What are your thoughts on purely buying into Oil and Banking stocks (hit by lowered CAPEX budgets, esp in Canada) over the next year while the low oil environment continues to perpetuate; with a holding period of 2.5-3 years in mind?
It seems that with the USD’s value so astronomically high right now, and bound to go higher once the Fed increases interest rates, that once the mechanics of global oil supply and demand start to realign with past equilibrium prices, the USD devalues 15%, oil prices hit $80+ and there massive torque behind a reversal in oil stock prices upwards (and then Banks as a result, esp. in Canada).
If you look at some of the mid/small cap oil companies that don’t have massive balance sheets or hordes of cash, many have seen 60% devaluations since middle of last year. I figure if you look for comapnies that have solid enough balance sheets to endure 1-1.5 years of $50 oil prices, the mid-term gains after oil’s reversal could be pretty substantial