It’s stunning how behind the times the analysts can be.
It is, in fact, the one thing to our advantage as independent investors – we care only about being right and less about not being wrong. When oil began dropping below $80 a barrel in early 2015, I admitted my mistake, abandoned my thoughts of a constantly bullish oil market, analyzed the real inputs that were causing the collapse, realigned my thinking for investing in the space and even wrote a book on the whole affair.
Meanwhile, oil companies were whistling through the graveyard – dropping capex projections while continuing to pump oil until the wells that were already on tap were producing at greater volumes than ever. “Keep Calm and Frack On” was the battle cry I heard at every conference in the early months of 2015, as I was telling readers that the time for investment in the oil space wasn’t going to reemerge for months and perhaps years. Oil companies laughed at the idea that oil prices would remain low, and assumed that the drop in oil prices couldn’t possibly last more than a quarter or two.
Now, everyone is starting to believe it – even to the point of ridiculousness. Two of the most influential analysts in the energy sector – both Goldman Sachs and OPEC itself are betting that oil prices that won’t reach $80 again for the next 5 years at least.
Again, this is where I push forward the reality check. Now the pendulum has begun…