Thoughts on XLE as a reopening trade? Or stick to clean energy plays instead

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There is still some upside left, but the potential returns are muted to what you could have gotten prior to vaccine news in November. BC's OXY and OIS plays were huge, 100% return stock plays because the timing was great. And even the fact that there is still some upside left doesn't mean that it is still the right play, as you also have to factor in opportunity costs of how your money could be invested elsewhere for possible higher returns. But, if you have a good chunk of money already tied up in tech, small caps, clean energy, etc, it could be a good balance to your portfolio for more consistent returns. Especially LT, we are still an oil/energy society and that won't change heavily for 10+ years.

I personally am out of energy for now as there is some uncertainty about the new COVID strain and potential for continued local lockdowns. And I believe January/February are historically the weakest months for oil/energy, so maybe waiting another month may get a cheaper entry.

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I’m an energy bull and think we could be setting up a commodity super cycle. This won’t be a fast trade and it likely won’t ramp like an EV SPAC when it hits.

I’m playing a high quality pipeline with a solid dividend and another company (BSM) that holds nat gas production leases. So getting paid 8-9% to wait without the balance sheet risk that drillers (and XOM) carry. These names may lag the group once stock prices appreciate but the dividend compounding will help make up for that.

Longer term I do think XLE can go higher but it will be a longer term play - maybe late 2021. I’m not invested here at the moment, but considering a long term option here.

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