Billionaire George Soros is an extremely influential person in the world of business. This Hungarian-Jewish businessman is one of the richest men in the world. When Soros does something within the market, many people follow his movements. In January of 2016 The Street reports, Soros had his fund company dump all of their shares of Chevron, NRG Energy and Cheasapeake Energy in February of 2016. When Soros had his company make this move many business insiders began to speculate. They somehow wondered if Soros could see some type of problem starting to form within the energy industry.
Fuel prices have been at an all-time low since 2015. Consumers might not mind the low prices but energy companies are suffering. An energy company cannot survive over a long period of time when fuel prices are low. The reason being is that low prices drives down demand. Once this happens, consumers will get use to spending less on fuel and a company will not be able to earn a profit.
When fuel prices are set to normal rates, energy companies can make steady profits. Consumer demand will be optimal and companies will be able to competitively adjust their prices. This will fuel more competition and keep consumers searching for the best prices on fuel. A few companies will then emerge over the rest in terms of fuel sales. This will happen because they are offering the best rates on fuel prices within the market.
Do not forget that at least 9% of all people are employed in the energy field. Also, nearly all workers are dependent upon energy field for transportation and heating needs. If the energy industry starts to fail then other sectors of the economy.
Here is something else to consider about Soros’s actions. Back in 1992 when the British pound was in trouble; Soros did a short sale of British pounds and made 1 billion dollars. He sold 10 billion to get back that one on the short sale. The point is that Soros knew when to dump his stocks and took the price cut. He still came out on top in terms of the deal. So, many critics are wondering if Soros is taking the same approach with the current situation regarding energy.
People can find out more information about Soros activity by reading the article Week Ahead in Energy: Does George Soros Know Something We Don’t?. It will give some insight into Soros’s reasons for taking this action with energy stocks. After reading the article people should be able to speculate and draw their own conclusions.