Weekly Update: The Energy Trade is in Full Swing
Good evening, and welcome to this week’s edition of Stealth Trades!
In Q3 2025, I alerted readers to two major themes that I believed would lead the market over the next 12-18 months – metals and energy.
The metals trade played out quickly. Silver and gold saw huge gains. Steel, aluminum and copper will likely continue pushing higher. These are the physical materials behind every AI data center and infrastructure project across the globe.
The other big idea was energy.
The AI buildout has exposed just how underpowered the US is. Data center demand for power is skyrocketing. We are seeing a 10X increase in electricity use every 2-3 years from them.
The existing grid, obviously, cannot handle the load. It couldn’t deliver the electricity needed even if we did have it, which we don’t.
This has created massive demand. Hundreds of billions, probably trillions of dollars will be invested in energy infrastructure over the next decade. And the stocks in the middle of that money flow will see their share prices surge.
I have 25% of my retirement account allocated to energy. Here is what I own:
As you can see, my exposure is split between traditional oil/gas and renewables via 6 exchange-traded funds.
I won’t pretend I can predict which power source will dominate. So I’m betting on all of them.
In late 2025, nuclear stocks led the pack.
This year, my Vanguard Broad Energy ETF is up over 30%.
Solar is up 42% since last month.
In my opinion, this is just the beginning. I expect to see $200 crude before the year is over. Utilities will likely continue to escalate megawatt pricing. And the winning nuclear names could run 5-10x from today’s share price.
The nice thing about these longer-term thematic plays is they are set-it-and-forget-it investments. Unlike most of my more active trades, this anchor portfolio is allocated to dominant themes that I believe will outperform over the next few years. But there’s plenty of diversification to soften the day-to-day swings around things like trade wars and geopolitical uncertainty.
I have another 25% allocated to metals – a mix of precious and industrial ETFs. Then 40% in a handful of equity indexes and 10% dedicated to hard assets.
I’m not saying this is the right allocation for everybody. But this is where I see the best mix of opportunity and safety in the coming years.
Best wishes for your trading,
