The Portfolio That Will Double in Three Years | The Mesh Report

The Portfolio That Will Double in Three Years

John Thomas June 14, 2017 Comments Off on The Portfolio That Will Double in Three Years

Below, I have listed a portfolio of ten stocks that will almost certainly double in three years. If I am wrong, it will gain 100% in only two years.

But there is a catch. This basket of stocks may have to drop 20%-30% first. It is a cardinal rule of investment that if you want to earn higher returns, you must accept higher volatility as well.

It doesn’t require a rocket scientist to figure out that this is an energy-based portfolio.

Crude almost certainly hits its trough in the current quarter at $40 a barrel. But this python has a couple of pigs that it has to digest first.

As an old oilman, I can tell you that the majors have never been able to forecast the price of oil, and that is with all the resources in the world to accomplish this.

This is why they hedge out all their production in the futures market, or with long-term contracts with customers. The oil companies that thought they could predict the price of oil all went out of business a long time ago.

And as a mathematician, I can also tell you that this is an impossible task. There are just too many variables involved. So, don’t even try.

The bottom line is that absolutely no one can pinpoint when and where oil will hit bottom.

Let’s start with the supply side.

Thanks to the avalanche of cash that poured into fracking plays at the top of the market, US oil production peaked at 9.6 million barrels a day in the spring of 2015.

It has since fallen to 9 million barrels a day.

This is occurring because once money enters the production pipeline, it stays there forever.

Drillers would rather complete a half finished well and sell its output at a loss for a couple of years, than shut down construction and lose everything.

However, new projects have fallen precipitously.

You saw this in the collapse of the number of drilling rigs in use, from a peak of 2,000 six years ago to a 2016 low of only 352 last year, according to the weekly Baker-Hughes reports.

Then there is the storage issue.

Much of this new oil is going straight into storage. As a result, the facilities at Cushing, Oklahoma, are full. Virtually every tanker in the world has already been chartered and is also loaded to the gunnels with Texas tea.

Once all the storage in the world was full to capacity, there was no alternative but to cap wells, or dump new production on the spot market. This led to the price Armageddon that so many investors worried about.

Now, lets look at the demand side. We only need two letters for this one: QE.

We are a mere two years into what is probably a 5-6 year program of quantitative easing in Europe.

The Bank of Japan continues to dump massive amounts of cash into its own economy.

In the meantime, the United States is still basking in the glow of its own just ended hyper aggressive $4 trillion QE strategy.

It’s now looking like all of America’s 2017 economic growth will be concentrated in the final two quarters of the year.

This all adds up to a global synchronized economic recovery and much higher oil prices. Personally, I think oil could recover to $70 by 2018.

This is why large, long term institutional investors are happy to look across any potential $40 valley that may occur over the next few months and are loading the boat with energy stocks now.

Maybe you should do the same.

Mad Hedge Fund Trader Model Energy Portfolio
Majors Symbol Price Yield Weighting
Exxon Mobile (XOM) $80 3.83% 10%
Chevron (CVX) $104 4.17% 10%
Occidental Petroleum (OXY) $60 5.16% 10%
Conoco Philips (COP) $44 2.37% 10%
Exploration and Production
EOG Resources (EOG) $90 0.74% 10%
Offshore Drilling
Transocean (RIG) $9 0.00% 10%
Gas Liquifaction
Cheniere Energy (LNG) $49 0.00% 10%
First Solar (FSLR) $38 0.00% 10%
SunPower (SPWR) $8 0.00% 10%
Master Limited Partnerships
Alerian (AMLP) $12 8% 10%
total 100%

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