Oil prices are to straw hats as supply is to demand.
If one takes the shorter view on energy, the outlook remains somewhat bleak. But that's not what we're suggesting.
Much of the media coverage personifies that view. Everyone knows most money runners are quarter to quarter investors in the main. Quarterly window dressing is just one example.
There's an old Wall Street saying about the time to buy one's straw hats is in December not July. Straw hats were once upon a time men's fashion plates for humid summers. That was about demand. Energy prices as they continue to drift lower are simply a metaphor for the straw hats of a long ago yesteryear.
In those days it was most likely difficult to overpay for a straw hat in December when demand was practically nil. A quite similar situation in our view is now developing in the energy space. Sure energy prices can decline from here. And they probably will. But unlike some other investments they're never going to zero.
Straw hats served a dual purpose. They were cooler and they offered protection from the sun. Owning energy at cheaper prices serve a similar purpose. It's a necessity and it ain't going away anytime soon irrespective of what you might hear.
Cheaper oil prices add more miles to the gallon of one's driving. It's a psychological reality.
Supposedly, smart investors can look into the future and see things others can't or don't. Sort of like old Willy Loman in Aurthur Miller's classic tragedy, "Death of a Salesman," going around talking out loud to himself, asking his wealthy deceased brother who went into the jungle poor and came out rich: "He'd you do it, Ben?"
In Willy's case we never really find out how Ben did it. But the implication is there, seeing opportunity in risk.
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