Wednesday, April 19, 2006

Participating in the Clean Energy Wave

I was up late last night thinking about investments and clean energy.

Over the last year and a half, I began investing in to energy and clean energy stocks. I started around Dec 04 and finished rollig over my investments around November 05. Well, I am up 50%.

I see no reason in sight for it to stop. I look around the US and see everything that will need to change - cars, lights, sprawl, natural gas fired power plants, roofs without solar panels, SUVs, freeways full of trucks, grocery shelves full of food from Mexico and California, plastic grocery sacks, plans for new coal-fired power plants and new highway bridges … I can go on and on and on. They do not have a clue!

In the next 20 years it is all going to change. A gigantic transformation of our economy is underway. I believe that it will make the tech boom of the 90ties look like the bunny hill. And it will change our world.

Even our republican government sees it (my bold):

President Bush's Advanced Energy Initiative is a "Vision for Victory," according to Alexander Karsner, DOE's new Assistant Secretary for Energy Efficiency and Renewable Energy (EERE). Assistant Secretary Karsner declared that the energy initiative could lead to victory over U.S. enemies; over U.S. dependence on unstable regimes and ideologies; and over "anxiety and misplaced fears that we are passive and helpless to better this nation and better our planet." Assistant Secretary Karsner emphasized, "Maximizing energy efficiency and renewable energy is the domestic epicenter in the war on terror, and it is imperative that we maximize the partnerships between the public and private sectors in new and creative ways with a sense of seriousness, national purpose, and the urgency the situation merits."

They see it in a different light than I do (i.e., militaristic). I see it as survival of our and the planet's quality of life.

My goal in life is to steer the energy solution toward energy efficiency (EE) and renewable energy (RE) not nuclear. Nuclear is a false solution. Uranium is limited, waste is dangerous, it is too complex (complex solutions are the wrong solutions), etc.

There are a few ways that each of us can do that:
1. put EE and RE into/on our homes
2. make part of your career include EE and RE
3. tell people about it, lobby for it, etc
4. invest in it

The better EE and RE stocks do:
* The more seriously the financial markets treat the sectors and the more other people invest…
* The better financed EE and RE firms are to do R&D and grow.
* The more and smarter the entrepreneurs that start EE and RE businesses.

So when we invest in EE and RE there are many benefits:
1. Empower the companies and sectors you invest in
2. Make the RE future a bit more likely
3. Do good for the planet
4. Help create local jobs and strengthen local economies (rather then importing fuel from far away)
5. Help put and end to global tensions over energy resources

So I suggest you think about rolling some investments into managed funds that purchase EE and RE stocks. I only know of two and one is brand new.

The first is the PowerShares WilderHill Clean Energy Exchange traded fund (PBW).
Find more about it here:
http://finance.yahoo.com/q/pr?s=PBW

I began purchasing it about a year ago when it was first issued. Those initial investments are up over 70%. An exchange traded fund is like mutual fund that but is traded real time. They hold about 30 stocks traded on the US stock exchanges. The managers actively move in and out of stocks – so that you do not have to actively manage it.

The second is Guinness Atkinson Alternative Energy mutual fund (GAAEX)
Find more about it here:
http://finance.yahoo.com/q?s=gaaex

It is brand spanking new. I began investing in their peak oil and gas fund (GAGEX) in December of 2004. Those initial investments are up almost 100%.

GAAEX is so new that they do not even list which stock they own. Read more about it here: http://www.gafunds.com/gaaex.asp

What I really like about GAAEX is that they will purchase international stocks that are not traded on the US stock exchanges, and one of their two main fund managers lives in England. Again they will own many stocks, and will move in and out of shares to maximize return – just like PBW.

No doubt the investments will be more volatile than standard funds. But in the longer term they will do better, plus they support a sector of the market all of us believe in.

Your comments?

Comments:
Iam wondering if you have done any research into quality of companies in PBW index. I have some money invested in PBW but iam looking for further information about long term prospects of these companies. As someone who deals with clean energy on practical basis, do you have any comment ?
 
I have concerns about some of the stocks held by PBW. For example fuel cell stocks. But at this time I trust the Wilder Hill group that selects the clean energy index to do the research and know what stocks to drop and add to the index. In general the sector as a whole will do very well. Even if the road is bumpy at times.

I see the interest on the ground, here in Wisconsin, growing rapidly. Be it solar hot water systems, large commercial solar electric systems, biodiesel plants, farm manure digesters... basically where ever you look in the RE area, it is growing and sees nothing but further growth for years to come.
 
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