A Comment -- General Comments From an Expert (A Commentary)

Very optimistic for energy investors in 2023. Expecting $100 oil in near term future. Two major headwinds gone: 1) China pandemic ending 2) SPR releases have passed. China re-opening will unlock ~1MM bbls oil a day of demand. Supply is still not growing at material rate. Return of capital to shareholders limited further investment.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Representativeness Bias. The representativeness bias is a misconception that future patterns will resemble past ones. An investor may identify an investment as being good or bad based on its most recent price performance. This is why increases and decreases in share prices can often become overextended. If the price of a stock continues to climb higher, then investors may feel that this pattern will persist into the future, and this drives the price up further. Vice versa when stock prices decrease, as investors may feel that they will only continue to fall further. This cognitive bias helps us to explain our general belief that the sign of a top in price is when investors feel that the stock can only go up and the price decreasing is not a possibility, and the sign of a bottom is when investors feel that the price can only decrease further, and no mentions of a rebound are in sight. These types of behaviours occurred at the bottom of the stock market in 2008 and 2020, as investors sought lower prices and were using the most recent performance as an indicator for the future. Unlock Premium - Try 5i Free