Perfect Knowledge

How perfect oil predictions can still lead to devastating losses in energy stocks.

Let me offer you the best trade in the world. A crystal ball.

I’ll tell you, right now, exactly where the price of oil will be on any future date you choose. Not roughly. Exactly. You’ll know the wars, the supply shocks, the Strait closures, the OPEC cuts, the demand collapses...every wiggle, years in advance, to the dollar. Most people would tell you that’s all they’d ever need to get rich in energy.

It isn’t. In fact, I can show you stretches where that crystal ball would have bankrupted you.

Oil direction vs FTI direction

The Stock That Wouldn’t Cooperate

Take TechnipFMC, ticker FTI, one of the larger subsea oil-services names. We’ve owned it, and it’s been a cracker. But forget the outcome for a second and walk it forward with me, the way you’d have lived it.

Start in early 2021. I hand you the crystal ball. It tells you that over the next year or so, oil is going higher...a lot higher. Brent was sitting around $50 to $60 then, and you now know with certainty it’s heading north of $100 as Russia invades Ukraine and the energy world loses its mind. Easy money, right? You buy the best subsea name you can find and wait for the gusher.

Here’s what you’d have collected for being exactly right about oil: a drawdown. Into the back half of 2021, with oil climbing, FTI fell. Not a little. You’d have been sitting on a meaningful loss while the one thing you “knew” would happen... oil going up... was happening in front of you, right on schedule.

Now spin the ball forward again. It’s the middle of 2022. Oil has done exactly what you knew it would, well over $100. And the ball now tells you the next leg is down... oil is going to roll over hard, shedding something like half its value into late 2023. So you do the sensible thing. You sell the oil-services stock, because why on earth would you hold an oil stock into a 50% oil decline?

That’s the moment FTI decided to triple and then some. Through the very window where oil fell by half, the stock didn’t just hold...it went vertical, eventually running to fresh all-time highs above $77 by the spring of 2026. The thing reached its highest price ever after a multi-year span in which oil went nowhere in particular.

Created with TradingView

In other words...perfect knowledge of the commodity would have had you buying before a fall and selling before a moonshot. The crystal ball didn’t help you. It actively hurt you. (And do your own research here, obviously...FTI has split its stock twice over this stretch, so any back-of-the-envelope “it did X percent” needs adjusting. None of this is advice. It’s an illustration.)