Investment in new oil and natural gas production and supporting infrastructure continues to badly lag the level of previous cycles. That promises to keep supply in catch up mode to demand for years to come. And we expect both commodity prices and energy stocks to push out to new heights, well above even the highs achieved in the previous cycle.

The bullish long-term outlook does not rule out a near-term drop in commodity prices and sector stocks. And should the current combination of inflation pressure and rising interest rates land the global economy in recession or something close to it, damage could be swift and severe.

Some readers will be OK with simply holding on through such a setback, so long as they’re sure on the longer-term upside. We don’t have a problem with that. But we’ll do considerably better in this long-term energy bull market by occasionally paring back our highest flyers—either swapping immediately to something cheaper or holding the cash out with the intent to invest again on the pullback.

We’re stepping up our emphasis on two other energy sectors that have lagged the rally so far but stand to benefit most from the next stage of the energy cycle, as producers gradually ramp up output in response to higher prices.