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Pumpjacks at work on a well pad outside of Fox Creek, Alberta on Thursday, July 2, 2015.Amber Bracken/The Globe and Mail

There was always going to be a window of time when crude became scarce globally and prices surged. If we are not at that point, it's not far away. According to BHP Billiton however, neither is the tipping point for the proliferation of electric vehicles. For longer term investors, timing will be everything.

The collapse in oil prices in the latter half of 2014 led directly to an industry-wide collapse in spending on finding and developing new sources of oil. At the same time, rising standards of living in the developing world continued to push global demand for crude higher.

Although they might be talking their own book to some extent, commodity trading firm Trafigura recently estimated that "global oil demand may be between 2 million to 4 million barrels per day more than worldwide crude supply by the end of 2019." Citi analysts are already urging clients to "get ready for an oil squeeze" that will send the commodity price sharply higher.

California is considering following China's lead and banning gasoline-powered cars. This might not be an imminent or even credible threat to oil investors – it would be a monstrously big change for a state that sold more new cars in 2016 than either France, Italy or Spain.  The winds of change, however, are definitely blowing towards renewable energy sources and electric vehicles, even if many of the latter will be powered initially by electricity from coal.

The information and estimates at hand currently suggest a significant period of strong oil prices, followed by a supply response centered on U.S shale and also a decline in long-term demand expectations as renewable energy sources proliferate. The length of any oil rally will depend on the relative strength of all these trends.

Everything's happening at once, and I don't have anything like a believable five-year oil forecast at this point. In China alone, the country shows rapidly rising crude demand and an explosion in renewable energy installation. And, if recent history is any precedent, they'll have the advantage of not really caring whether the push towards renewable power is profitable or not, unlike the developed world. More countries, developed and emerging, are likely to legislate in favour of electric vehicles.

Global oil demand estimates will be the most important indicator to follow, but even there I'm not sure how useful they will be. Given the range and speed of potential outcomes, I'm not sure any of them can be trusted.

-- Scott Barlow, Globe and Mail market strategist

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Stocks to ponder

STEP Energy Services Ltd. This stock appeared on the positive breakouts list last week. The stock has closely tracked the price of oil, which is up 1 per cent to approximately $51 (U.S.) a barrel today. This newly listed stock has an unanimous buy recommendation from nine analysts with a one-year expected return of 33 per cent. Jennifer Dowty explains.

Valeant Pharmceuticals International Inc. Early this year, Valeant Pharmaceuticals International Inc. referred to itself as "the new Valeant" in investor presentations, a turn of phrase that was met by skepticism from some quarters, as the company's financial results continued to seem troubled. There's been more enthusiasm since, and the shares have rallied from lows, albeit nowhere near the highs of the old Valeant. There is building enthusiasm for the leadership of chief executive officer Joseph Papa and a potential turnaround. We'll set that question aside for today, however, and ask this instead: Is the company's financial reporting better under Mr. Papa than under his once-vaunted, now-exiled predecessor Michael Pearson? And in one complicated but important way, the answer seems to be "no." David Milstead explains.

Freehold Royalties Ltd. This stock appears on the positive breakouts list and is from a rebounding sector. For cautious investors, this security may represent a defensive way to play the energy rally. The stock offers investors a 4-per-cent dividend yield combined with an expected price return of 10 per cent. Jennifer Dowty explains.

The Rundown


My top 5 investing lessons after 30 years as an economist

Next month marks David Rosenberg's 30th anniversary as a Street economist – from Bay Street to Wall Street and then back to Bay Street. In fact, the exact date of his first day as the financial markets economist at the Bank of Nova Scotia was Oct. 19, 1987, otherwise known as Black Monday. That actually turned out to be a great day to start a career despite all the nail biting. He said it taught him the difference between a correction and a bear market – what separates them is not magnitude as much as duration. The time you spend in the contraction and the time it takes to recoup the lost capital. What happened in the Fall of 1987 was a steep correction, not a bear market, though that was a tough sell back then during the eye of the storm. David Rosenberg outlines other lessons he's learned during the past 30 years.

How should investors respond to a rising Canadian dollar?

If you're thinking of investing in Canadian companies that stand to benefit from a strong Canadian dollar, analysts have begun to compile helpful lists of potential winners and losers to help you along the way. But here's the problem: The stock market may have already factored in the loonie's strong gains. The dollar's ascent has been spectacular over the past several months, blasting above 82 cents against the U.S. dollar earlier this month, up from 74 cents at the start of June. It has since settled back slightly, to about 81 cents. What should investors do? David Berman explains.

ETF providers race to launch Canada's first bitcoin funds

Canadian investors may soon get easy access to the burgeoning market for cryptocurrencies through TSX-listed exchange-traded funds that track the price performance of bitcoin. Such ETFs in Canada could arrive even before similar products that have been awaiting approval in the United States. But in doing so, they will also expose investors in this country to risks that are both elevated and not widely understood, given the complexities of how bitcoin works and the regulators' unfamiliarity with the bitcoin market. Clare O'Hara explains what moves are ahead.

Should I invest in ETFs or individual stocks? Here's how to decide

John Heinzl examines when it's best to buy dividend exchange-traded funds instead of creating and managing a portfolio of individual dividend stocks.

For an investment that sparkles, consider Tiffany or Cartier

Diamonds, as the song says, are a girl's best friend. But certain diamond jewellery – like rings, bracelets and earrings – can be a great investment. Last week, Tiffany & Co., the established U.S. jeweller, celebrated its 180th anniversary, while Sotheby's played host to an auction in London that sold $4.26-million (Canadian) worth of jewellery. The market for high-end baubles remains strong. Paul Sullivan talks about the case for jewellery as an investment.

A disturbing number of people are building their retirement plans on a weak foundation – their homes.

Years of strong price gains in some cities have convinced some people that real estate is the best vehicle for building wealth, ahead of stocks, bonds and funds. Perhaps inevitably, there's now a view that owning a home can also pay for your retirement. Rob Carrick explains.

A tax break that's not on the hit list

The battle over Ottawa's proposed tax changes is heating up. Numerous groups have lined up against the plan, including those representing doctors, lawyers, farmers and small-business owners. The Conservatives have latched onto the proposals as a wedge issue they believe can swing votes in their direction. Even some Liberal MPs have publicly expressed doubts over the whole idea. There is one big tax break available to small businesses and incorporated professionals that is not in the Liberal government's sights, at least not at this stage. And it could potentially save a company and its principals thousands of dollars a year in taxes. It's the individual pension plan (IPP). Gordon Pape explains.

The end of Strategy Lab

There's one important lesson to be had as Strategy Lab ends its five-year battle

They call the stock market the great humiliator for a reason: No matter how clever you think you are, it has an endless capacity to make you look like an idiot. Strategy Lab, which we founded five years ago and which we're powering down this month, provides a fine example of the market's capacity to embarrass. I can say that with confidence because I was the guy who launched the darn thing, back when I served as investment editor of this esteemed publication. I entered into the project with some strong expectations. The results promptly shot holes in my swaggering forecasts. Ian McGugan explains the lessons learned via the Strategy Lab series.

Not a single loser in Norman Rothery's portfolio of value stocks

It's time to harvest a bounty of gains from the Strategy Lab portfolios. Norman Rothery is pleased to say that his crop of value stocks has gained 95 per cent since the portfolio was planted five years ago. It raked in a 14.2-per-cent compound annual return over the period. But the value portfolio didn't just contain stocks. It started life with 30 per cent of its assets in cash and ended with 28 per cent in cash thanks to dividends and a couple of sales along the way. Norman Rothery talks about his Strategy Lab portfolio.

Innovation and disruption: How Chris Umiastowski turned $50,000 into $250,000 in five years

Chris Umiastowski wrote his Strategy Lab conclusion piece from his sunny backyard. It's late September and the Toronto area has been beautifully surprised by weather that makes it feel like mid-July. This surprise heat wave struck him as a great metaphor for his style of growth investing. After five years of running his model portfolio, he's turned the initial $50,000 into more than $250,000. If we had to start over again, he probably couldn't duplicate that level of success. But his strategy would remain the same. And that strategy is to invest in companies that are clear leaders in important or emerging fields and run by excellent managers who inspire innovation or disruption. Chris Umiastowski explains more about his strategy.

Others

Tuesday's Insider Report: Companies insiders are buying and selling

Monday's Insider Report: Companies insiders are buying and selling

Chairman and VP buying at ARC Resources

The Globe's Stars and Dogs for the past week

Bullish on D.R. Horton

How parents can keep down payment gifts safe when couples split

Number Crunchers

Eleven quality U.S. stocks with lower volatility

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What's up in the days ahead

Goodbye Yield Hog. John Heinzl outlines what his next portfolio will be. Clare O'Hara talks about three ETF myths.

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Compiled by Gillian Livingston

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