This broad market rally in January has taken the experts by...

This broad market rally in January has taken the experts by surprise. Around Christmas time on CNN out of the US the financial commentators were unanimous that markets would be wobbly through the first half of 2023 and then pick up in the second half. At the moment they’re a bit red-faced on that call.




The broad market rally is not unwelcome (as long as you're reasonably well diversified)….however I don’t trust it. While energy stocks, and WDS in particular, has been left behind a little in this rally, I think by year end we’ll look back at another year where energy (and WDS) has again strongly outperformed.

The WDS outperformance ultimately may well be because other sectors retrace and WDS holds its ground ….however with the near certainty of two bumper dividends this year - I’ll take that.

Further, Brent in the US$80’s, whilst obviously not as lucrative as at $100 is not all bad. Things have quietened right down about ‘prices at the pump’ in the US so oil companies can quietly go about their business generating rude profits without causing so much political handwringing and interference. (eg Biden releasing from the US SPR and governments around the world dreaming up new ways of levying and taxing O&G companies)

Even here it’s been noticeable that the noise about petrol prices has dropped off as punters have been quietly conditioned to $1.80 per litre - levels that were causing an uproar not so long ago.

So the US$80’s for Brent might actually be a bit of a sweet spot.

Looks like the WDS sp might bump around in the mid $30’s for a little while yet - but I still like the chances of a $40 sp this year and dividends rolling in on a 8%/9% yield look a near certainty too.

WDS continues to hold a very firm place in my portfolio.