{"id":8942,"date":"2020-10-22T21:24:53","date_gmt":"2020-10-22T21:24:53","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8942"},"modified":"2022-02-26T13:06:28","modified_gmt":"2022-02-26T13:06:28","slug":"will-the-energy-sector-power-up-again","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/will-the-energy-sector-power-up-again\/","title":{"rendered":"Will the Energy Sector ‘Power Up’ Again?"},"content":{"rendered":"\n

Ben F. from Houston,\nTX asks: <\/em>Greetings from Texas, Mitch. I\u2019m curious to hear your thoughts on\nthe Energy sector. It seems like the Energy sector has been performing poorly\nfor some time now, and I\u2019m wondering if there is a turning point in sight or if\nEnergy investing may look different in the future. Thank you for your time.<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thank you for emailing your question, Ben. The Energy sector\nhas indeed been battered down in 2020. Year-to-date through September 30, the\nS&P Energy sector is down -48.1%, and with global demand for energy reliant\non economic activity and growth, the short-term outlook for energy is mixed at\nbest. For example, capital spending on new energy projects is set to decline\n-18% this year, with global energy demand sinking by 5%, according to the\nInternational Energy Agency (IEA).1<\/sup> The energy sector has not seen\nthis type of decline since World War II.<\/p>\n\n\n\n

In particular, spending on traditional energy sources \u2013 oil,\ngas, and coal \u2013 have taken the biggest hits while spending on renewables has\nheld up relatively well. In terms of growing demand, the IEA expects renewables\nto \u2018generate\u2019 80% of the growth in global electricity demand through 2030. To\nnote, this does not mean renewables will become the leading generators of\nelectricity \u2013 rather, they could be where the rate of growth is highest. <\/p>\n\n\n\n

________________________________________________________________<\/p>\n\n\n\n

Are You Making This Investing Mistake? <\/a><\/strong><\/p>\n\n\n\n

The energy sector has had a rough go of it this year and this may push investors to look to remove exposure to energy or hastily pivot to renewable energy. Making hasty decisions can be a mistake for investors who do not take the time to consider their unique financial situation. But you don\u2019t have to fall prey to this mistake! <\/p>\n\n\n\n

The energy sector has had a rough go of it this year and this may push investors to look to remove exposure to energy or hastily pivot to renewable energy. Making hasty decisions can be a mistake for investors who do not take the time to consider their unique financial situation. But you don\u2019t have to fall prey to this mistake! <\/p>\n\n\n\n

There are common mistakes and habits that we\nbelieve can help some investors succeed while others fail. To help you\nunderstand some of these mistakes and how to avoid them, we have created the\nguide, \u201c9 Retirement Mistakes to Avoid.\u201d<\/p>\n\n\n\n

See what we believe are the biggest mistakes investors make when planning for their financial future and how to avoid them with our guide. If you have $500,000 or more to invest and want to learn more, click on the link below:
\u00a0
 <\/a>Learn About the 9 Retirement Mistakes to Avoid!<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n

________________________________________________________________<\/p>\n\n\n\n

As far as the investment perspective is concerned, there is\na good argument that the oil and gas industry may have matured, with the future\ngiving way to a more diverse energy mix. But such an outcome is by no means\nassured, particularly in the short-to-medium term. Oil demand is expected to\ncontinue growing rapidly in developing countries like China, India, and other\nEmerging Markets. The growth in these areas of the world, coupled with\nreturning demand once the full risk of the pandemic fades, should push global\noil demand to recover in the next few years. Weak performance in the Energy\nsector could give way to a recovery. <\/p>\n\n\n\n

In investment portfolios, I would urge readers not to pivot\ntoo hastily into renewable energy plays nor to remove exposure to the Energy\nsector altogether. Even though Energy returns have been an anchor on total\nreturns for the year \u2013 and in many past quarters recently \u2013 the\nunderperformance is not likely to last indefinitely. Economic growth requires\nenergy consumption, and the rough patch for the Energy sector is likely to give\nway to better returns when the outlook for growth is firmer. <\/p>\n\n\n\n

Low interest rates should also help the Energy sector regain\nfooting once demand returns to the market. Low interest rates are key for\nlegacy companies in oil and gas to restart projects and push new development,\nwhile also allowing competitors in renewables to develop clean energy technologies\n\u2013 which generally require very high upfront costs. <\/p>\n\n\n\n

In all, it has indeed been a rough go\nfor the Energy sector, but I do not think investors should walk away from\ninvestments in the space. Future investments in Energy should look to include a\ndiversified mix of energy companies, which may ultimately reflect how the world\nconsumes energy. <\/p>\n\n\n\n

In times like these, investors can fall prey to common mistakes like forgetting to take a diversified approach. But you don\u2019t have to fall prey to these mistakes. There are common mistakes and habits that we believe can help some investors succeed while others fail. To help you understand some of these mistakes and how to avoid them, we have created the guide, \u201c9 Retirement Mistakes to Avoid.\u201d3<\/sup>
\u00a0
In this guide, we provide our thoughts on what we believe are 9 of the biggest retirement mistakes investors should avoid. If you have $500,000 or more to invest and want to learn more, click on the link below:<\/p>\n","protected":false},"excerpt":{"rendered":"

Mitch takes a look at why Energy is performing so poorly, and what\u2019s ahead for the sector<\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71,1],"tags":[],"class_list":["post-8942","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8942","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8942"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8942\/revisions"}],"predecessor-version":[{"id":10525,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8942\/revisions\/10525"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}