Q: What are your thoughts long term on oil. The bulls have recently been taking it on the chin. Will they eventually be right? A lot of money will be made if they are. Other than utilities like Enbridge and TC I have no direct exposure.
Thx
Thx
5i Research Answer:
OIl has been weak with US inventory rising and concern on China's economy. But, producers are in very good financial shape compared with other cycles, and valuations are very very cheap. We would be fine with 'some' exposure to the sector. Most now offer decent dividends which have a bit more security than usual (because of strong balance sheets). The TSX Index is now at 18% energy. We think that would be too much for the average investor.