The Compound on $XLE (Oct 28, 2026)
XLE has outperformed SPY by about 400% since the COVID bottom but remains less than 4% of the index. The speaker sees energy stocks as cheap on single-digit PE ratios and says they should be up more, though many losers hold back the sector; a cited hedge fund manager expects AI electricity demand to virtually guarantee a natural gas shortage in the next 2 years, but prices have not reflected it.
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is anyone actually aware of XLE versus SPY performance since the COVID crash? I know no one actually times the bottom of the instinct perfectly, but I think it is instructive to look at the bottom of a crash like that because a lot of times the winners and losers are totally changed and energy is the biggest one.
So in the 10 years leading up to the bottom of CO energy stocks were down 54% in total. this is why it's still less than 4% of the index because yes, it's outperformed by like 400% this this decade so far from the bottom, but it's still a tiny piece.
I think in 2020, energy finished down like 33%. And the S&P finished up 18.
Honestly, given what's gone on with energy, these stocks should be up even more than they are. There are so many losers in this sector holding back the sectorwide performance. the PE ratios were all like single digits. Like, it was it was cheap.
Do you think these companies though are kind of being penny smart and pound foolish? Like, they're they're reaping the rewards right now, but they're going to push a lot of people into, you know, big businesses into clean energy or into EVs and that kind of stuff by these stories.
natural gas prices are actually down over the last 15 years. Between the United States and Canada, we're sitting on like a 200year supply.
Patrick uh Oonessy had a hedge fund manager on who's making this massive bet that the demands of AI, the demands for electricity to fuel AI virtually guarantee we're going to be in a natural gas shortage in the next 2 years and that that is the fattest pitch in the market right now.
people don't believe it because the price of natural gas seems to never do anything.
Marathon, Valero, and Phillips, I think in that order, are the the numbers one, two, and three performers in the XLE ETF.