The financial media, in its quest for news stories to sell its ever growing audience, has been providing surprisingly little value to its consumers. Take the latest catch phrase ‘green shoot’, which are supposed to be sprouting up all over the place. In reality, it looks more like dead grass to me, as the only things that are improving are equity prices, but not the real economy (unemployment up, GDP down, working hours down, trucking association tonnage index down etc.). Even the Beige Book admitted that a possible recovery would be tough to achieve.

But the thing that really confuses people is when the financial media starts telling people that investing is dead. There was a study done which compared the average performance of bonds and stock market indeces over the last 30 years. The conclusion of that study was you would be better off putting your money in bonds, but this completely misses the point of long term investing. If you are an investor, you would not put your money on the S&P 500, rather, you would find a sector or a company that exhibits growth potential. It doesn’t matter if we’re in a recession or a depression, one can still find growth stocks and growth sectors.

Of course, this raises the question as to which sectors/companies are best situated to grow in the next five to ten years. As far as I’m concerned, it’s pretty straight forward.

1) OIL & CONVENTIONAL ENERGY
Recession or not, we’re in a peak oil environment and though crude oil got down to about $35 a barrel and most producers announced heavy cuts in production, the fundamentals of the oil sector are still strong. In fact, they’re getting better by the minute as inventories are falling and the price of oil is on the rise. Once the inventories are depleted, companies will have to start expanding production. Natural gas is down as well, due to a combination of oversupply, warm winter and falling demand from the agrochemical sector. In the long term, though, each and every fossil fuel is in a bull market.

2) ALTERNATIVE ENERGY
There’s been a huge influx of funds to the alternative energy sector over the past decade and there are no signs of decline for the long term. Yes, the bubble in oil price created an oversupply of silicon wafers used in the production of solar PV panels, but again, over the long term, as the price of oil and other fossil fuels goes up, demand for wind turbines, solar panels, smart grid solutions and other alternative solutions will rise dramatically. Added to that are environmental concerns, which is a huge factor influencing the Chinese renewable energy sector.

3) BASE METALS & OTHER COMMODITIES (EX ENERGY)
The global population growth rate is not showing any signs of slowing in the intermediate term. Though production is down for the time being, we are still in a situation where the amount of recoverable resources per capita is falling – this only means one thing: a bull market for all commodities, especially food. Lithim might be in for a price spike as well, if the plan to produce electirical vehicles on an industrial scale goes forward (lithium is used to make batteries, the same type that power your phone and laptop).

The bottom line is that you should do your own research and not take the financial media too seriously, as business model is not really built around sound advice, but only ad dollars. Take a look around you and think about the changes that are going to affect the world in the next ten years. Then put your money to work.

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