2008 Has Already Happened In The Energy Sector

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Includes: BNO, DBE, DBO, DNO, DTO, DWTI, JJE, OIL, OLEM, OLO, ONG, RJN, SCO, SZO, UBN, UCO, USL, USO, UWTI
by: Cullen Roche

We're approaching a level of truly horrific returns in the energy space, as the price of oil continues to crumble in the early days of 2016. There are quite a few people predicting a repeat of 2008, but the reality is that the energy space has already experienced its 2008.

To put things in perspective, here's a chart of the energy sector's performance over the course of the last two booms and busts. During the 2003-2008 bull market, the energy sector rallied 290% before cratering about 45%. The sector then rallied 140% off the 2009 lows, before topping in 2014 and collapsing 41%.

Click to enlarge

A number of analysts have predicted that the price of oil could decline to $20, in which case the pain is likely to get worse in the short term here. But for those predicting that 2008 is right around the corner - well, it already happened. Savvy players in this space have to be licking their lips at some of the long-term possibilities out there as the bear market in the commodity space creates opportunities for those who were a bit more prudent during the boom.