If the "oil bubble" does pop - what's next? Where will the next bull market be?
Answers
3090 points
EthanR answered 6 months ago …
Believe it or not, if the oil bubble were to pop, the next bull market could be in the airlines! Hard to believe, given their crummy track record, but when the price of oil drops precipitously (I just love that word), that boosts the profits of the airlines, as gasoline is about their largest expense.
I think you would also get a bull market in other transport stocks that rely on oil, such as trucking companies, Fedex, etc.
677 points
Dragonsbane answered 6 months ago …
I'm not sure the airlines or transports will benefit from a popping of the "oil bubble" until after the US is through it's recession (or at least close to). The numbers haven't turned negative and corporate defaults haven't spiked yet, so we're still a long ways away from the midpoint in any economic bottoming process. Personally, I'd stay away from these sectors because they are tremendously sensitive to the economy and the real pain in this economic cycle hasn't even begun.
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109 points
pow453 answered 6 months ago …
California, Nevada and a few other states in that area of the country, have passed legislation which requires 20% of energy come from renewable sources by 2010 and 2012 etc. Check out geothermal companies such as US Geothermal sym. HTM and Nevada Geothermal sym. NGLPF. Ormat is the company that builds geothermal power plants worldwide. Regardless what oil does, energy needs continue to grow.
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EthanR answered 6 months ago …
While I agree with Dragonsbane that a recession would hurt the airlines, I have to think that if the oil bubble popped, and prices came way down, that would go a long way toward either keeping us out of recession, or limiting the duration of any recession. In either event, I still believe the stock market, which always looks out six months to the future, would begin to price in a recovery of the airline sector in advance, and the stocks would rise.
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alanj answered 6 months ago …
Of the major sectors that is undervalued the most at this time is the Health Care sector. It is undervalued 19.3% and it hasn't moved much since the beginning of the year. Technology is second to last and looks as if it has started an uptrend. These are two sectors I would watch. I found a free newsletter that follows four types of markets. For a sample issue check it out here- http://www.rightsideadvisors.com/advisors/freedaily.aspx . Sectors will be the first newsletter "Market Commentary" by " Richard Suttmeier". Click on where it says "more" within the body of the particular newsletter. He follows 11 sectors and list by percentage how much each sector is over or under valued. It's on a chart at the bottom of the page (give it time to load)
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269 points
stocktraderdan answered 5 months ago …
Unfortunately my psychic has left for her summer vacation so I can’t give you a prediction of what sectors would rise if oil pops. What I can offer is the ETF “DUG” which is ProSahares UltraShort Oil & Gas Fund. You can hold this in a retirement account since it does not require margin. If you’re confident the oil bubble has popped or about to pop this is where you would want to be. If you’re not confident you definitely want to stay clear of it.
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