How to Play the Next Bull Market in Energy

With the S&P 500 index having fallen 40% from its peak, it's time to prepare for the next bull market in the best-performing industry this decade: energy.

The previous bull market started in mid-2003, and China and India were hot topics. As China and India, sometimes referred to as "Chindia," are home to a third of the world's population, it was likely that oil prices would rise as those nations' economies boomed. That's exactly what happened.

With that sort of backdrop, it made sense to aggressively build up positions in the energy, natural resources and mining sector. In 2003, energy comprised about 9% of the S&P 500. I went overweight at 12%. I bought British Petroleum(BP Quote), Chinese refiner Sinopec(SNP Quote), exploration and production company Murphy Oil(MUR Quote) and Statoil(STO Quote), the big oil company of Norway. Each was weighted at 3%. ...