Do you remember 2020?
I’m sure you do.
I’m referring to COVID, you must be thinking.
No, I’m referring to the year when Exxon Mobil, one of the biggest American energy companies, got kicked out of Dow Jones Industrial Average.
With the rise of tech stocks, Chevron was the only energy stock left in the Dow, and Exxon was replaced by a tech stock: Salesforce.
Initially, XOM fell after its removal.
But it’s up 260%+ since that day.
Here is another fun fact.
The whole energy sector has been outperforming the technology sector since then.
Big time.
Tech stocks may have been one of the cool kids on the block the last several years, but energy stocks have been doing quite well quietly before your headlines were full of the conflict in Iran and tensions around the Strait of Hormuz.
The irony is that it is the best performing sector of the S&P 500 for the last six years or so, yet makes up a very small portion of the S&P 500 itself. While tech makes up about one-third of the index, energy only makes up around 3.5%.
To be fair, if you zoom out further in time to a decade, tech is the resounding outperformer.
Still.
This reveals the importance of diversification and that sometimes the biggest winners aren’t always who you’d expect.