- During the 1980s and 1990s, oil prices are consistently low and steady; however, FSENX prices increased steadily. This mirrored the S&P500's steady ascent.
- During the dot com boom in the late 1990s and early 2000s, FSENX moved with oil prices, but the gap between FSENX and oil widened slightly which follow the rise in S&P500.
- During the Great Recession, oil, S&P500, and FSENX prices all collapsed together.
Fast forward to the current situation, oil prices have dropped more than 50%. The key difference this time is that the S&P500 continues to rise. Therefore I will state that only the combination of collapsing crude prices and poor stock market performance will sink energy stocks to the pits.
What about the dividend investors and other investors who are waiting for an oil price rebound that I talked about in my 1/29/2015 blog?
Those investors provide price support for energy stocks. Click the button below to view the latest model results updated today based on 1/31/2015. Although the Energy Industry Investment Model is used primarily for the Energy Select Sector SPDR ETF (XLE), its results are also a good indicator of energy stocks as a whole.