Energy abundance - from multiple sources - is about to unlock staggering gains for investors.
But if you just "play the majors," you may find yourself with less than your fair share.
With a few rare exceptions, the windfall profits in the months ahead will be reserved for a handful of small niche companies poised to become the biggest winners as energy truly goes global.
Make no mistake: You will make more money in energy investments over the next several years than in any other sector and during any other period in your lifetime.
And now you won't have to fret over what this new market means, what elements are driving it, or what to invest in.
That's my job. I've been doing it for over 40 years now: advising governments, investors, companies, banks, and trading houses worldwide.
Mind you, this is not guesswork on my part. It's all part of a well-structured, well-seasoned 15-point strategy I've outlined below.
But first, let me step back and explain the reason why I'm letting you tag along. Then, I'll outline my strategic design and show you the best way to use it.
Let's get started...
You Are the Energy Market's Solution
Many of you have asked why I decided to start this energy advisory in the first place. It stems from the misgivings I have about Wall Street gurus setting us up for another bubble...
... and you actually turn out to be the remedy itself.
Since oil is both a commodity and a financial asset, its price and direction are largely determined by the objectives of those bringing the liquidity into the market. It's true of oil now, and this is rapidly becoming the situation with every other energy source.
The liquidity upon which oil trading is currently based reflects the interest of speculators in making money from the spread on a futures contract. They have no interest in either the actual oil or longer-term effects on trading.
You, on the other hand, do.
The truth is average investors have a more balanced view, since they look more long term. That means many average investors, taken together, can actually provide the liquidity necessary to stabilize the energy markets.
In fact, that's why I decided to start Oil & Energy Investor because it is you who literally has the ability to prevent the next asset meltdown. It's all about power in numbers.
Of course, you could also be making some serious money along the way, and that's fine too.
How You Could Make Money
My strategy is composed of five entry points, five essential ingredients, and five elements you need to know.
Taken together, these 15 considerations comprise a strategic investing approach I have developed over decades of experience.
First, the entry points...
The entry points are where I will bring you into the market. They include:
- Companies in the upstream (production), midstream (distribution), and downstream (wholesale and retail)
- Technology developers and providers
- Ancillary and support entities
- Energy trading and hedging
- Product spreads
The first three involve standard investment plays - buying or selling stocks and bonds, using puts and calls when appropriate, to maximize gains and minimize losses.
Here, we will be appraising companies, their performance, and their potential. In other words, this is traditional investment 101 as it applies to all kinds of energy and all participants in the sector.
The last two are newer opportunities. Here, the average investor can participate in the profits from playing "paper" assets (futures contracts) against "wet" assets (the actual underlying oil, gas, or energy consignments), as well as the market value of one valued-added product (say gasoline) against others (for example, diesel, jet fuel, heating oil, or petrochemical feeder stock).
We will follow investment targets in one or more segments: providing energy; improving efficiency or delivery; making available the necessary field, power plant, or market services; and trading the resulting energy itself.
For each of these plays, I will lay out for you the why, the who, when in, and when out.
The Essential Ingredients of Success
But to succeed as an investor, you need to have access to where the money is being made. That is not simply access to the market in general, but a trading position having particular characteristics. This is the next part of our strategy.
Think of these "essential ingredients" as the building blocks of a successful investment approach.
To succeed you need:
- Access to trading liquidity sufficient to temper volatility
- Exposure to the right trades and executions
- Flexibility to move into and out of the action
- Ease of application (It does not help if there is a correct move out there somewhere, but it requires two pages of equations to get to it)
- Timing
This last consideration is without doubt the most important single element in any trading strategy. Good timing makes money. Bad timing loses money - period.
And yes, all of the above are my responsibility. You don't need to worry at all.
The Elements You Need to Know
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The final category of the strategy considers the five primary elements you need to know. Each of these comprises a main aspect of the market in which we will be trading. Keep in mind, these components are not static; they change.
Therefore, you need to understand:
- The environment: that is, the factors both inside and outside the market impacting a potential investment move. These often change the attractiveness, or even the desirability, of what may otherwise appear to be a promising trade.
- The sequence of events: both those improving the investment and those cautioning against it. This allows the investor to participate in direction or flow. Confusing what is a cause and what is a result has brought down many an investment model. (Being able to do the first two elements allows you to do the next two, clearly the most important. Just as computer trading programs analyze factors before acting, so must you. However, your approach is actually more direct.)
- You need to be able to identify triggering events: those that produce an expected result.
- You need to be able to determine when to move in and when to leave.
- And finally, all of this needs to be in plain language.
There it is in a nutshell - the 15 elements of our trading strategy. I do the heavy lifting, and you make the profits.
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About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.