MS | ETFGo 🇨🇦

Oil now surging for geopolitical reasons, but this is an important reminder for the following: Sometimes, you can have the full foundation of a thesis in place, yet the catalyst that sets it in motion often remains unclear until it happens. That’s likely the case with the bullish setup for the energy sector. Oil and gas producers have been languishing at historically low valuations for an extended period. One way to see this is by looking at the energy sector’s current share of the overall market, which is at a historic low. In the 1980s, the sector accounted for about 30% of the market; today, it’s down to just 3%. Some people attribute this to a permanent structural shift, and I think there’s some truth to that, but it’s likely a combination of factors. While we probably won’t return to the highs of the past, it doesn’t make sense for the sector to remain so undervalued. Today, energy companies are extremely profitable, and I see them as one of the most attractive opportunities for both macro and value investors.