A massive increase of the energy stock share will come at the expense of tech decline
The investment strategist Louis Navellier predicted that the portion of energy stocks within the S&P 500 will rise from 2% in 2020 to 30% in a couple of years. They will likely occupy the place previously taken by the big tech companies.
The prices of energy-related stocks have gone through ups and downs throughout the last two years. For instance, in 2020 oil prices plunged as the pandemic suppressed the demand. The whole energy sector has displayed a downtrend and slid to a mere 2% in the S&P 500.
However, this year brought the unexpected Russian-Ukrainian war, which has sent oil prices surging. Energy stock started outperforming while its share of the index has tripled to 6%.
At the same time, technology stocks which peaked amid the pandemic are slowly losing ground. The technology sector is down 25% year-to-date. Besides, many tech giants are facing disappointing growth levels and bearing financial losses.
Therefore, Navellier suggested investment managers have to play catchup and buy energy stocks as the sector weights in the S&P 500 change for at least the next couple of years. Apparently, the investment strategist doesn’t share the expectations of a likely oil price decline which is possible if a peace deal is ever reached between Russia and Ukraine.