Our readers should already be well aware of the danger by now. We’ve been seeing the red flags fly closer and closer together these past few months.
Now, data from the U.S. Energy Information Administration confirms our worst fears: We’re headed for the worst bear market since 2012.
Interest rate hikes, S&P crashes, Russian price caps, bloated inventories, not to mention the dreaded demand destruction…
The list of warning signs is a mile long. So far, most of the financial world has been burying its head in the sand and hoping the problems go away.
Unsurprisingly, the situation has only gotten worse.
The energy bull market that has made our portfolio incredible gains is coming to a crashing halt. I won’t sugarcoat it.
Now the real work begins. Navigating a bear market is tricky but not impossible. It just takes more planning, patience, and nerves of steel.
Let’s start by taking a look at some of those not-so-subtle warning signs…
Too Many Red Flags to Count
Where to start? The onset of the oil bear market has been anything but subtle.
A recent flurry of pessimistic headlines has practically guaranteed a major market slump. A few of them were too big to ignore.
In the broader market, the S&P 500 dropped almost 2% in a day. The index is currently on a four-day losing streak thanks to a particular announcement we’ve all been dreading.
The U.S. Federal Reserve just dropped yet another shoe. Interest rates will be hoisted an additional 0.75% — the third consecutive increase of this size.
Jerome Powell then immediately doubled down, claiming the battle against inflation could send rates as high as 4.6%. Talk about instilling confidence in the market.
High interest rates typically means tighter consumer spending, and one of the first luxury items to get the axe is recreational traveling.
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Less driving and fewer flights means refineries slow down, crude demand takes a dive, and supply quickly starts to outpace demand.
This is exactly where we are now. The summer driving season is ending at the worst possible time, pushing crude below $86 per barrel.
Then, the “exceptionally weak” report from the EIA hammered the final nail into the oil market’s coffin. Inventories of crude oil and nearly every petroleum product have risen sharply, some as much as 18% in less than a week.
Gasoline demand is 5.6% lower than last year, and distillate demand is more than 18% lower. In the past 15 weekly reports from the EIA, only two have been remotely positive.
Everyone who has made money investing in energy this past year should have been preparing for this exact scenario — mentally and financially.
It’s not going to be easy, but there are a few simple tricks to help your portfolio survive the worst of the bear attack.
Step 1: Don’t Panic
This should also be steps 2 and 3. It’s far too common for investors to see a bear market looming and immediately sell off — usually at a loss.
It’s also common to see the opposite. Perma-bull investors are convinced it’s just a minor dip, so they rush to buy as much as they can.
When the market plunges deeper and deeper with no end in sight, that confidence starts to wane. Selling off at that point is the biggest mistake you could possibly make, but it happens.
It’s the No. 1 reason investors miss out on gains like this — even during times like these.
The only tried-and-true method of coming out ahead during a bear market is hard work. There’s no way around it.
It takes hours and hours of careful market research. When every investor in the market is on a hair trigger to sell, every piece of news counts.
To manage this, our team spends hours digging through company press releases, earnings reports, and analyst commentary.
If you were looking for a silver bullet to slay the upcoming oil bear market, I’m sorry to disappoint. This is where the real legwork comes into play.
If you have even a cent invested in the energy market, keep reading. It could mean the difference between total losses and monster gains this quarter.
Did I mention it’s completely free?
To your wealth, Luke Sweeney Luke’s technical know-how combined with an insatiable scientific curiosity has helped uncover some of our most promising leads in the tech sector. He has a knack for breaking down complicated scientific concepts into an easy-to-digest format, while still keeping a sharp focus on the core information. His role at Angel is simple: transform piles of obscure data into profitable investment leads. When following our recommendations, rest assured that a truly exhaustive amount of research goes on behind the scenes..
Contributor, Energy and Capital
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