One Way to Hedge Your Portfolio Against the Oil Price Shock
Been spending a lot of time recently thinking about how to position during the current oil shock. Markets are down 3-4% since the Iran conflict started and it is not just the obvious names getting hit. Growth stocks, small caps, leveraged companies, pretty much everything is feeling it as people price in inflation staying higher and rates not coming down anytime soon.
The natural hedge is owning energy. But I went down a rabbit hole looking at which energy stocks actually make sense here, because not all of them work the same way in this specific situation. Some of the biggest names have meaningful Middle East exposure, which is a bit of an odd hedge when the disruption is coming from that exact region.
Ended up landing on one Permian Basin producer that I think is the cleanest expression of the trade. Wrote up the full thinking here for anyone interested :)
Curious whether others are thinking about the oil shock as a portfolio hedge at all, or mostly just riding it out.