The last time I wrote about this Solar ETF (TAN) I was very optimistic. I believe very strongly that the globalized push for clean energy will put holdings like this in a very good position to do well. Fortunately, I was picking up shares at the time I was writing it – and was fortunate enough to see this ETF continue to appreciate in price.
However, I got a bit concerned when I was watching news develop around Hanergy, and how there may be some questions around the balance sheet and how the company is structured. Hanergy is the ETF’s largest single holding, and frankly, I cannot understand how this one Chinese stock was continuing to go up.
I realize that many people don’t really understand ETF’s – or even common stocks for that matter, but in this case I rang the register and cashed out. Not because I think that clean energy has run its course, but because TAN has placed too many chips on this one company that could come under fire for a number of reasons, at any time.
I am definitely a longer term buyer of this ETF, and many other commons in this sector, but I am keen to see the price come down a bit to take some of the risk out of getting in at these prices after a considerable appreciation in value over the past few months.
I guess that will be the focus of my next post – when to go ETF and when to go individual holding in a sector with so much predicted volatility. Solar is a field still in its infancy, much like the auto or airline sectors all those years ago. That’s the lesson I am trying to take away from this – even though a product may be in use by millions every day, the fundamental underlying economics of the business may not always make sense. I am going to try to watch as this develops and find the next “Coca-Cola in a Haystack”…
Never take my ramblings as professional advice. Just realize that these are the thoughts of a guy who loves the markets and is not a professional…