Investors are beginning to sense a change of performance leadership among US stocks. Big tech is selling off - most easily witnessed via the 'FAANG' stocks - and many are betting that commodity plays will assume the sector rotation mantle.

 

Maybe they won't, but it's hard to argue that oil, gas and pipeline stocks are not out of favour. Despite the price of oil remaining remarkably buoyant, for example, sentiment around those stocks seems relatively poor. Going back two years, WTI crude oil has more than doubled in price, far outperforming established company share prices - demonstrating a clear lack of investor faith. In fact, the TSX energy index now has a -1.3% 10-year compound annual return. The Nasdaq index, on the other hand, stands tall at +16.6% per year over the same time frame.

 

The future for energy definitely continues to evolve. But does anyone expect oil & gas usage to be marginalized in the coming decade? I feel the smart money is currently placing their bets that the existing tech / energy sector performance gap will narrow in the years ahead. I like that bet.