Basically the title. If you’re looking to purchase and hold assets over 30 years, and logic pretty much dictates that a commodity like oil or gasoline is going to be integral to society for the next 30 years AND it is a limited quantity, to me, it seems like a good sector tilt.
I currently have like 5% of my portfolio in VDE which has had consistent good returns over the 1/3/5/10 year range, handily beating VTI, but the price fluctuates every time the president makes a tweet or or a middle eastern OPEC country farts funny.
Take today for example, very bullish for the market, but VDE is down 4%. Curious what you guys think over the long term.
Is holding energy ETFs or individual stocks worth it?
byu/ATPsynthase12 ininvesting
Posted by ATPsynthase12
4 Comments
smh and chill
>dictates that a commodity like oil or gasoline is going to be integral to society for the next 30 years AND it is a limited quantity, to me, it seems like a good sector tilt.
Do you mean like you expect it to outperform the broad market? Because “integral to society for foreseeable future” is already accounted into the current pricing.
Energy can do really well at times. It can underperform the market at times. It’s just a sector, and performance is cyclical, and not really predictable.
>Curious what you guys think over the long term.
I think I don’t know anymore than the rest of the market currently knows, and I have no way to know if VDE is underpriced or overpriced currently. Whether VDE beats VTI over the next 30 years is unknowable.
I have 15% of my portfolio in XLE and XOP. It’s done remarkably well since 2020 when I bought them. The oil sector as a whole is incredibly undervalued, and is where all the money will be at for the next few years as the world recovers from the hormuz crisis. I firmly believe Hormuz is going to teach the world how they’ve been taking oil for granted this whole time. Renewables will grow a lot in the next few decades, but never enough to stop the growth of the oil sector. The only technologies out there that could seriously compete with fossil fuels in meaningful ways is Nuclear or Geothermal, and anyone outside of china is not rapidly deploying either of them, so you can guarantee oil will be growing for the rest of our lives.
This seems like an odd take tbh. Oil majors especially are close to ATHs and there is actually a lot of reason to think that oil and gas are on the decline in the longer term, with fossil fuel use declining for the first time ever (outside of major global crises like COVID) in 2025 despite continued increase in electricity consumption, due to explosive growth of renewables. Oil majors are also doing very well currently for pretty obvious geopolitical reasons but hopefully this is not going to be an ongoing problem. It also seems likely that the UAE will be boosting output substantially once the straits open, possibly suppressing oil prices even further over the medium term, so most likely the stocks of oil majors will be lower in 6m compared to where they are right now.
I think if you are able to find ways of investing in electricity stocks as opposed to oil stocks, that would make a lot of sense to me. If you believe the AI narrative you almost have to believe that we will see substantial growth of electricity production over the next decade or two. But energy indexes are mostly oil companies, and it seems unlikely those will be the future.