Episode summary
Jim Mellon: Why I'm Loading Up On Energy Stocks
The Master Investor Podcast With Wilfred Frost
· · 41 min · Hosts: Wilfred Frost · Guests: Jim Mellon
Summary
Jim Mellon said he has cut his gold and silver exposure by about 80% after a huge run in 2025, arguing the trade has become crowded and that he prefers to leave a winning market before the final burst. He pointed to central bank buying, retail enthusiasm and inflation fears as reasons the metals soared, but said those forces may now be fully reflected in prices. He also warned that the Magnificent 7 now account for about 40% of the S&P 500’s market cap, creating a concentration risk he does not want to own.
His main new call is energy. Mellon said he has been “loading up” on oil and gas since November and December because the sector remains underowned, pays dividends, and should benefit from the buildout of data centers and AI infrastructure. He argued there is not enough U.S. grid capacity or energy supply to meet the demand implied by massive data-center spending, and he expects natural gas, oil and some coal to fill the gap for years before nuclear can help.
He also made a bearish case on Tesla and other expensive AI-linked names, while saying robotics is a better long-term way to play AI, especially in China. Beyond equities, Mellon said the Japanese yen looks undervalued and could rally if Japanese yields keep rising, and he remains cautious on China’s property market even as he sees opportunities through robotics and currency plays.
Key takeaways
- Jim Mellon said he has reduced his gold and silver exposure by 80% after a strong 2025 and now thinks the trade is overcooked.
- Mellon said he has been loading up on oil and gas because the sector is unloved, underowned and likely to benefit from AI-driven power demand.
- He warned that the Magnificent 7 now make up about 40% of the S&P 500 and sees that concentration as a major risk.
- Mellon said Tesla and other AI-linked stocks still look expensive to him, especially versus the opportunities he sees elsewhere.
- He expects robotics to be one of the biggest markets by 2040 and thinks China may capture much of the early value creation.
- Mellon said the Japanese yen is severely undervalued and could rise if Japanese rates and inflation keep moving higher.
Notable quotes
“we've been loading up, I mean literally loading up on oil and gas”
“if I said that we have reduced our position in gold and silver exposure by 80%, I think that would be about accurate”
“Those seven stocks represent about 40% of the market capitalization of the S&P, which is just a huge and uh very dangerous concentration risk”
“my view in life is that, you know, you don't need to be in the game that everyone else is playing”
“I think that is absolutely true. We will all need robots in our life”
How the episode opens
So, there's all sorts of reasons why um you know, gold and silver gone up, but I did not expect it to go up as much as it did. And it it was a 4-year call for me. So, it's worked out very well.
And you know, sometimes you take your you don't say for the last dance, and that's my philosophy. So, if I said that we have reduced our position in gold and silver exposure by 80%, I think that would be about accurate. Those seven stocks represent about 40% of the market capitalization of the S&P, which is just a huge and uh very dangerous concentration risk.
Um, at a time when they're all doing essentially the same thing, I wouldn't be playing in that area because there's plenty of my view in life is that, you know, you don't need to be in the game that everyone else is playing. there's plenty of other things to do and that's what I try and do. What's the next unloved sector as gold and silver were four years ago uh that you know will actually pay you to be part of it and get dividend yields in most oil and gas stocks of of any note.
Uh that is very lowly represented in the S&P and in other indices around the world and of course it's oil and gas. And so we've been loading up, I mean literally loading up on oil and gas. Welcome to the Master Investor podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders, and politicians in the world, giving you, our listeners, the edge.
And a very happy new year to you. The Master Investor podcast is sponsored by BMY Investments, LEG, and Interactive Brokers.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- energy stocks
- gold and silver exposure
- magnificent 7 and ai
- robotics as ai play
- japanese yen undervalued currencies
Companies and tickers mentioned
- BP
- SHEL
- EQNR
- BP
- Shell
- Equinor
- ADNOC
- Santos
- BNY Investments
- iShares MSCI Europe Energy Sector ETF
- VanEck Oil Services ETF
- First Trust National Gas ETF
Watch the episode
Watch “Jim Mellon: Why I'm Loading Up On Energy Stocks” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Master Investor Podcast With Wilfred Frost, this episode and its artwork belong to Paradine Productions. Octagon is not affiliated with the show; this page is an independent summary.
