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Making The ‘Obvious’ Trade In A Recovering Energy Market

I have spent nearly four decades in and around financial markets, and that experience has left me with certain habits and preconceptions. I am, for example, usually reluctant to take an obvious trade and would far rather take a contrarian stance on a well-hyped story. I guess if I were to sit down with a psychiatrist, they would tell me that that is a product of the kind of arrogance that is needed to survive in a dealing room, but I prefer to think of it as a sensible way of avoiding a crowded trade. When a strategy is obvious, lots of people get involved, and when a lot of people trade in the same direction, even a small change in circumstances can prompt a rush for the exits. Meanwhile, the upside is limited simply because everyone who wants to buy already has.

Sometimes, though, the obvious trade is the right one to take, and that is the case now after Joe Biden revealed his administration’s infrastructure plans.

Let’s not fool ourselves, not even the most ardent Biden supporter can really believe that the plan as written will get through Congress. As easy as it is to get support for infrastructure projects, which usually look a lot like “pork”, through the House and Senate usually, the polarization of politics makes it virtually impossible right now. Republicans, who stood by and did nothing as Trump busted the budget over his term, have suddenly turned into fiscal hawks with a Democrat in the White House. Democrats, on the other hand,…

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