Want to learn more about investing in energy sector.?

Question

Hi there I'm kinda a newbie in investing, right now I'm reading few books, and just starting to get the feel of things. I plan to be an active trader and want to concentrate in the energy sector. I want to learn all about the sector, who are the big players what they do, how they do it upcoming companies and stuff like that also about the sector itself and how to perfectly invest in it.

Thanks so much.

Answer 1

You're late to the game.

The easy money's been made.  The price of oil is breaking the back of the global economy.  Further increases in the price of oil will only cause more harm to the economy.  Yeah, price of oil will be $200/barrel but there is going to be fewer and fewer buyers of the commodity in the long term.  Do you think China and India are going to throw money blindly to the oil producers when everybody (including themselves) is on the hunt for the next best thing - and it will come because there is a fortune to be made for the next step in evolution.

Look at the history of coal.  So "buy" into the existing energy sector leaders with the understanding that they may be tomorrow's laggards.

Answer 2

Energy has been a cycle investment since last century.  Right now you should be looking at what happens when oil drops or alternative energy companies.  You are too late for oil right now.  If oil crashes then it's time to put money into oil and then ride the next cycle up.

Here is an example of a relationship where you can work with two cycles that oppose each other.  During the '1970s people had beg cars because gas was cheap.  This came the oil crises and people dumped their large cars and hot-rods for small foreign cars that got better gas milage.  As soon as gas prices dropped, they bought SUVs and pick-up trucks as if nothing at happened.  SUVs and pick-up trucks are more profitable than cars and the American auto industry was doing pretty good.  The the American car companies were caught off guard again when oil prices went up and their stocks tanked.

I think you should be looking at sector trends in the late 1970s when oil and gold were both high and property was tanking and see if you can spot the bulls.  Also note that three things happened when Reagan got into office.  To squash inflation he crashed the economy and caused the interest in government bonds to soar.  The stock market had one of its biggest bulls ever.

So go to the library and find the sector rotations that fit this economy (my guess would be the Carter years although this economy isn't as bad as the Carter years yet) and if you play those sectors in the same order, you will probably be more right than wrong.

Answer 3

I suggest that you don't, for a while.

Today's energy sector is like the early days of the dotcom era.

New solutions being born every minute.

Some of them are obsolete before they even leave the drawing board ( the Chevy Volt, due out in 2010, is likely already obsolete, for instance)

There's going to be some really big winners and a LOT of losers until the first wave settles out.

At this moment, the leading technologies in my view are;

Solar thermal heating and possibly energy generation and

Ultracapacitors ( which will start replacing batteries next year, maybe).

Wind power is old news.  Solar photovoltaic is so last week.  Tidal generation may have a lot of use if they can keep the costs down, but it's iffy.

Tomorrow, something could come up that throws all of that out.

Answer 4

Here are web sites that may help you find "big players" and "Upcoming companies".

www.renewableenergystocks.com/Companie...

RenewableEnergy/Stock_List.asp

www.biodieselinvesting.com

www.biodieselmagazine.com

www.biofuels-news.com

www.biomassmagazine.com

www.domesticfuel.com

How to perfectly invest in it?  We all are looking for that answer.