(MEMO) Memo - A Challenging Year But It's Full Throttle Ahead
By: Wilson
I'm just glad this year is coming to a close.
Source: HFI Portfolio
From a portfolio performance standpoint, the underperformance to the S&P 500 was not without the many mistakes along the way. While my decision to liquidate the energy portfolio in April 2024 turned out to be a key part of why we are still positive for the year, the re-entering in May/June cost us a good chunk of the returns we made previously (up 31.54% in early April).
From the analysis standpoint, there were also a lot of blunders along the way. In June 2024 when we saw OPEC+ crude exports meaningfully drop, I thought the setup for an oil price spike (albeit temporary) was in the making.
The reality?
OPEC+ crude exports did remain low. Global oil inventories dropped.
OPEC+ Crude Exports
Global Crude Inventories + Oil On Water
OECD Oil Inventories
However, oil prices failed to gain any traction as concerns over 2025 oil market balances (surplus), weak Chinese oil demand, and OPEC+ spare capacity continue to keep a lid on prices.
In addition, unrealistic non-OPEC supply growth, no matter the reality, continues to keep investors' sentiment negative on energy.
Source: Michael McDonough
As a result, energy is once again the worst-performing sector in 2024. Since 2011, energy has ranked either as the worst or 2nd worst performing sector in 8 out of the last 14 years. It takes a special skill to be that bad for that long, but that's what a bear market looks like.
Inversely, Bitcoin has been the best-performing in 11 out of the last 14 years.
A sign of the times I suppose. It's no wonder no one cares about energy.