Right now, a lot of investors feel alone in a sea of red. But they shouldn't... even though the market's recent seesawing action has been frustrating and downright frightening in some moments. Remember our motto: Don't panic. Or, for fans of Dune (and not The Hitchhiker's Guide to the Galaxy), remember, "Fear is the mind-killer..." There are beautiful islands of green in these rough seas. And beyond that, in moments precisely like these - when anxiety and uncertainty are at a premium - one of my favorite long-term strategies can be turbocharged. So pull out your wish list and get ready to shop! Black Gold Prints Barrels of Green All the way back in January, I laid out my case for why crude oil was in for a tremendous year. I predicted the "black gold" would top $60 per barrel - a level not seen since the early days of 2020. A couple of months later, in March, I upped the ante and raised my forecast to more than $75 per barrel. On Monday, the price of U.S. crude peaked at $78.38. We haven't seen a peak this high in crude since November 2014. And year to date, the gooey remains of dinosaurs, prehistoric plants and other organic material have left the broader markets and the vaunted FAANG stocks eating their dust. Crude is outperforming tech stocks by more than fivefold this year. Take that, Netflix (Nasdaq: NFLX), and your devilishly bingeable Squid Game! Of course, this is an outcome we saw unfolding. Energy was the worst-performing sector of the market last year. The U.S. ended the year with the fewest rigs drilling for crude since 2005. And that was all the way back before the modern shale era in oil. Due to wells being shut in - as well as the insanely small fleet of rigs working - a situation was set up where U.S. crude would slingshot higher as demand began to normalize and the world tiptoed out from the pandemic. And a little push from Mother Nature - in the form of winter storms and hurricanes shutting down operations again - created more of a supply crunch. Taking a position in the Energy Select Sector SPDR Fund (NYSE: XLE) at the start of the year would have handed investors a nice return. It's up more than 45% year to date. Now, this wouldn't be as nice as the performance of crude itself. But during the drama of 2020, a select group of readers used one of my favorite long-term strategies for beaten-down markets to score even bigger returns! |
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