These Two Charts Tell Me Everything I Need To Know About Where Oil And Energy Stocks Are Headed
In order to outperform, your thinking has to be different and better."
- Howard Marks
Good investing is inherently contrarian. As Howard Marks beautifully put it in his memo, "I beg to differ," he says that to outperform in the long run, you have to not only do things differently than the consensus, but you have to be correct. Being different for the sake of being different is not the same as being different and more superior. In this sense, to be a great investor, you have to be wired differently, and as a result, understanding what the consensus or the market is saying becomes that much more important to your process.
As I was scrolling through the Twitter feeds this weekend, my gut instinct was already telling me a few things from the prior week's indicators:
There are solid indications that oil demand is starting to bottom in the US.
Global oil demand is likely to surprise to the upside due to gas-to-oil switching.
Energy stocks have shown resilience in the face of volatility from oil, another positive indicator.
Sentiment appears to be pointing to retail piling in tech-centric names as opposed to commodities and energy.
So the two charts that I saw over the weekend not only reinforced my gut instincts, but it made me feel more confident/comfortable that I may be reading the market correctly.