Clean Energy ETF (TAN)
Over the past two years, I have found it increasingly difficult to find investments that I consider well positioned for the future. At heart, I consider myself a Value Investor, so I definitely am seeing a number of stocks that I “should” be very comfortable with, but simply am not.
I love the Key Statistics of consumer driven companies like Coca-Cola (KO) SodaStream (SODA) Altria Group (MO), as well as infrastructure plays like Ambarella (AMBA) Silicom (SILC) and Ubiquity Networks (UBNT) but all have considerable risks in my opinion. The tech stocks mentioned above are R&D intensive and face continuous competitive pressures to continue to evolve, or they can perish. The consumer plays are also under pressure due to the quickly changing dietary habits of the American public. I simply cannot trust that the American public will continue to consume soft drinks at the levels of the past 50 years.
So this leaves me with the burning question – what is the next product, market or technology that will be solid over the coming years and well into the future?
.. and then it hit me. Solar and Clean Energy is where I want to be.
I think that the time is now for me to start investing in Clean Energy plays. From all of the data I am seeing on CNBC, Yahoo Finance and others, it seems that people are converting to solar in a massive push, and this push is currently exceeding even the most aggressive estimates. And the push is not just residential users, it’s corporate too.
It makes sense too. Oil is difficult and expensive to extract and process and we have a finite amount of it here on earth. Solar is very easy to harness once the infrastructure is in place, and once that infrastructure is in place has a theoretically limitless supply to tap into. Oil consumption causes pollution, solar does not.
I think that it’s safe to say that Solar makes good sense, but that is not the end of the story. It’s only the beginning.
One of the major challenges with investing in transformational technologies, is that many of the companies don’t make it. You can start out with a handful of promising companies, but if you are lucky, only a couple survive and prosper. A big part of my stock picking process involves looking at the past to determine the forward intrinsic value of the companies I am interested in. I need a lot of backward-looking data to be confident about the future.
Since I don’t have enough data and / or confidence to make considerable investments in individual players, I am placing my faith (and cash) in ETF’s. Specifically the ETF from Guggenheim, the TAN Solar ETF.
Here, they are investing in 25 or so of the top players in Solar, and are constantly evaluating and adjusting based on performance and future prospects.
Also, the timing lately has been really favorable. As oil prices plunged, the Solar sector plunged with it. I guess the logic was that solar was in lower demand as the prices for oil was decreasing. I saw oil’s recent plunge as a very short term issue. As we continue to deplete our oil resources, the prices will naturally rise and solar will again be in play. As for me, I am hoping that oil will stay depressed for an extended period so I can load up on Solar plays, so when oil revalues upward, my Solar bets will start to really pay off.
I am not a professional, but a very interested amateur. Do your research, but I think that Solar is the wave of the future and the Solar ETF’s are a good way to play it.