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Increasing Industry risk within the energy sector - sell AGL, Origin and Caltex hybrids

When an industry's risk profile increases, as happened to traditional media when challenged by digital, it is best to get out of the sector and re-assess as needed, especially when investing in hybrids
By · 30 Nov 2014
By ·
30 Nov 2014
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When an industry's risk profile increases, as happened to traditional media when challenged by digital, it is best to get out of the sector and re-assess as needed, especially when investing in hybrids.  Losses can be more painful to a fixed interest portfolio in comparison to an equity portfolio. 

The energy sector is currently facing many issues, some cyclical but some also related to climate science.  When industry risks increase just sell the sector, you don't need to come to too many specific conclusions  Selling eliminates the problem, the risk.  BR Securities recommend you sell AGL, Origin and Caltex hybrids. 

AGL has exposure to coal fired power plants.  Who knows the future of coal given climate science issues?  Origin also has the extra exposure to LNG exports.  Who knows the future price of oil given climate science issues?  Can Caltex make a profit if oil prices fall further?  Climate change may see accelerated growth in other sources of energy.  Global policy initiatives to combat climate change are likely to be vigorous.  You don't need to pinpoint the detail of what is going to happen to be a seller. 

General advice only AFSL 456663.  www.brsecuritiesaustralia.com.au
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David Bickford
David Bickford
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