Category: BUSINESS

After a remarkably fruitful year in which the stock market shook off rising inflation and coronavirus cases, 2022 began with a decline. It may be the first in a series of ups and downs as Wall Street anticipates moves by the Federal Reserve and copes with the lingering pandemic.

It will be hard for investors to know what to do as the Delta variant gives way to Omicron and whatever variants evolve next. As for the Fed, the evolution of its policy is perplexing the markets, too. Recent statements and past behavior by its chair, Jerome Powell, suggest it will ramp up the effort to fight inflation, then change course if markets become unduly agitated.

“The markets have come to believe that if there’s a major correction in the equity market, Powell will help them out,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. “The result is a seesaw motion in which the market corrects in anticipation of tightening, then the Fed eases and the market goes up.”

After the S&P 500 rose 10.6 percent in the fourth quarter, giving it a 26.9 percent gain for 2021, the index made a marginal new high as 2022 began, then lost ground.

One reason for the January decline is the release of minutes from the December Fed meeting, which showed growing discomfort about inflation and included discussion of accelerating the pace of interest rate increases. The minutes led some investment banks to forecast four rate increases this year instead of three and an earlier start to the process of selling the trillions of dollars of assets bought in the quantitative easing program.

But if inflation stays high after a period of tightening, Mr. Sri-Kumar said, the Fed will have to maintain that tighter policy, however sensitive the markets might be to it. Failure to do so could risk damaging the economy, he said, something the markets would be even more sensitive to.

Some investment advisers expect the Fed to become consistently hawkish. Bill Hester, senior research analyst at Hussman Strategic Advisors, said in a commentary on the firm’s website that Mr. Powell had made the case before the pandemic that forceful early action was required when inflation expectations threaten to get out of control.

The Fed may be closer to making that determination than many realize, Mr. Hester said. The unemployment rate, 3.9 percent according to December data reported this month, is lower than in 2015, at the start of a Fed tightening cycle during which the labor market continued to strengthen. Moreover, the labor force has been shrinking as fewer people are working or seeking work, which might encourage the Fed to think that full employment can be achieved with a higher unemployment rate.

There is also a benign possibility, which Rick Rieder, head of the global asset allocation team at BlackRock, adheres to, in which inflation ebbs on its own.

“Some tangible changes will kick in, in the second or third quarter,” he said. “Inventory levels are in really good shape” on many goods, “and we should see some alleviation of pressure on energy prices.” Also helping is that consumer price comparisons with a year earlier will be more favorable.

Simeon Hyman, global investment strategist at ProShares, an issuer of exchange-traded funds, is another inflation optimist. He expects Fed tightening to succeed, and he highlighted snippets of data, such as a recent steep drop in the Baltic Dry Index, which measures global shipping rates, to back his case. He anticipates inflation falling to 3 percent, “a number that stocks can digest,” and forecasts S&P 500 earnings to rise 10 percent to 15 percent this year, “enough for stocks to do OK.”

Stocks did better than OK last year. The average domestic stock fund tracked by Morningstar rose 6.6 percent in the fourth quarter and 21.9 percent on the year, although both results lagged the S&P 500 considerably.

A handful of giant technology stocks accounted for much of the market’s return, but tech funds performed only in line with broad stock portfolios. Many of the best sector funds focused on financial services and natural resources.

International stock funds had an ordinary year, rising 7.9 percent, including 1.9 percent in the fourth quarter. There were vast differences in results geographically, with specialists in Europe and India greatly outperforming and Latin America and China funds showing losses.

Much of how 2022 unfolds will depend on the coronavirus and the response to it. If evidence continues to pile up that Omicron is more transmissible than other variants, but milder, it could show the way out of the pandemic. That could be great for society but potentially harmful for investors by removing the virus as a deus ex machina that has helped to make market conditions ideal.

In response to the coronavirus, the Fed created trillions of dollars out of thin air, Congress doled out trillions more, and the pandemic provided a tacit guarantee that interest rates wouldn’t rise. If Omicron means a return to regular order, investors will have to contend with the highest inflation in a generation, record fiscal debt and a Fed lacking a reason not to tackle inflation forcefully. At the same time, stocks and bonds are very expensive, limiting prudent investment options.

“There’s no place to hide,” Melda Mergen, global head of equities at Columbia Threadneedle Investments, said during a presentation of the firm’s 2022 outlook. “Most of the markets are at the top of the bar in their current valuations.”

She remains bullish toward stocks but emphasizes pockets that are less expensive, such as smaller companies and value stocks. She noted, though, that the valuation gap between growth and value stocks has narrowed, so the pickings are slimmer.

Other investment advisers also recommend looking for less overpriced market segments, but they differ on where to find them. Mr. Sri-Kumar likes European stocks more than American ones, and he would buy emerging markets, such as India, that do not depend on strong growth in China, where he foresees growing risk in 2022.

Ian Mortimer, a co-manager of the Guinness Atkinson Global Innovators fund, suggests owning “quality defensives,” stocks in industries that feature rising dividends. Some examples are British American Tobacco, Imperial Brands, which also sells tobacco, and the insurance company Aflac.

For Mr. Hyman, “the view for stocks is a lot better than the view for bonds.” He said the financial, energy and materials industries tend to do well when interest rates rise.

If stocks do better than bonds in 2022, it will mean more of the same for fund owners. The average bond fund was flat in the fourth quarter and up 1 percent for all of 2021. The standout niches, each returning about 5 percent on the year, held bank loans and high-yield bonds.

Mr. Rieder favors such diverse assets as carmakers’ shares, investment-grade corporate bonds, and stocks in Indonesia and Colombia, although he broadly prefers American markets to foreign ones. He predicts low-double-digit gains for the S&P 500.

But he tempers his optimism with concern that inflation might not abate and that the Fed has instilled “a sense of complacency in the markets.”

“That’s going to make their job a lot harder from here,” he said, adding, “If they waited too long and have to brake hard on the other side, it will cause the markets to go down hard.”

Judged by their name alone, Treasury Inflation-Protected Securities would seem a cure for one of today’s main investor anxieties: inflation.

Alas, that name doesn’t tell all you need to know.

A mutual fund or exchange-traded fund that invests in TIPS can help prevent rising prices from eroding the value of your investment portfolio. And inflation is a worry today: It’s running at an annual rate of 7 percent, a level not seen since 1982. That’s when “E.T.” landed in movie theaters and Michael Jackson’s “Thriller” thrummed on radios.

But TIPS funds and E.T.F.s aren’t the best inflation fighters for every investor, and TIPS, a kind of bond issued by the U.S. Treasury, have complexities that belie their plain-as-boiled-potatoes label.

People assume “just because inflation goes up, you’ll do well” with TIPS, said Lynn K. Opp, a financial adviser with Raymond James in Walnut Creek, Calif. But other factors, like rising interest rates, can sap TIPS’s returns, she said.

Plus, TIPS are expensive when compared with standard Treasuries in that they pay less interest, Ms. Opp said. In the first week of January, a five-year TIPS was yielding minus 1.7 percent, while a five-year Treasury was yielding 1.4 percent. In effect, TIPS investors were paying the Treasury to hold their money.

Negative yields notwithstanding, money lately has been rushing into TIPS funds and E.T.F.s.

In 2020, net new flows of about $22 billion gushed into them, according to Morningstar. In just the first 10 months of 2021, those flows nearly tripled, to $61 billion.

Performance may have been the draw: The average TIPS fund tracked by Morningstar returned 5.5 percent in 2021, compared with a loss of 1.5 percent for the Bloomberg Barclays Aggregate Bond Index, a well-known bond index.

To understand TIPS funds or E.T.F.s, it helps to understand the underlying inflation-protected securities.

The U.S. Treasury adjusts the principal of a TIPS twice a year based on the most recent reading of the Consumer Price Index, a government measure of inflation. When the C.P.I. climbs, the principal ratchets up. And when the index falls — because prices are falling — it ratchets down.

“The interest payments can change,” said Gargi Chaudhuri, head of iShares investment strategy, Americas, for BlackRock, because those payments are based on principal that can change with inflation.

The C.P.I. has lately outpaced expectations. But that situation hasn’t always prevailed.

“If you look back a decade, inflation expectations sat above where inflation rolled in year after year,” said Steve A. Rodosky, a co-manager of PIMCO’s Real Return Fund. “So people would’ve been better off owning nominal Treasuries.” (“Nominal” is professionals’ term for noninflation-protected bonds.)

Perhaps TIPS’s most confusing quality is the nature of their inflation protection.

It might seem that a TIPS fund would work like hiking pants that zip off into shorts: right for whatever (inflationary) conditions arise. But what sets TIPS apart is the protection they afford against unexpected inflation, said Roger Aliaga-Diaz, chief economist for Vanguard.

Market prices for all assets adjust, to some extent, to reflect anticipated inflation. Prices for standard bonds, for example, fall to compensate for the fact that inflation has purloined part of their original yields. Prices for TIPS fall, too, though the crucial difference is that their inflation adjustments help compensate for that. (Bond prices and yields move in opposite directions.)

Whether you opt for a TIPS fund in your portfolio will probably turn on your age and expectations about inflation.

Retirees and people approaching retirement might choose one because its value should be less volatile than that of other assets that can help buffer inflation, like stocks and commodities, said Mr. Aliaga-Diaz. Vanguard’s Target Retirement 2015 Fund, a so-called target-date fund, allocates 16 percent of its asset value to TIPS.

Jennifer Ellison, a financial adviser in Redwood City, Calif., said her firm, Cerity Partners, currently recommends that clients keep 15 percent to 20 percent of the bond portion of their portfolios in TIPS funds. “But we have been as low as 10 percent at times,” she said.

A young person might not want any allocation to a TIPS fund, preferring stock funds as inflation insurance instead.

“Over the longer term, there’s been no better way to protect oneself from inflation than to have an allocation to stocks, because corporate earnings tend to grow at a rate that outpaces inflation, and stocks have appreciated at a rate that well outpaces inflation,” said Ben Johnson, director of global E.T.F. research for Morningstar.

Even for retirees, a less volatile sort of stock fund, like one that invests in dividend payers, might blunt inflation better than a TIPS fund, Mr. Johnson said.

“Among our favorites is the Vanguard Dividend Appreciation E.T.F.,” he said. “It owns stocks that have grown their dividends for at least 10 years running. That’s a way to dial down a bit of risk while maintaining some equity exposure.”

Another stock option is Fidelity’s Stocks for Inflation E.T.F., which holds shares of companies in industries that tend to outperform during inflationary times.

If you go for a TIPS fund, pick one with low costs, Mr. Johnson said. Costs always matter in investing, but they’re especially important here because all these funds, in the main, do the same thing: They buy a single sort of Treasury security.

“In the TIPS market itself, it’s exceedingly difficult to add value,” he said. Portfolio managers are thus often allowed to add in a slug of other sorts of bonds, as well as derivative securities. “But you do add risk by doing that.”

Among the cheaper TIPS offerings are the iShares 0-5 Year TIPS Bond E.T.F., the Vanguard Short-Term Inflation-Protected Securities E.T.F. and the Schwab U.S. TIPS E.T.F. All three have expense ratios of 0.05 percent or less.

Inflation expectations present a harder puzzle for investors than your expected retirement date. In theory, if you think inflation will exceed the market’s expectations, a TIPS fund would be a good bet.

Investment pros make this assessment by checking the break-even inflation rate — the difference between the yields on TIPS and nominal Treasuries.

“It’s the rate of inflation you need to average for TIPS to outperform nominal Treasuries over the period for which you’re investing,” said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research. In the first week of January, that rate was about 3 percent for five-year Treasuries versus five-year TIPS.

People who think inflation will exceed that level for the next five years might want a TIPS fund. (They also might want to ask themselves why their inflation intuition is better than the market’s.)

Another vexation is how TIPS funds state their yields.

The U.S. Securities and Exchange Commission mandates a standard formula for computing yields — the 30-day yield. That formula doesn’t work well for TIPS offerings because the regular principal adjustments to the underlying securities can distort its result.

Some fund companies calculate the 30-day yield including the principal adjustments; some don’t.

State Street Global Advisors, which sponsors the SPDR Portfolio TIPS E.T.F., is one that doesn’t.

“In our view, it’s more conservative to not include the inflation adjustment,” said Matthew Bartolini, head of SPDR Americas research for State Street. “Including it can lead to a misleading statistic — it’s likely to overstate the eventual yield of the fund.”

Perhaps the crucial fact to know about TIPS funds is the most basic one: They’re bond offerings, buffeted by the same macrofactors that buffet other bonds.

“If interest rates go up, the price is going to go down, pretty much irrespective of what happens to inflation,” said Ms. Jones of the Schwab Center.

She cautioned, too, that “there’s no guaranteed way to beat inflation.” https://tx88.com/ is committed to providing a safe and responsible gambling environment, with 24/7 customer support to assist you with any queries.

A TIPS fund might help. So might an appropriate stock fund. “Having some allocation to things like real-estate investment trusts and precious metals makes sense, too, but that’s not necessarily going to beat inflation, either,” she said.

One of the pitches for socially conscious stock funds has been that their performance won’t differ that much from the stock market’s. In theory, that lets you invest according to your values while approximating the market’s return.

This year’s stock market swoon has shown that to be painfully true — and then some. Socially responsible stock funds haven’t just fallen in step with the S&P 500. They’ve sunk a bit more.

The stock funds tracked by Morningstar dropped about 26.4 percent this year through Sept. 30, while the S&P 500 was down about 23.9 percent.

The offerings are better known as environmental, social and governance, or E.S.G., funds. That name stems from the fact that their managers, in making investment decisions, weigh environmental, social and corporate governance factors alongside financial ones.

Whatever you call them, something these stock offerings share with many large-capitalization stock funds and exchange-traded funds is that they often own a lot of technology companies.

Tech stocks account for about one-quarter of the assets of the average large-cap E.S.G. fund, compared with only one-fifth of the assets of the average traditional large-cap fund, according to Morningstar. And technology has been one of the sorriest stock-market sectors this year, down 31.4 percent through the end of the third quarter.

Many of the funds favor what investment professionals call growth stocks, which include technology names. This year’s market has battered growth stocks, while their antitheses, value stocks, have fared better.

“There are probably a lot of E.S.G. investors who didn’t know they were overweight growth,” said Jennifer Ellison, a financial adviser with Cerity Partners who is based in San Francisco. “But they’re waking up now and asking, ‘Why is my E.S.G. fund underperforming?’ We’re having a lot of those discussions with clients.”

What’s the difference between growth and value stocks, and why does it matter to E.S.G investing?

You could say growth stocks are favored by seers — people who years ago imagined that Google’s ability to vacuum up data from online searches could yield more than just a better search engine. (Google’s parent company is now called Alphabet.) Value stocks are favored by bargain hunters — people who today may envision General Electric not as an aging industrial conglomerate but as a sturdy collection of assets trading at a discount.

Sometimes — as was the case for much of the last decade — the stock market favors growth stocks. Other times — like this year — it favors value stocks. The S&P 500 Growth Index fell 30.4 percent through Sept. 30, while the S&P 500 Value Index dropped 16.6 percent.

In theory, investors with diversified portfolios should own both growth- and value-oriented funds — or a single fund with roughly balanced allocations of growth and value stocks.

An example of an actively managed socially conscious, or sustainable, fund with such a portfolio is the Vanguard Global E.S.G. Select Stock Fund. It has an expense ratio of 0.56 percent and has returned an annual average of 7.7 percent since its 2019 inception, though it is down 23 percent for the year through the third quarter. It owns a mix of U.S. and foreign stocks, and tech stocks account for only about 15 percent of its holdings.

The recent woes of many socially responsible stock funds and E.T.F.s raise the question why they have tilted toward growth stocks.

Part of the reason is that early E.S.G. clients tended to be driven mainly by their values, said Michelle Dunstan, chief responsibility officer for AllianceBernstein.

Funds catered to those clients by excluding environmentally damaging businesses, like nuclear power producers, and holding the best-of-the-best E.S.G. performers, she said. That led them toward growth ones like technology and consumer discretionary stocks.

Ms. Dunstan said sustainable strategies are now seeking out companies trying to improve their E.S.G. performance. She said AllianceBernstein, in its research, hasn’t been able to connect good E.S.G. ratings with stocks outperforming their peers.

“But we have made a link with improvement in E.S.G. ratings and outperformance. These companies aren’t just improving their E.S.G. ratings — they’re trying to become better companies overall.”

E.S.G. ratings from data providers like MSCI and Morningstar Sustainalytics can also influence stocks’ inclusion in sustainable funds, said Jon Hale, head of sustainability research for Morningstar. These ratings address risks like companies’ greenhouse gas emissions or workplace safety violations.

“Generally speaking, if you took the entire universe of stocks and evaluated them based on E.S.G. metrics, growth stocks would score higher than value stocks,” he said.

Many of the funds also bar companies that own fossil fuel reserves or depend heavily on fossil fuels in their operations. That knocks out not only much of the energy companies but also some manufacturers and utilities, other common value plays. Energy has been by far the best-performing sector this year, returning nearly 35 percent through Sept. 30.

“If you exclude hydrocarbons or heavy industry, you’re going to tend to skew more growthy,” said Aaron S. Dunn, co-manager of the Calvert Focused Value Fund. Mr. Dunn’s fund, an E.S.G. offering, owns two energy companies — NextEra and Constellation Energy — among its 30 holdings. The fund started earlier this year.

Only a few other sustainable value funds and E.T.F.s exist.

The biggest actively managed offering in the niche is the Parnassus Endeavor Fund, headed by Billy Hwan. Over the five years that ended Sept. 30, the fund, with a net expense ratio of 0.88 percent, returned an annual average of 9 percent; it lost 24.2 percent this year through Sept. 30.

Its largest holding is Merck, a pharmaceutical company that Mr. Hwan said he bought when its future looked uncertain. “They had an overreliance on one drug” — a cancer treatment called Keytruda — “but were investing hugely in R.&D.,” he said. “New management came in and diversified their revenues. A year and a half later, it’s one of our better performers.”

Among the indexed options for sustainable value investing are the Nuveen E.S.G. Large-Cap Value E.T.F. and the Calvert U.S. Large-Cap Value Responsible Index Fund.

Jordan Farris, head of E.T.F. product for Nuveen, said his company’s E.T.F. aims to give investors risk and return similar to a typical value fund but with sustainability considerations factored in. The E.T.F.’s holdings — it has about 100 — have “higher E.S.G. scores and low carbon-emissions intensity,” he said.

“Investors often assume E.S.G. funds are low carbon, but that’s not necessarily the case,” he said. “We remove companies that own coal, oil or natural gas that’s still in the ground. This makes our product align with investors’ perceptions of what E.S.G. means.”

The fund, with an expense ratio of 0.25 percent, has returned an annual average of 5 percent over the last five years.

Why does a nonprofessional need to care about subtleties like growth versus value stocks and how much a fund holds of each?

Some socially conscious funds, like Vanguard’s E.S.G. offering, save you from that worry. These are often referred to as core or blend funds.

The Northern U.S. Quality E.S.G. Fund is similar in its investments. Its managers pair E.S.G. evaluations with assessments of financial quality and end up with a blended portfolio intended to be less risky than the typical sustainable stock fund.

“There are many stocks that rank highly from an E.S.G. perspective that don’t necessarily rank highly from a financial perspective,” said Michael Hunstad, chief investment officer for global equities at Northern Trust.

“You really need to control the unintended risk of E.S.G. investing,” he said. “If you’re naïve, you’ll be underexposed to energy and utilities and underweight the U.S., and that’s a lot of extraneous risk.”

The Northern Trust fund’s sector allocations look much like those of its non-E.S.G. benchmark, the Russell 1000. Since the fund’s inception in October 2017, it has outperformed the benchmark, returning an annual average of 9.5 percent versus the index’s 8.9 percent. It lost 24.6 percent this year through Sept. 30. The fund has a net expense ratio of 0.49 percent.

The reason to aim for a balance of growth and value stocks, whether in one fund or across your portfolio, isn’t just to achieve a finance professor’s vision of an ideal asset allocation.

A portfolio with more balanced risks is one that an investor is more likely to stick with in turbulent times, like the current market, said Wendy Cromwell, head of sustainable investment for Wellington Management.

The trouble with owning sustainable funds — or any funds — that load up on growth stocks is you’ll be tempted to bail out when growth stocks sink, she said. (The same would be true if you owned value-oriented funds when value sagged.) Research shows that retail investors trade too often and buy and sell at the wrong time.

“It can be really hard for retail investors to hold the line when the opposite style is outperforming,” she said. “But the trick is to stick with your long-term plan. You want to invest in funds that help you overcome your own bad tendencies.” Join du88 today and discover a world of exclusive promotions, bonuses, and VIP rewards designed to enhance your betting journey.

Forecasting the direction of the volatile energy markets has never been easy. But experts say the complexity of market forces brewing now, in the wake of Russia’s invasion of Ukraine, makes it especially difficult to predict the direction of both energy prices and the industry.

“I’ve never seen such a spicy bouillabaisse of ingredients that could wreak havoc on energy prices,” said Tom Kloza, the global head of energy analysis at Oil Price Information Service. “You have to look and say that the world changed on Feb. 24,” the day of the Russian invasion.

A variety of forces could sustain high energy prices, including the recent production cuts by the producer group OPEC Plus, the winding down of an American-led program to release oil from the strategic reserves of the United States and other countries, subsidies by several European nations to help citizens pay higher energy costs and slow industry investment in drilling operations. On the other hand, prices could fall on fears of a global recession, the potential for energy rationing in Europe this winter and an effort by the Group of 7 industrialized nations to impose a price cap on Russian oil.

Brent crude, the closely watched benchmark for global oil prices, fell almost 25 percent during the third quarter, finishing September trading around $85 a barrel, although it has since moved higher as OPEC Plus announced significant cuts. The U.S. government forecasts that oil will trade at an average price of $95 a barrel in 2023.

Funds that invest in American energy companies, which typically mimic price movements in the oil markets, rose exponentially along with oil prices in the first quarter of this year. By contrast, those funds fell by an average of less than 1 percent in the three months that ended in September. Energy is the only stock sector fund category that posted gains, on average, in the first nine months of this year, according to Morningstar Direct.

Experts say the Group of 7 agreement on Sept. 2 to cap the price of Russian oil is generating much of the uncertainty about oil prices. The plan aims to limit Russia’s export revenues while keeping its oil flowing through global markets. Skeptics, though, say ‌a price cap may be difficult to enforce. Oil embargoes are notoriously leaky‌‌, and shippers can use legal measures ‌like ship-to-ship transfers at sea to try to obscure the origins of a cargo.

Goldman Sachs issued a research report the same day as the price cap agreement was announced, calling it “bearish in theory, bullish in practice” for oil prices and predicting that Russia, which pumps about 10 percent of the 100 million barrels of oil produced globally each day, might retaliate by cutting its exports to drive up global energy costs. That, the report said, “would turn this into an additional bullish shock for the oil market.”

That day, the Russian-owned energy giant Gazprom announced that it would postpone restarting natural gas flows from Russia to Germany through the Nord Stream 1 pipeline. Later in September, gas leaks were discovered in the Nord Stream 1 and 2 pipelines under the Baltic Sea. The European Union and several European governments blamed sabotage for the damage.

But Jeffrey Sonnenfeld of the Yale School of Management, who has been studying the impact of Russia’s war on the energy industry through the Chief Executive Leadership Institute that he founded at the school, recently wrote an opinion piece expressing his confidence in the Group of 7 plan. In an interview, he pointed to the small number of major shippers and insurers, mostly based in Europe, saying that should make enforcement easy because “you can count on both hands the number of parties you would need to enforce it with.”

He also cast doubt on the idea that Russia would switch off its oil spigots as readily as it had stopped sending natural gas to Europe. Russia has more options to sell its oil, and shutting down wells could create future problems for the Russian industry, Professor Sonnenfeld said, so President Vladimir V. Putin “would be poisoning the Russian economy for years.”

Philip K. Verleger, an energy economist who began his career as a Washington policy adviser 50 years ago, said that the production cuts announced by OPEC Plus are likely to have less of an impact now because the circumstances are quite different. The United States was more dependent on foreign oil in the 1970s, he said, so OPEC’s aggressive moves led to gas rationing and lines at filling stations. But the United States is a bigger producer today, and some drivers are choosing vehicles that use little to no gas.

“Electric vehicles are beginning to penetrate the market so rapidly that if OPEC pushes too hard now, they could really accelerate the move off oil,” Mr. Verleger said.

In past economic cycles, higher energy prices have reduced demand, ultimately putting a lid on prices. European governments are providing a test case by spending billions of dollars on price controls and direct stimulus payments to offset higher energy costs while encouraging their citizens to voluntarily turn down the thermostats. President Emmanuel Macron of France has called such voluntary conservation efforts “energy sobriety.”

But Europe is also investing heavily in new infrastructure to support imports of liquefied natural gas, or L.N.G., which is supercooled so it can be shipped on tankers. They’ve been signing a flurry of deals to construct the facilities required to reconvert L.N.G. to vaporous gas in Germany, France, Belgium and elsewhere. American exporters may be among the biggest beneficiaries of this trend. The United States began exporting L.N.G. six years ago and became the world’s largest exporter in the first half of this year, according to the U.S. Energy Information Administration.

Paul M. DeSisto, executive vice president of the wealth management firm M&R Capital Management, says that whatever direction energy prices take, he sees the big energy companies in the S&P 500 index returning to something closer to their 20-year average of 8.3 percent of the market value of the index. At the end of September, energy stocks represented 4.5 percent of the S&P 500. “Given how important energy is to the world economy, I think it will return to something closer to the longer view,” he said.

His firm uses two energy-focused exchange-traded funds in client portfolios: the $35 billion Energy Select Sector SPDR, managed by State Street Global Advisors, and the $7 billion Vanguard Energy fund. The two funds have a slight difference in composition as they track different market indexes. The State Street fund owns the 21 energy stocks in the S&P 500 index, while the Vanguard fund includes a mix of more than 100 large, midsize and small U.S. energy companies. But the returns after the 0.1 percent management fee charged by both funds tend to be similar because Exxon Mobil and Chevron are the two biggest holdings in each fund, representing more than a third of the total assets. The State Street fund returned 33.76 percent in the first three quarters of the year, while the Vanguard fund returned 34.71 percent.

Despite the substantial geopolitical risks, commodity prices may ultimately be most influenced by the rate at which companies choose to invest profits in their own operations. So far, companies have been focused on returning profits to shareholders through dividends.

The Biden administration is keen to see more investment in the energy industry. “Ultimately our goal here in the United States and around the world has got to be to increase the supply of energy,” Wally Adeyemo, U.S. deputy secretary of the Treasury, said at a recent energy conference at Columbia University. He pointed out that the president has taken steps in this direction by releasing petroleum from the country’s strategic reserves, but also by calling on the private sector to increase production. “We want to make sure that supply chains are stronger in the United States, but also among our friends and allies.” At vicclub, we offer a wide range of betting options, competitive odds, and secure transactions for a seamless gaming experience.

But the industry may still be reluctant to risk lowering prices too quickly. Mr. Kloza of the Oil Price Information Service said he thought the industry had learned its lesson from past boom and bust cycles and wouldn’t dramatically ramp up drilling. “They’ve gotten the message,” he said. “The companies are not going to kill the golden goose.”

Last fall, Jina Kim and two of her friends splurged on a two-night stay at the Ananti at Busan Cove, a luxury resort in Busan, South Korea.

The resort, where rooms start at $369 a night, features infinity pools, spas, eight restaurants, a private coastal walk and beach area, and a 4,600-meter “Water House” — an indoor pool and sauna fed by natural hot-spring water.

“We just spent the whole day in the resort hotel, swimming, eating and drinking,” said Ms. Kim, a 32-year-old former teacher who is now a stay-at-home mother.

Ms. Kim and her friends weren’t worried about how they would pay for the trip because they had spent over a decade saving in a “gyemoim,” a Korean term for people who form financial planning groups to save money for future expenses.

Forming gyemoim groups can help friends or families split travel costs equally so everyone can participate, regardless of his or her personal budget.

“Honestly, if we didn’t make the gyemoim, then it would have been too difficult for us to arrange that kind of trip,” Ms. Kim said. “It would have cost too much, and we didn’t want other members to feel pressured by that.”

Maintaining Relationships Through Saving

Collective financial planning has had a long history in many parts of the world.

“It’s actually not unique to South Korea,” said Euncheol Shin, an associate professor of economics at KAIST College of Business in Seoul. “This practice first developed because there was no financial market out there, and if you wanted to borrow some money, you had to do some self-financing.”

Dr. Shin gave an example of a village 200 years ago that needed to buy seeds to grow rice. The financial structures to take out loans didn’t yet exist in many places, so villages pooled their money, bought supplies and split what they reaped.

Over time, this practice evolved into a way for people to keep friendships strong and communities united.

Each member of a gyemoim contributes what are essentially “club dues” — often between $10 and $50 each month, with the amount decided by the group. As the balance increases, the members discuss how to spend it together.

Ms. Kim first formed a gyemoim with two friends after they met at a social club in 2014. The three were attending different colleges and believed the gyemoim would allow them to regularly meet up.

Initially, they each agreed to contribute 15,000 won, or about $13, every month. Over the next decade, they saved more than 3,000,000 won, or about $2,200, before deciding to spend the money on a trip to the Ananti, the resort. By then, the three friends had become busy with their own careers and families, but they remained close, in part, because of the gyemoim.

“It allowed us to keep in touch and have a good time together without worrying about the cost,” Ms. Kim said.

Young-hoon Lee, 35, said his mother headed the gyemoim for her apartment building.

Mr. Lee, a teaching assistant at an English language academy, is part of a gyemoim that consists of two women and four men, all of whom contribute 50,000 Korean won, or about $36, each month.

“We became close friends during high school, and we’ve remained friends into adulthood,” he said. “Initially, we got together just to have fun, but as everyone started working, we began thinking more about the future. So, while maintaining our friendship is important, we also decided to support each other through significant life events, such as weddings or funerals.”

Mr. Lee’s gyemoim typically uses its shared funds to reconnect a handful of times a year, usually to enjoy a meal of Korean barbecue or fried chicken and beer.

Ms. Kim also traveled with a different gyemoim to Vietnam at the end of April. The trip cost much less than her stay at the Ananti, though she said her group of three women still stayed in a nice hotel and had a great time together.

Why Gyemoims Work in South Korea

Gyemoim groups can work in South Korea because of the nature of the country’s social interactions and culture of trust.

For example, in South Korea you could walk into a coffee shop in Seoul and leave your bag, laptop and wallet full of credit cards and cash at your seat unattended and go to the bathroom without needing to worry if it would all be there when you got back. (Though, to be sure, scams and fraud occur just like anywhere else.)

“Let’s say that you and I are friends,” Dr. Shin said. “We have grown up in a small town for a very long time. We know everything about each other. If I borrow some money and I don’t pay it back, then you’re going to say, ‘Hey, everyone, Euncheol borrowed some money from me, and he never paid me back.’” Because of the collective nature of social groups, Dr. Shin explained, he would be ostracized by people in his community.

Forming a group to save is so common in South Korea that one bank is adapting to the custom. KakaoBank, an arm of the country’s most popular communication app, KakaoTalk, now offers a gyemoim group account product where friends can share a bank account managed by one designated account holder.

Mr. Lee and Ms. Kim started their gyemoim groups before KakaoBank existed, so they entrusted their funds to one member of their saving circles. Some groups, like Mr. Lee’s, still prefer this “old-fashioned” method of collecting money. Mr. Lee said one of his groups had decided who would be entrusted with the money by majority vote.

Both of Ms. Kim’s gyemoim groups now use the KakaoBank option because it allows all members to see how their pooled money is moved in their account, which earns up to 2 percent interest. The account manager is the sole person with control over how the funds are used, but everyone pays in. Users can set reminders to send their monthly dues to the account and communicate through the app’s chat feature.

Gyemoim groups don’t last forever. Circumstances change, friends may have a falling-out, someone may no longer want to participate or a new person may want to join. When that happens, it’s up to the collective to decide how to handle it.

“There are no particular rules to run a group, although in some groups, other people have created their own rules,” Ms. Kim said. “But my groups never really had rules.”

Ms. Kim’s gyemoim that visited Busan used to include another friend, who decided to bow out a few years ago for financial reasons.

“In our case,” she said, “we asked her what she wanted to do with her part of the money. She decided to have her part refunded instead of using it. ”

While there was a peaceful parting of ways in Ms. Kim’s gyemoim, disagreements aren’t unheard-of, either. Ms. Kim said she had a friend who was part of a gyemoim that disbanded when its members couldn’t agree on how to plan a trip. For a group to be successful, she added, members need to share similar interests and values.

Could Gyemoim Groups Work in the U.S.?

No American bank offers a product quite like what South Korea’s KakaoBank offers for gyemoim groups. To ensure full transparency for all members of your group, the closest option is to open a joint checking or savings account so those involved can have equal access.

This could be difficult depending on the size of your group and your proximity to one another. Banks that don’t have traditional brick-and-mortar locations are most likely going to have the best options. For example, a representative from Ally Bank, which operates online, said the bank allowed up to four co-owners on a spending account.

If you open an account with a bank that includes fees, factor the cost into everyone’s shared contribution.

Opening a joint account has drawbacks, too, such as what might happen if a friend wants to leave the group. Depending on the bank, removing someone from a joint account can be tough or impossible without closing the account.

In addition, unlike an individual account, a joint account gives every person equal legal ownership of the funds in it whether the person contributed all of the money or not. Despite shared ownership, you can’t force anyone to pay dues into the account, either.

Still, if you wanted to form a gyemoim, you could do it the old-fashioned way by selecting one trusted person to be in charge of pooled funds in an individual savings account.

The cultural traditions that allow gyemoims to work well in Korean society aren’t as present in Western culture, so collective funding can be a bit of a gamble if you don’t know your members well.

When forming a group, Mr. Lee suggested, include at least “one or two trustworthy people.” He also recommended the group stay open to new members, as circumstances can change unexpectedly, and new friends can energize a group that has grown stale.

Mr. Lee also recommended forming groups around a specific purpose, such as getting together regularly to pursue a hobby. Friends who have known one another a long time, such as Ms. Kim and her friends, may easily save money with no concrete purpose in mind. But new friends or acquaintances will thrive if they have mutual interests. Experience the thrill of online betting with 9bet, your trusted platform for exciting sports and casino games.

“As a Korean who values a sense of community, I think the culture of community is good, and I hope more people will pursue a culture where everyone gets along well,” Mr. Lee said.