For the last 14 months, there has been much volatility in the stock value for the energy sector. With the price of oil down from over production of oil in the Middle East, many of the reserves are trying to freeze oil production in order to bring oil prices back up. The price of oil has hovered around $30 a barrel for quite some time, a decline of more than 73% from midsummer highs in 2014 of $110.
For many investors the question is when to start reinvesting in the energy stocks or if it’s still time to sell. The answer to those questions can best be answered by financial expert George Soros. Soros who is a financial expert in the field of financial management, dumped all his energy shares last quarter for three of the biggest energy companies in Chevron, Chesapeake Energy, and NRG Energy reported by The Street. The founder and chair of Soros Fund Management company had good reason to dump these stocks, and his success of becoming a billionaire is all the evidence people need to know he is making the right calls. (GeorgeSors.com)
While Soros has plenty of room to fail, his moves suggest that investors should jump ship in the energy sector to consider potential growth in other sectors. It’s important to be careful where to invest however as while the Energy sector only makes up a mere 8% of the U.S. GDP, it accounts for more than 30% of the Standard and Poor 500 capital expenditures and a quarter of research and development spending. This makes it tricky to find the best investment as the energy industries volatility can easily spread to other stock values.
Soros is famous for his decision to risk $10 billion on a single currency speculation when he shorted the British pound, when all along he turned out to be right, generating a one day profit of $1 billion. (Investopedia) Soros credits his knowledge to a theory of equilibrium, that is easily applicable to economic theories to know that the final outcome is more critical than the process that gets you there. (WikiQuote) Soros has used this knowledge in many of his books such as The Alchemy of Finance: Reading the Mind of the Market and The Bubble of American Supremacy to explain the theories of his ways to promote success to investors.
The billionaire has made bold predictions on economic outcomes from migrant and refugee crises which stems from his personal experience as a survivor of the holocaust. (GeorgeSoros.com) He is also the founder of Open Society Foundations where he has been giving scholarships to black South Africans under apartheid for nearly 30 years. (OpenSocietyFoundations)