Energy equities remain cheap structural diversifiers
The guest argued that despite recent run-ups, energy equities remain historically cheap, significantly underweight in major indexes, and serve as excellent non-correlated portfolio diversifiers.
The argument
The guest noted that while they scaled back positions from the pandemic lows, they maintain a significant weighting in specific cheap names. He emphasized that energy does not trade in tandem with other asset classes, offering robust diversification benefits.
The thesis, stress-tested
✓ What validates it
- ✓Energy sector weightings in major indexes reverting toward historical averages
- ✓Continued strong free cash flow generation from the named holdings
▸ Risks discussed
- ▸Commodity price volatility
- ▸Sector underperformance if global energy demand softens
Hear it yourself
"Your September portfolio had a heavy weighting in energy, which was, appreciate given given what's happened. What's your thought process on on energy? Well, energy is still cheap even after the run up we've had. It's not nearly as cheap as it was during the pandemic and when oil prices went negative."
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