likely trends, such as when I recommended a couple of fuel cell stocks three weeks ago, FCEL and BLDP just before they jumped sixty and forty percent, respectively. The long-term opportunities can also be identified based on spotting potential trends, although of a different kind. In the former, you are looking for the next trendy pick, in the latter, for investment themes with long-term appeal and staying power.
To me, the biggest of those in the coming years, never mind weeks or days, is going to be the search for yield. It is what led me to recommend RDS.A back on March 20th, when it was in the low $20s, and it still applies now.
We live in a world where the 10-Year U.S. Treasury, which, keep in mind, is issued by a government with $23 trillion of debt, returns less than 0.7%, and the debt of some other nations has a negative yield. That creates a problem for large funds and institutional investors, who typically hold some yielding securities to produce regular income and smooth out return.
Based on what Fed Chair Jay Powell said this week, those ultra-low rates are not likely to change any time soon either.