“The current energy crisis is more serious than the ones in 1973, 1979 and 2002 together.” That’s a quote from Faith Birol, executive director of the International Energy Agency. Birol was referring to the magnitude of the disruption of energy supplies. Industry insiders are also alarmed. Wall Street isn’t as worried.
Enthusiasm for oil stocks peaked a month ago on news of a cease fire and the anticipated opening of Hormuz. What hasn’t peaked is enthusiasm for everything related to AI. But how do investors anticipate products and services that will be impacted by AI? Perhaps by separating those companies that are developing software and programs from those that will use them. That process began years ago in Corporate America when mainframe computers replaced thousands of workers using incompatible terminals. ATMs replaced bank tellers.
In my two-part AI article from last August I wrote it would be hard to predict winners and losers from AI. AI stocks have indeed been a mixed bag. Semiconductors became high profile winners while software stocks of all kinds emerged as surprise losers.
Again, going back to my AI articles, I chose instead to invest in companies that provided the power to data processing. Think Williams Cos. (WMB), GE Vernova (GEV), Invesco Solar ETF (TAN), and Market Vectors Nuclear Energy ETF (NLR). Add Quanta Services (PWR) to that list
The natural gas infrastructure stocks are still well positioned to serve the growing economy, data centers and the export market. Due to warm weather and ample supplies in storage natural gas prices have been lower than expected. For now. Moving gas from where it’s found to where it’s needed will be a growth industry for years. I own several pipelines, none of which have significant exposure to the price of crude.
Despite bad news at every turn, stocks have done well. Not all, of course, but enough. Even with the war earnings have remained strong. Bravo Corporate America.
Once the war ends today’s uncertainties will be history. Earnings will be higher and so will stock prices. Interest rates will be virtually unchanged. The market reflects expectations and is usually right. The Dow, S&P 500, and Nasdaq are saying the war will end with little impact on us or the economy. That alone is reason to be optimistic.
David Vomund is an Incline Village-based fee-only money manager. Information is found at www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.
