The Energy World is Flat: Opportunities from the End of Peak Oil

Chapter FourteenImplications and Opportunities in the Financial Markets

Price is what you pay. Value is what you get.

Warren Buffett

Winners and losers

During the Gold Rush, most would-be miners lost money, but people who sold them picks, shovels, tents, and blue jeans (like Levi Strauss) made a nice profit.

As discussed throughout this book, there will be large winners and losers from the current energy revolution, but the opportunities are not “one-way directional bets”. It is the same as with the internet revolution.

The key trends and themes identified within the book need to be implemented efficiently. There are simply too many cases of “good idea, bad outcome” where the vehicle, be it a commodity future or an exchange traded fund (ETF),¹ or an equity, did not behave in the way we anticipated.

The following sections focus on educating and teaching you “how to fish” instead of sharing some recommendations based on a snapshot of the market and “giving you the fish fished”.

Long-term success is about capital preservation. Much of the focus is on making money, but over the years as a hedge fund manager I can tell you that the most successful investors and traders are obsessed by “not losing money”. And using a golfing analogy, long-term success is as much about “making birdies” as it is about “avoiding bogies and double bogies”.

As experts in energy equities and commodity derivatives, we have no bias, and we recognize the importance of the small details for successful implementation. ...