As a professional trader, I depend upon having a plan. One of the only things that sets me apart and gives me any advantage in my energy investing decisions is the plan that I devise. You need one too.
I cannot stand investment advice that is based upon, for example, the reading and analysis of corporate reports – this is the most ubiquitous and 'known knowns' of investing information and, I've found, nearly useless in practice. If everyone's got it, it's got to be worthless – that's what I believe.
In the energy sector, my plan has been well documented in my book and I again invite you to read it. From a macro point in that timeline that I laid out, we are in the final 12-month throes of the oil bust cycle. That means that although there are likely several quarters to go before oil companies again become profitable and growth candidates, the stocks will begin to react to that upcoming turnaround.
In fact, I believe that has already begun.
Inside the energy sector are several sub-sectors that will move at different rates of speed in this recovery process and I have focused mostly on the ones that I believe make the return move first: the independent E+P's. But in making your own plan for investing in the energy space, you need to know where your money will do the most good the quickest. So here's an overview on what I believe will be the staggered return profile for some of the major energy sub-sectors. From this, you'll be better able to…