A black bear has been unleashed on capital markets. After having been adrift for several months, oil has been cascading relentlessly lower since late November. But despite the recently severe downward pressure on the energy sector, many are suggesting that this will be a short-lived and isolated blip. And in a still raging bull market for U.S. stocks, the pullback in energy shares represents just the latest opportunity to suddenly buy “deeply discounted companies on the dip.” Perhaps. But a number of characteristics make the sharp decline in oil and energy shares notably different from what so many have grown accustomed over the last six years. In short, the recent struggles in the energy sector may not only go on much longer than many are anticipating, but these downside forces have the potential to spread across the broader market.
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