Future Returns: Investing In the Soaring Energy Sector
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,428,634 (-1.45%)       Melbourne $930,989 (-0.82%)       Brisbane $810,456 (+0.44%)       Adelaide $761,620 (-0.66%)       Perth $660,033 (+0.19%)       Hobart $726,275 (-0.58%)       Darwin $631,920 (+0.43%)       Canberra $949,792 (+1.48%)       National $928,905 (-0.56%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $711,464 (+0.99%)       Melbourne $479,443 (-0.34%)       Brisbane $444,216 (-2.99%)       Adelaide $355,517 (-1.97%)       Perth $374,449 (+1.17%)       Hobart $534,602 (-0.33%)       Darwin $342,769 (-5.36%)       Canberra $499,736 (+1.97%)       National $495,165 (-0.04%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 9,160 (+153)       Melbourne 12,809 (+376)       Brisbane 9,350 (+98)       Adelaide 2,738 (+51)       Perth 8,333 (+89)       Hobart 1,098 (-10)       Darwin 258 (+2)       Canberra 936 (-1)       National 44,682 (+758)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 7,898 (+94)       Melbourne 7,166 (+23)       Brisbane 2,088 (+33)       Adelaide 486 (+10)       Perth 2,308 (+39)       Hobart 153 (-10)       Darwin 379 (+7)       Canberra 522 (+1)       ational 21,000 (+197)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $690 (+$5)       Melbourne $525 (+$5)       Brisbane $570 (+$10)       Adelaide $550 (+$10)       Perth $575 (+$5)       Hobart $565 (-$5)       Darwin $700 (-$20)       Canberra $690 ($0)       National $616 (+$2)                    UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $660 (+$10)       Melbourne $500 ($0)       Brisbane $550 (+$10)       Adelaide $420 ($0)       Perth $520 ($0)       Hobart $470 (+$20)       Darwin $530 ($0)       Canberra $550 (-$10)       National $533 (+$4)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,678 (-134)       Melbourne 5,496 (+1)       Brisbane 3,855 (+40)       Adelaide 1,147 (+38)       Perth 1,656 (+15)       Hobart 274 (-1)       Darwin 122 (+2)       Canberra 705 (+7)       National 18,933 (-32)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 6,667 (+140)       Melbourne 4,149 (-45)       Brisbane 1,304 (-20)       Adelaide 351 (+15)       Perth 708 (+38)       Hobart 128 (-11)       Darwin 199 (-13)       Canberra 526 (+4)       National 14,032 (+108)                HOUSE ANNUAL GROSS YIELDS AND TREND       Sydney 2.51% (↑)      Melbourne 2.93% (↑)      Brisbane 3.66% (↑)      Adelaide 3.76% (↑)      Perth 4.53% (↑)        Hobart 4.05% (↓)       Darwin 5.76% (↓)       Canberra 3.78% (↓)       National 3.45% (↓)            UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 4.82% (↑)      Melbourne 5.42% (↑)      Brisbane 6.44% (↑)      Adelaide 6.14% (↑)        Perth 7.22% (↓)     Hobart 4.57% (↑)      Darwin 8.04% (↑)      Canberra 5.72% (↑)      National 5.60% (↑)             HOUSE RENTAL VACANCY RATES AND TREND       Sydney 1.6% (↑)      Melbourne 1.8% (↑)      Brisbane 0.5% (↑)      Adelaide 0.5% (↑)      Perth 1.0% (↑)      Hobart 0.9% (↑)      Darwin 1.1% (↑)      Canberra 0.5% (↑)      National 1.2% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 2.3% (↑)      Melbourne 2.8% (↑)      Brisbane 1.2% (↑)      Adelaide 0.7% (↑)      Perth 1.3% (↑)      Hobart 1.4% (↑)      Darwin 1.3% (↑)      Canberra 1.3% (↑)      National 2.1% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND       Sydney 26.9 (↑)        Melbourne 27.0 (↓)       Brisbane 32.8 (↓)       Adelaide 25.0 (↓)       Perth 32.3 (↓)       Hobart 27.2 (↓)     Darwin 34.8 (↑)        Canberra 26.9 (↓)       National 29.1 (↓)            AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 25.4 (↓)       Melbourne 26.0 (↓)       Brisbane 28.3 (↓)       Adelaide 23.8 (↓)       Perth 37.5 (↓)     Hobart 24.0 (↑)        Darwin 35.6 (↓)       Canberra 29.8 (↓)       National 28.8 (↓)           
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Future Returns: Investing In the Soaring Energy Sector

The sector came roaring back to life late last year on positive vaccine news.

By Karen Hube
Wed, May 19, 2021 10:47amGrey Clock 4 min

Energy has transitioned from the worst- to best-performing sector in a matter of months. How long is it likely to outperform? And which companies are most promising for investors?

Serious difficulties for the energy sector began in April 2020. Demand screeched to a halt under pandemic lockdowns, and the futures prices on the global benchmark West Texas Intermediate (WTI) cratered to negative territory for the first time. The per-barrel price plummeted from US$18 to negative US$37 due to oversupply as Covid-19 crippled industry and mobility around the globe.

But the sector came roaring back to life late last year on positive vaccine news and surged through this year’s first quarter, as successful vaccine rollouts enabled relaxation of Covid-19 restrictions and economic activity rekindled.

In the first quarter, many big oil companies banked a profit for the first time since the pandemic began. Meanwhile, investors have been soundly rewarded. Through last week, the energy sector was up 35% this year compared to 9.5% for the S&P 500.

Bull or Bear?

Sam Halpert, Philadelphia-based chief investment officer at Macquarie Investment Management who oversees the firm’s natural resources equity strategy, views the recent outperformance as a cyclical bull market in the context of a secular bear market for the sector.

“The bull market could last two or three years, but there are still long-term issues around hydrocarbon and the energy transition that will impact the sector,” Halpert says.

The energy sector was under pressure even prior to the pandemic as investors were increasingly hesitant to commit capital as an inevitable transition from fossil fuels to greener choices loomed.

Lack of capital flowing into energy companies focused on shale technology is a hindrance to oil production. “Investors have not been willing to finance shale, there’s been a decrease in investment and production,” Halpert says. “Production was 11 million barrels a day last week, and we peaked at 13.1 million barrels a day in March 2020.”

Pressure on the sector isn’t likely to let up. In fact, the transition from the U.S.’s reliance on fossil fuels to low-carbon energy alternatives has renewed political momentum under President Joseph Biden, who supports policies that elevate greener alternatives and aims for the U.S. to have a 100% clean energy economy and net-zero carbon emissions by 2050.

Investors’ decline in interest in energy has been steady and notable. In 1980, the sector accounted for almost 30% of the index. By 2019 the percentage was 5.3% and this it slipped to 2.33%.

While energy will clearly be impacted over the long term by fundamental changes, “there are a lot of companies that can benefit during the transition and are changing the way they do things,” Halpert says. “They’re becoming more environmentally friendly or changing business slightly to areas that have more growth, and the market is rewarding that.”

Consolidation Boom

Some of the best opportunities are among companies that are not only accommodating environmental factors in the way they do business, but that are sound enough to be gobbling up smaller players in what has been a highly fragmented industry.

The consolidation has been rapid: For example, in late 2019, Parsley Energy of Midland, Texas, acquired Denver-based Jagged Peak. Since then, Parsley was acquired by Pioneer Natural Resources of Irving, Texas, which in May completed the acquisition of Midland, Texas-based DoublePoint Energy.

A central region for the consolidation boom is the Permian Basin, a 75,000-square-mile region from West Texas to Southeastern New Mexico. With rich oil reserves discovered some dozen years ago, it now accounts for more than one-third of oil production in the U.S. Just two years ago the Permian Basin unseated Saudi Arabia’s Ghawar oilfield as the biggest producer in the world.

“There have been too many players, many with marginal acreage or fields they’re developing,” says Geoffrey King, senior vice president and portfolio manager at Macquarie. As investor capital has declined, many of the smaller players have struggled.

King looks for opportunities among companies with sustainable practices that are in position to buy the smaller players. They’re benefiting from strengthened commodity prices and a perked-up demand.

“They have the ability to not only develop and maintain a growth rate comparable to the overall average S&P 500 growth rate, but to deliver excess cash to shareholders,” King says. “The model is being proven out and we’re in inning two or three.”

Veteran Industry Players

Among biggest holdings in Halpert’s and King’s institutional strategy is Plano, Texas-based Denbury (DEN), one of their few small-cap names that focuses on producing carbon negative barrels oil through carbon sequestration, which is the process of capturing and storing carbon dioxide.

“As people talk more about carbon sequestration, this is the game in town,” King says. “A lot of industrial companies don’t want to deal with the complexity of storing carbon. We think this is a very unique small-cap story that’s underappreciated.”

Another is Valero, the San Antonio-based largest independent refiner in the U.S.

“It has best-in-class assets and best-in-class management team,” Halpert says. “They’ve done a really good job returning capital to shareholders over the last several years.”

The company recently entered into an agreement with Darling, which processes waste such as from meat processing plants and the leftover oil from restaurants and food businesses. Valero transforms the waste into the fuel equivalent of ethanol.

“It has the identical chemical properties as ethanol, but ethanol has constraints around usage. It’s tough in the cold weather because it can cause engines to clog,” Halpern says. “Valero’s product is a low carbon fuel and low cost to produce.”

Another noteworthy holding is the big oil service company Schlumberger (SLB), based in Houston but with a global reach. “It’s involved in lithium, carbon sequestration, and a number of technologies that will be important in the energy transition,” Halpert says.

While there are numerous new entrants to the energy transition play, “we prefer to play it with a company with a balance sheet like Schlumberger and the technology of Schlumberger.”

Reprinted by permission of Penta. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 18, 2021

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How 20 Seconds Can Make You a Better Investor

Investors are taming impulsive money moves by adding a little friction to financial transactions

By IMANI MOISE
Tue, Mar 14, 2023 4 min

To break the day-trading habit that cost him friendships and sleep, crypto fund manager Thomas Meenink first tried meditation and cycling. They proved no substitute for the high he got scrolling through investing forums, he said.

Instead, he took a digital breath. He installed software that imposed a 20-second delay whenever he tried to open CoinStats or Coinbase.

Twenty seconds might not seem like much, but feels excruciating in smartphone time, he said. As a result, he checks his accounts 60% less.

“I have to consciously make an effort to go look at stuff that I actually want to know instead of scrolling through feeds and endless conversations about stuff that is actually not very useful,” he said.

More people are adding friction to curb all types of impulsive behaviour. App-limiting services such as One Sec and Opal were originally designed to help users cut back on social-media scrolling.

Now, they are being put to personal-finance use by individuals and some banking and investing platforms. On One Sec, the number of customers using the app to add a delay to trading or banking apps more than quintupled between 2021 and 2022. Opal says roughly 5% of its 100,000 active users rely on the app to help spend less time on finance apps, and 22% use it to block shopping apps such as Amazon.com Inc.

Economic researchers and psychologists say introducing friction into more apps can help people act in their own best interests. Whether we are trading or scrolling social media, the impulsive, automatic decision-making parts of our brains tend to win out over our more measured critical thinking when we use our smartphones, said Ankit Kalda, a finance professor at Indiana University who has studied the impact of mobile trading apps on investor behaviour.

His 2021 study tracked the behaviour of investors on different platforms over seven years and found that experienced day traders made more frequent, riskier bets and generated worse returns when using a smartphone than when using a desktop trading tool.

Most financial-technology innovation over the past decade focused on reducing the friction of moving money around to enable faster and more seamless transactions. Apps such as Venmo made it easier to pay the babysitter or split a bill with friends, and digital brokerages such as Robinhood streamlined mobile trading of stocks and crypto.

These innovations often lead customers to trade or buy more to the benefit of investing and finance platforms. But now, some customers are finding ways to slow the process. Meanwhile, some companies are experimenting with ways to create speed bumps to protect users from their own worst instincts.

When investing app Stash launched retirement accounts for customers in 2017, its customer-service representatives were flooded with calls from panicked customers who moved quickly to open up IRAs without understanding there would be penalties for early withdrawals. Stash funded the accounts in milliseconds once a customer opted in, said co-founder Ed Robinson.

So to reduce the number of IRAs funded on impulse, the company added a fake loading page with additional education screens to extend the product’s onboarding process to about 20 seconds. The change led to lower call-centre volume and a higher rate of customers deciding to keep the accounts funded.

“It’s still relatively quick,” Mr. Robinson said, but those extra steps “allow your brain to catch up.”

Some big financial decisions such as applying for a mortgage or saving for retirement can benefit from these speed bumps, according to ReD Associates, a consulting firm that specialises in using anthropological research to inform design of financial products and other services. More companies are starting to realise they can actually improve customer experiences by slowing things down, said Mikkel Krenchel, a partner at the firm.

“This idea of looking for sustainable behaviour, as opposed to just maximal behaviour is probably the mind-set that firms will try to adopt,” he said.

Slowing down processing times can help build trust, said Chianoo Adrian, a managing director at Teachers Insurance and Annuity Association of America. When the money manager launched its online retirement checkup tool last year, customers were initially unsettled by how fast the website estimated their projected lifetime incomes.

“We got some feedback during our testing that individuals would say ‘Well, how did you know that already? Are you sure you took in all my responses?’ ” she said. The company found that the delay increased credibility with customers, she added.

For others, a delay might not be enough to break undesirable habits.

More people have been seeking treatment for day-trading addictions in recent years, said Lin Sternlicht, co-founder of Family Addiction Specialist, who has seen an increase in cases since the start of the pandemic.

“By the time individuals seek out professional help they are usually experiencing a crisis, and there is often pressure to seek help from a loved one,” she said.

She recommends people who believe they might have a day-trading problem unsubscribe from notifications and emails from related companies and change the color scheme on the trading apps to grayscale, which has been found to make devices less addictive. In extreme cases, people might want to consider deleting apps entirely.

For Perjan Duro, an app developer in Berlin, a 20-second delay wasn’t enough. A few months after he installed One Sec, he went a step further and deleted the app for his retirement account.

“If you don’t have it on your phone, [that] helps you avoid that bad decision,” he said.

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