The Age of Tech is Over, the Time of Oil has Begun! via /r/wallstreetbets #stocks #wallstreetbets #investing

The Age of Tech is Over, the Time of Oil has Begun!

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Tech is over, Oil is just getting started.

For the past 7 years, trillions of capital has been been flowing into tech, funding the dumbest possible business models, burning all that money on employee salaries which feed into comp sci comp packages and bay area and seattle real estate, and customer acquisition costs, which feed Facebook and Google ad revenue.

Meanwhile, oil is facing about 700 billion deficit in underinvestment due to TSLA memes and ESG taking hold in Europe and the US (mostly just to convince people to invest more in tech). Now the snap back will be multi-decade and will result in significantly higher oil prices.

The average oil company in XOP is trading at 6x EV/FCF. The average tech company ‘s value is all based on the future (10 years+) while the value of oil companies is nearly all based on profitability and cash flow in the next few years. This makes tech extremely sensitive to interest rates while oil is barely effected by it. Given oil is a big driver in the economy, effecting the price of both energy (nat gas) and tons of inputs in everything from fertilizer, good, plastics, any sort of industrial chemicals, high oil prices means high inflation and higher rates come for the next decade.

On to the technicals, as you can see in the first chart, Oil is in a falling narrowing wedge while tech is a rising widening wedge. This is super bullish for oil as it is clearly breaking out and tech looks like it may test the bottom side of its range with a risk that it drops below it.

Have 300k+ in XOP across multiple accounts (both brokerage and IRA, here is a couple)

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Submitted February 02, 2022 at 09:13PM by vegaseller
via reddit