The Collapse of the Energy Sector
It’s crazy to think oil hit more than $150/barrel briefly in the summer of 2008 before the financial crisis shifted into overdrive. People at the time were worried oil was going to the moon. When oil peaked in the summer of 2008, the energy sector made up nearly 17% of the S&P 500.
Today it makes up just 2.8% of the index and that weighting is falling fast. It’s hard to believe this number was nearly 30% in 1980. One of the most impressive aspects of the stock market is how adaptable it is over time. The energy sector dominated the market at a number of junctures over the past 40 years or so but it’s also seen its relative importance in the index fall off a cliff.
Howard Marks once said, “There’s nothing intelligent to be said about the future of the price of oil.”Even with oil prices falling for some time now no one would have predicted negative prices or the craziness we’ve seen in the past couple of days.