...one thing we can learn about risk:reward of a sector is to look at how it performs over time.
...and you can see below that the 5-year performance of our ASX energy stocks (oil and coal) have been below par with exception of NHC and YAL.
...they tend to perform well over a short period of time, but not over the longer term.
...reason- funds are not moving much in their direction as forward growth is an issue, so at best they're simply dividend stocks.
...if after 5 years, your energy stocks still makes negative returns despite all the good profits they make, it is not going to get better in the absence of another supply chain shock as we had in 2022. And I did cautioned on oil and coal stocks back then, holders rather hold steadfastly being 'married' to fossil fuels perhaps due to ideology and/or what resonated with them. Another example why ideology and what resonates with us have no place in investment decisions.
...one day in retrospect, you could see the lithium sector is a similar boat, because lithium too is energy. And there will be more abundant of them around the world, and I do see our Aussie lithium doing poorly on the global market due to cost competitiveness, geopolitics, nationalism and logistics.
