Oil and land did well because the “inflation wolverine” beneficiary stocks became the cool kid investments. A year ago, the S&P 500 Index had 2.4% in the entire energy industry. In 1981, energy peaked at 29.7% of the S&P 500 when it was the “coolest of cool kids.” Institutional investors who now know they should be invested in energy are trying to use a firehose to put water into a teacup. We are overweighted in oil stocks and land-oriented companies.
In conclusion, there will be bargains in shares which we have avoided for years as this plays out in full. Don’t blame the Russians, but instead reorganize you're investing around where your money will get treated the best! As always, fear stock market failure!
Bill Smead is chief investment officer of Smead Capital Management.