Ask Matt: Who predicted the energy rally?

Q: Who predicted the energy rally?

A: Investors with the guts - or who were crazy enough - to buy energy stocks in mid-January have been paid handsomely. The 40 energy stocks in the Standard & Poor's 500 have added roughly $200 billion into the pockets of investors since oil prices bottomed since Jan. 20, 2016.

The fact so much money was made from the bottom is impressive, but not all that surprising. With the price of oil tanking below $40 a share, many analysts figured a bump was overdue. Shares of energy stocks exposed to oil prices were primed for big gains. Many analysts have been trying to call the bottom in oil prices and energy stocks. The problem many of these analysts were wrong for months, and the stocks kept tanking along with the price of oil.

Extreme volatility is the nature of stocks in the energy and materials sectors. These stocks can rapidly fall apart when prices of the underlying commodities sink. But big money can be made from these sectors - sometimes epic gains - when commodity prices inevitably recover. The key, though, isn't trying to call bottoms, which is infamously difficult and perilous. The key is being diversified. If you own the S&P 500, you enjoyed the rally thanks to your 7% exposure to energy.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.