Battery Low
It’s not new news that the Energy sector has had a rough go of it in 2023 — it’s currently the worst performing sector in the S&P with a -7.6% YTD return. Nor is it new that this pullback is in stark contrast to the outstanding performance of 2022, when Energy led the index and posted a 60% gain.
But what may be a newer takeaway is that despite some of the forces that served as tailwinds last year still being present (more on those below), if not stronger, oil prices and energy stocks have failed to hang on to their rally attempts in 2023 (another of which we are in the midst of right now).
Given that Energy is one of the most cyclical sectors in the market, ongoing fears of a slowdown both here and abroad are likely weighing on the price of oil and energy stocks. Although a soft landing remains in the realm of possibility, the general mood this year has become much more cautionary, if not edgy, about when a recession may begin.
However, some external forces that would be expected to support the price of oil haven’t really done their job. Namely, the possibility that the Biden administration will begin refilling the Strategic Petroleum Reserve (SPR) now that the Debt Ceiling has been lifted, along with Saudi Arabia’s one-million-barrel production cut. (Learn more at How to Winterize a House).
Jumper Cables
Energy stocks can frequently behave differently from oil as a commodity, which makes the sector both challenging and interesting to analyze. One of the forces that can cause stock prices to diverge from oil prices is how companies choose to use their excess cash.
Without getting into a political debate about what energy companies should do with their cash, the chart below shows the increasing trend of returning money to shareholders in the form of dividends and buybacks over the last year.
This served as a persistent jumpstart to energy stocks in 2022, but despite the continued increases, investors haven’t shared the same buying appetite.
I see this as having two possible explanations: 1) Perhaps it’s similar to oil prices in that investors are dealing with economic uncertainty and shunning cyclicals; or 2) last year’s volatile equity market didn’t offer many attractive opportunities, so shareholder-friendly energy stocks were rewarded.
Cheaper Charge
Despite the fact that investors haven’t benefited much from Energy this year, consumers certainly have. The most direct impact being at the pump, with average regular gasoline prices down to $3.55/gallon from the peak of $5.00/gallon last summer.
Energy costs in general are no longer contributing to inflation pressures either. In a time when we worry about the ability of consumer spending to drive growth, the less consumers have to spend on Energy, the more they can spend on other things. (Learn more at Guide to Different Types of Homes).
Nevertheless, the cross currents and mixed messages remain. What should be supportive of oil prices and energy stocks hasn’t had much effect. The forces of global economic uncertainty seem to be stronger than the other drivers at play, and Energy is serving as a signal in markets that we’re not sure we can rely on strong demand to pull us through yet.
Until we have a clearer view of the global economy, this may stay in the “range bound” category with other cyclicals…and test our patience.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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16 smart, simple ways to save money right now
Whether putting money away for a rainy day or for retirement, good savings habits can prepare you for emergencies and life changes. While it may seem like a struggle, rest assured there are countless ways to build up your savings. It starts with trimming down the expenses that tend to take the biggest bite of your budget, from groceries to gas. We’ll walk you through 16 tips to cut back in each of these categories.
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JGalione
You can really maximize your money simply by selecting the right credit card to swipe at the register. Certain credit cards offer lucrative rewards for grocery store purchases, and many don’t have annual fees. Rewards can climb up to 3% cash back at supermarkets, which can add up during your weekly grocery runs.
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Gone are the days of sifting through pages of flyers and clipping coupons. Instead, check out Flipp, an app that allows you to browse through thousands of weekly ads and compare prices among retailers to make sure you’re really getting your best deal.
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Higher priced items or items with a high markup tend to be placed in the “bulls-eye zone,” the second and third shelves from the top. Look at below or above eye-level shelves for lower prices, whether it’s bulk items or store-brand options.
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In-season fruits and veggies not only tend to taste better, but they are also often less expensive than off-season produce. Check out the USDA for a guide to in-season produce to help you shave money off your grocery bill.
Steve Debenport
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If you’re in the market to buy a house, keep in mind that rates and fees for mortgages vary widely. Just like you’ll take your time hunting for the perfect house, you should also be comparison shopping with lenders. LendingTree’s mortgage comparison tool can help you get started.
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While shorter-term mortgage loans typically come with larger monthly payments, they usually have lower interest rates, which means you’ll pay less over the life of the loan because the repayment period isn’t as long. Take the time to crunch the numbers to see if this option makes sense for you.
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There are various local and state programs designed to help residents shoulder the cost of buying a home. These can range from special down payment assistance loans to matching savings programs that help you save on homeownership.
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Before you commit to a lender, make sure to negotiate to get your best offer. You can request a lower rate, the reduction or waiving of certain fees or a rate lock (meaning once you agree on a rate, that rate won’t change between the offer and closing).
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Similar to how certain credit cards can maximize savings on groceries, other cards help you save on fuel, so be selective when gassing up. Rewards can range from cash back to car rental insurance.
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A number of large grocery chains, including Kroger and Hy-Vee, have free programs that reward shoppers with points they can use to pay for fuel at partner gas stations. For example, Shell has partnered with numerous grocery store chains, giving customers that shop at those chains discounts on gas when they purchase certain products with a special members card.
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Apps like GasBuddy compare fuel prices near you, so you can make sure you’re getting the best price at the pump. Those extra savings can add up over time, especially if you put in a lot of mileage.
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Properly inflated tires get better gas mileage and can end up saving you hundreds of dollars a year on fuel.
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Professional energy audits determine how energy is being used in your home and can outline steps to make your home more energy efficient, which will lower your electric bill. You can get relatively inexpensive professional energy audits, or you can do a DIY version.
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Not only are LED bulbs better for the environment, but they are known to use up to 75% less energy than regular light bulbs and last much longer, resulting in a lower electric bill.
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Be sure to unplug appliances when you are not using them. These appliances can account for 5% to 10% of residential energy use, resulting in bigger bills.
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Just like you can negotiate for a lower rate on your mortgage, you can negotiate your utility bills. Contact your utility provider and ask them for a better rate, which could result in savings.
Need help managing your finances?
Learn how you can start saving money right now.
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While all of the tips above can help you save money fast, the only way you can really make strides in your savings is if you carve out a place for it in your budget.
One way to make space for saving in your budget is to follow the 50/30/20 budgeting framework. With the 50/30/20 budget, the idea is that you will dedicate 50% of your monthly income toward essentials, 30% toward “wants” and 20% toward your savings. If you want to save more aggressively, you can flip the 30% and the 20% categories.
To incorporate savings more seamlessly into your everyday life, consider automating it. Many banks and credit unions offer features that allow you to automatically transfer a set amount of money from your checking account to your savings account on a cadence of your choosing. You can also look out for high-yield savings accounts to earn more on your savings.
At the end of the day, the most important aspect of saving money is to get started and then stick with it.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article originally appeared on MagnifyMoney.com and was syndicated by MediaFeed.org.
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