Most people are aware of the current market situation. A recession is already here, according to most economic experts and the UK stock exchange is down by more than 12 percent already this year as investors are still waiting for the other shoe to drop.
Does this mean that the best strategy is to hold on to your money or is it better to invest in something that has proven to provide high yields during dire times like these? Well, there is one sector right now that should be a given in your portfolio.
We are, of course, talking about energy.
In case you have been living under a rock for the last year and missed Russia’s invasion of Ukraine and the immense energy crisis all of Europe is about to witness, it would be safe to say that any energy-investment is pretty much the safest bet there is right now and could potentially yield high returns in a short to intermediate time span.
The cold upcoming winter will most likely pump the prices of energy up by what experts estimates 120% – 180% and the new “green” initiative of nuclear power is estimated to take between 7 – 12 years until we start seeing new Gen-IV reactors provide the energy Europe desperately needs to satisfy future powerconsumption.
The S&P 500 energy sector is already up around 46% this year. Yes, you read that correctly. This is before what is expected to be the most “energy deficient winter” since the oil crisis of 1973.
The euro-area annual inflation rate was 9.1% in August 2022, up from 8.9% in July. A year earlier, the rate was 3.0%. European Union annual inflation was 10.1% in August 2022, up from 9.8% in July.
Pulling out of the market will therefore ensure that your savings will lose value and since the classic 60/40 portfolio (60% stocks and 40% bonds) may no longer provide the same level of returns that it delivered previously, investing a part of your portfolio in the energy sector looks very promising during 2023 from an analytical standpoint.
Demand for energy will likely not decrease going forward. The global society is steadily increasing its energy usage and with the turmoil building up in Eastern Europe it will certainly only keep pushing energy prices one way. Therefore, investing in energy is widely regarded as a low risk / high reward investment of 2023.
Walton Finance has resarched some of the best energycompanies to invest in right now. Scroll down for the list of our 3 top picks.