End of the decade: Time to gauge investment trends
In assessing an investment cycle, rather than only relying on a set time-frame like a decade, it's good to objectively gauge the move from extreme optimism to extreme pessimism, and back again
A DECADE ago, the prevailing investment view was that the world had reached Peak Oil, and oil companies were widely recommended as a core long-term allocation.
Fast forward to now, and energy has been the worst performing sector globally for 10 years. The Peak Oil forecasts unfortunately coincided with the top in US oil imports. The US went from the biggest importer of crude oil in the world at over 10 million barrels per day in 2007, to 5.7 million barrels in 2018.
The 2008 Peak Oil recommendation was preceded by very strong out-performance of the energy sector, which increased in value from 5 per cent of the overall market to 15 per cent in nine years. The discovery of new technology that led to fracking increased US oil production to such an extent that all the gains from the previous energy bull market were reversed. Energy's weight of the market has now dropped all the way to the lowest on record at less than 5 per cent.
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