As a child I learned a fine line may divide a visionary and fantasist. Indeed the future pride of entire nations (or more importantly) your investment returns may depend upon which side of the line is straddled when planning how to invest for long-term returns.
Return on investments
Back in the 1950s the Sydney Opera House was designed and built to be later acclaimed the work of a true visionary. While in the UK in the late 1990s the British government wanted to build a great monument to celebrate the arrival of the new millennium.
Like the Opera House it would need to be iconic, timeless, and sufficiently brilliant to attract visitors over the next 1,000 years.
After much consideration, the UK government agreed a plan to build a giant dome. The $1.2 billion expense was big, but the "Millennium Dome" was needed to host its planners for the mother of all New Year's Eve parties. After the party and clean-up it was believed its giant-dome-like qualities would prove a magnet to tourists across the next millennium. Alas the vision failed and the dome became an unfortunate monument to foolish thinking and improper planning.
Which leads me onto my recent investment in beaten-down oil and LNG producer Santos Ltd (ASX: STO).
Is it the act of an Opera House visionary or Dome-headed dummy?
The fantasist scenario
Oil prices are in a long-term bear market as OPEC sets out to teach a harsh lesson to investors like me who assume high oil prices are a largely one way bet to bulging returns.
Even if OPEC's oversupply strategy sees the growth of shale oil production decisively reversed in North America, the US$50 per barrel level may act as a ceiling not a floor on oil prices as the battle for market share becomes the new normal.
With OPEC sincere in its commitment to fighting an indefinite price war, my Santos trade is starting to look like a one way ticket to CentreLink. Unless of course oil prices settle higher over time.
The visionary scenario
If you've ever bet a friend to see who could hold their breath underwater the longest, your friend might have some sympathy with the allies of the powerful Saudis among the OPEC group of nations.
Indeed with the entire supply side now effectively holding its breath, it perhaps won't be long before some sink to the bottom or come up for air. Under this kind of visionary scenario and a supply side re-orientation my Santos bet might see me sitting pretty come 2016.
It's not just Santos where bargain-hunting energy investors can look, stocks like Sundance Energy Australia Ltd (ASX: SEA) and Oil Search Limited (ASX: OSH) may also be oversold if you believe energy prices will eventually rebound.
There are also two more energy businesses named and detailed in this FREE report which could see you generate big returns if you take the time to discover their names while energy prices are deep underwater…
