Editor's note: This Weekend Edition, we're taking a break from our usual fare to share an essay from Pete Carmasino at our corporate affiliate Chaikin Analytics. In today's piece, Pete explains why Wall Street doesn't always know best. If you know how to ride unstoppable investment trends – especially when the rest of the market is looking the other way – you'll have much more success achieving life-changing gains...
I was having a normal workday in 1998.
Until a homeless-looking man with a thick European accent walked in, holding a $600,000 personal check...
I worked as a broker-dealer in those days. My company had several offices around the country. Our branches were typically in towns with a lot of high-net-worth residents.
Folks would often come in to talk. And we hoped they'd trust us to manage their money.
We would assign a "Broker of the Day" to chat with all the walk-ins.
That didn't happen when this man came in, though...
He was older – likely in his 70s. We could see his old Buick parked outside. And with his tattered Members Only jacket and drab clothes, he didn't look like he belonged there.
The Broker of the Day didn't want to talk to this man. Nor did anyone else. They all thought this guy was homeless, crazy – or both. And they had trouble understanding him.
So as our branch's manager, I met with the man instead.
I invited him to chat with me in our conference room. I figured that I could hear his story in private, politely tell him we couldn't help, and walk him to his car.
I'm sure glad I heard him out. Sometimes the most valuable investing lessons come from where you least expect them... and can help you find a path to massive success.
You see, if my colleagues had heard what I did in that conference room, they would've been floored.
This man had recently retired as a head scientist at ExxonMobil (XOM). He even showed me his old badge to prove it. He mentioned he still did some consulting work. But at his age, he wasn't doing much at all.
Truth be told, a part of me still didn't believe that the man's check was real.
But I wanted to do well by my potential new customer. So I opened his account and asked him how much he wanted to deposit.
That's when he handed me the $600,000 check.
The rest of the office took bets on whether the check would clear. A few days later, it did.
Here's where the story gets even more exciting...
About a year before the man came into my office, OPEC increased oil production by 10%.
The oil cartel made this calculated move as demand for oil was declining. And it was around the time of the Asian currency crisis. So the global markets were enduring a lot of volatility.
With more supply and less demand, oil prices plummeted. And oil stocks got crushed. It's hard to be profitable with oil at $10 to $12 per barrel.
Now, as a retired scientist at ExxonMobil, my new client knew the oil market better than anyone. And near the end of 1998, he called me from somewhere in the Middle East...
He had a laundry list of oil-related names. And he wanted to start buying when he returned from his trip.
I was shocked. All the oil-related stocks looked terrible from a chart perspective. I didn't see anything except bad news ahead. And most of Wall Street was avoiding these names.
I tried to encourage the man to hold off to wait for a better setup. But just like the first day in my office, he wouldn't budge. Again, he was spot on...
The next big run in oil stocks began slowly. It wasn't a straight line up. And as you'll recall, at this point in the late 1990s, most investors cared more about the dot-com boom.
But by the end of 1999, oil prices surpassed their 1997 levels. Suddenly, oil traded at more than double its 1998 bottom. In turn, the prices of most oil-related stocks ripped higher.
And folks, the man and I weren't just buying a few thousand shares. We were taking portfolio-manager-sized positions. I'm talking about 10,000 to 50,000 shares at a time.
Eventually, the man's account grew from $600,000 to $20 million in just a few years.
It was a nerve-wracking experience. But it was also the most fun I ever had in the business.
In the end, I learned more about the mechanics of the markets from this random man who walked in than from anyone on Wall Street. I know that's hard to believe. But it's true.
You see, he told me something like this...
Peter, not you, or your children, or your children's children for the next several centuries, will run out of oil. The Earth is the largest producer of oil, not man.
There will never be peak oil.
Folks, the past four years have proved that...
The COVID-19 lockdowns halted business everywhere in the spring of 2020. As a result, the price of oil briefly went negative. And yet, not even that craziness could eliminate the stuff.
The fact is that we can't ignore energy-related names today – whether they're in fossil fuels or renewables. Our dependence on more power generation isn't going away. It's increasing.
That's why I'm paying attention to the energy and oil space. And I suggest you do the same.
Good investing,
Pete Carmasino
Editor's note: The energy sector isn't the only space the Chaikin Analytics team is watching. Right now, Marc Chaikin – the founder of Chaikin Analytics – is stepping forward to share another opportunity that could double your money if you're prepared...
According to Marc, financial chaos is coming to the markets on May 15. It could spark the biggest move of the year. And with the help of one little-known investment vehicle that appears during times like these, you could double (or even triple) your life savings... Click here to learn the details.
