The Worst Energy Bust of Our Lifetimes

"Those deer are going into a rut," my friend Cactus told me as we drove along the fence line of his ranch on our way in from the airport.

"A rut, ooh, is that bad? Are the deer going to need our help?" I asked.

Cactus started laughing uncontrollably. "They're not falling into a hole, Steve – the rut is deer-mating season! I sure hope they don't need your help! Ha ha ha!"

And so it went, right from the get-go... I was an easy target, the butt of all the Texas jokes for the next few days.

Cactus Schroeder is a longtime West Texas oil man, and a longtime friend of Porter Stansberry's. He has been inviting me out to visit him in West Texas for probably 15 years.

But what the heck is there for me in West Texas? I do love hanging out with Cactus and learning. But... West Texas? Why would I go out there, right now?

For 15 years, nothing has compelled me to take Cactus up on his offer. But in the last year, a crazy confluence of events has shaken the energy market like it has never been shaken before.

So I got on a plane last month. And what I saw firsthand was incredible...

I shocked my wife, telling her I had to head to West Texas for a week. "Do you really need to get on a plane right now?" she said.

"Yes. It's the right thing for my readers. This could be big. And I have to see what's going on firsthand."

I realize that heading to West Texas of all places – during COVID-19 and a tech-stock Melt Up – sure doesn't seem like the best move. But here's the thing...

The story of one of the best investing opportunities on earth – for the next two years – starts in West Texas.

Longtime DailyWealth readers can guess my line of thinking...

You already know that the biggest opportunities start where nobody is looking – where everybody has given up. And, well, nobody is looking at this West Texas investment right now – everybody has given up.

"Is this the worst energy bust you have ever seen?" I asked Cactus.

"I've been through seven oil busts, Steve," he said. "1986 was the worst – until now."

Cactus explained that three events have come together to create a disaster for the oil market...

  1. The money dried up... Wall Street gave up on shale and left.
  1. The Saudis (and Russians) flooded the market with oil.
  1. COVID-19 led to economic shutdowns, causing gasoline consumption to fall 50%.

All three of these individual oil stories are destructive on their own. But taken together, they've caused the worst devastation of all time in the energy sector.

From their peak in 2014 to their bottom in early 2020, energy stocks – as measured by the Energy Select Sector SPDR Fund (XLE) – fell by more than 70%. This basket includes the household names in energy, like ExxonMobil and Chevron.

I looked at the history of energy stocks going back to 1973. There's never been a fall this big – ever.

Simply put, energy stocks are as beaten down and left for dead as they've ever been. And if you're a contrarian investor, that's great to see.

Tomorrow, I'll share more about what's going on, including just how high these stocks could rise in the coming years...

Good investing,

Steve

Further Reading

Going against the crowd is often the smart move when a sector is trading at extreme lows or extreme highs. And with traders all piled up on one side of this trade today, we're likely to see the opposite happen... Read more here: How to Never Lose Big in the Markets.

"Markets have been breaking out around the globe – even ones that most U.S. investors ignore," Chris writes. Ignoring market sectors that have been "left for dead" can be a huge mistake. And for this sector, history shows that the rally is just getting started... Learn more here: This Forgotten Market Has More Upside Ahead.

Market Notes
HIGHS AND LOWS

NEW HIGHS OF NOTE LAST WEEK

Disney (DIS)… entertainment giant
Roku (ROKU)… streaming devices
Spotify Technology (SPOT)… audio streaming
Match (MTCH)… online dating
Starbucks (SBUX)… coffee “World Dominator”
Square (SQ)… cashless payments
BlackLine (BL)… cloud-based accounting software
Maxar Technologies (MAXR)… satellites
CRISPR Therapeutics (CRSP)… gene editing
AbbVie (ABBV)… pharmaceuticals
Snap-on (SNA)… toolmaker
Darling Ingredients (DAR)… “food, feed, and fuel”
Scotts Miracle-Gro (SMG)… plant food
Emerson Electric (EMR)… engineering services
Honeywell International (HON)… manufacturing

NEW LOWS OF NOTE LAST WEEK

Not many… It’s a bull market, you know!