This Energy Sub-Sector Is Soaring, But It May Crash

A Counter-Cyclical Trade Idea With Asymmetric Potential Upside

“Peak earnings deserve trough valuations.” - Howard Marks

While oil and much of the energy complex have sold off over the last couple of months, one energy sub-sector is trading at new all-time highs, despite deteriorating fundamentals and a much weaker forward outlook. Sentiment is extremely bullish, and this area is now getting significant attention in the financial press. The positive press, high share prices and record profits suggest much of the upside in this sub-sector is already priced in, while the risk is heavily skewed to the downside.

This article highlights the trade I am making to profit from this downside risk potential, with limited capital at risk and multi-bagger potential upside. This is the seventeenth idea I’ve published so far here on Bison Insights, and will be added to the performance tracker. These ideas have outperformed the energy sector (XOP) and the market (SPY) since publication:

Disclaimer: This is for informational and educational purposes only. This is not an offer, solicitation, or investment recommendation. Please consult an advisor and do your own diligence. Investments incur risk of loss. Past performance is not indicative of future results.