My next investment play: small essay

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Well, after talking here a lot and getting my thoughts in order, I have decided what my next play is going to be with my portfolio:

Alternative energy.

It's my opinion for the next 20 years we will see a bullrun on alternative energy like we have never seen before, similiar to the bull run we saw in the 80's with Mircosoft and communications. With oil supplies waning across the world, I beleive it's inevitable.

I think it's the "call" of Generation X. . .to somehow keep what the Baby Boomers have built going, after they have burnt the world's oil supplies.

How we saw Bill Gates rise to power in the 80's/90's, there will have to be a "Bill Gates" of alternative energy to keep the world moving and building. I wish I knew who that is going to be but all I can do now is just play the sector.

So, not only do I think I will make money by making a "play", I beleive this is what I should be investing in for my children so they can have the lifestyle their grandparents had. In other words, I believe alternative energy to not just be a money maker - I am investing because I believe it will preserve the social order.

I am thinking of taking my International off the table right now and going into either:

GEX

or

GAAEX

Obviously, the ETF will be more efficient but I can understand why a higher expense ratio would be necessary in an alternative energy fund. The research process for stocks would probably more intense since this is a small cap endeavor.

So, in the next few months, I see my portfolio by design being:

33% SLV (I may split this with oil if it drops to $60/barrel)
33% GEX or GAAEX
33% Schwab S & P 500

Hopefully, this will allow my portfolio to grow to the $100,000 threshold and then I can let real estate fall a bit more and go for a REIT.

[bjl584]

Sounds interesting. Keep your eye on commodities and on companies that produce farm machinery too. With the ethanol boom going on farmers are favoring growing corn as opposed to other cash crops putting them in short supply. They also need equipment to do all that farming. Ethanol: love it, hate it, agree with it, disagree with it, it probably isn't going away anytime soon. The government is involved in it giving out subsidies, tax breaks, etc. It's a huge political issue and probably will continue to be well into the foreseeable future.

[safari]

Talking about alternative energy, I am keeping my eye on FSLR (First Solar, Inc).

[Broken Arrow]

I am still uncertain about where I stand with alternative energy....

It's one that I would personally love to see more research and gain traction.... However, it's also one that runs face first against the deep pockets and lobbying might of big oil.

Fact is, the idea of replacing fossil fuel has been around for decades, but never gained much traction. And so long as OPEC, for example, has any sway, we never will.

Of course, that doesn't mean it's a bad idea or that it won't happen someday. For now, I think of this as a very long term position, and thinking about it for our children or our grandchildren may not be a bad idea because... we may not realize any real gains within our lifetime? I could be wrong though.

But again, all this runs into what I am personally worried about: That we're all still trying to predict the future. Who knows? I could be completely wrong and we can have a huge bull run with it in the next 20 years. Or, Transocean's deep sea drilling research may prove to be successful, or new deposits of fossil fuel could be found. OR, water-based Hydrogen fuel research can finally have the breakthrough that literally solves our energy needs. Who knows? So many unknowns that even those at the forefront of these research do not know what will happen next....

All I know is trying to predict the future is risky business. If you bet right, it could pay off big. If not, well, I hope you hedged your bets.

[sweeps]

I tend to agree with BA. Alternative energy is a very desirable goal, and I hope it pans out very soon. But as far as an investment is concerned it's pretty risky. It could take 20 years for it to start paying off because you have to fight bureaucracy, special interests, and massive infrastructure changes. And on top of that, which alternative energy? If you go all in on solar or wind or hydrogen cells or whatever and something else turns out to be the big winner, you go bust. If you hedge your bets with an ETF, your gains will be muted -- I'm not sure if you'll gain more than the broad market (which would benefit from the discovery as well).

[buzz]

I think it's the "call" of Generation X. . .to somehow keep what the Baby Boomers have built going, after they have burnt the world's oil supplies.

The self-righteous chest-thumping is wearing just a little thin...

[maat55]

I wouldn't bet the farm on alternate energy sources becoming profitable in the near future. There is still plenty of black gold out there. I like the idea of switching to something else to get away from middle east oil, but it ain't happening soon. It will be at least 40 years before hard change will happen.

[disneysteve]

Fact is, the idea of replacing fossil fuel has been around for decades, but never gained much traction.

Have you driven across the Mojave lately?

http://www.terragalleria.com/images/us-ca/usca9770.jpeg

There are thousands of windmills on every ridge as far as the eye can see. We drove from Sequoia Natl Park to Vegas 2 summers ago and we amazed by the huge number of windmills. Closer to home, there are windmills operating in Atlantic City, NJ. They've been there for several years and I think they've added to the few they started with.

As with most things, as the technology has gotten cheaper, usage has spread. The desire has always been there. The science has been around for quite some time. It was just too darn expensive. Same goes for solar. That has gotten quite common, both on commercial and residential properties.

[maat55]

I'm kinda interested in the solar panels. I've seen stories where people can generate enough power to self sustain. They have new ways of retaining water also. As far as cars are concerned, high powered golf carts are the wave of the future.

[Broken Arrow]

Have you driven across the Mojave lately?

No, I can't say that I have.

I have no doubt that alternative energy is used wherever practical.

I have also read that there has been some advances in solar panel technology. Separately, research is being done to make them cheaper as well as generate more electricity. Personally, I would love to be able to use solar energy in a future home some day.

Still, I don't think it will displace fossil fuel's dominance anytime soon.

[cptacek]

Keep your eye on commodities and on companies that produce farm machinery too.

And seed and fertilizer companies like Monsanto.

[Blue Leader]

Talking about alternative energy, I am keeping my eye on FSLR (First Solar, Inc).

Not a bad choice at all. Check out LDK. Great fundamentals and at discount prices right now.

[m3racer]

Do you really think our country will wean itself from oil? I wouldn't hold your breath. The Saudi's will do whatever it takes to keep this gravy train rolling.

[disneysteve]

There is an article about this in this month's issue of Smart Money.

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It might be a little bit of self-righteous chest thumping and of course, I am trying to predict the future.

When you guys invest in the S & P 500, you are essentially predicting the future by putting your money where your mouth is.

You are saying, "We as Americans will keep being consumers. . .consuming. . .consuming and more consuming since most of the S & P 500 is based on consumption. (Disney, Coke, Dell, DuPont, Walmart)

I am guessing that the age of the American Consumer is coming to a close. . .many reasons beyond just oil supplies dwindling, although that's king reason. I have essayed that here before - it used to be we were American Citizens. . .now to the rest of the world, we are American Consumers.

Frankly, I think the rest of the world has had it with our borrowing ways and will seek to do business elsewhere soon. China will export to India and India back to China and so on.

To them, we are lik a bunch of cattle that's fed plastic gnomes from China that we buy at Walmart.

Here's also the way I see it - yes oil co.'s have politicians under their thumb to a certain extent. . .but that is only as far as when and if they are providing cheap oil.

That relationship will immediately dry up if oil hits $150-200/barrel. No more special deals. Sorry. . .when it costs $3.00-4.00 for a bottle of coke at 7-11 and your utility bill is $1000/month. . .they'll be hell to pay.

Deals are off.

And when I talk of alternative energy, I don't necessarily mean "clean energy" (although that's nice and a worthy goal). . .for instance. . .hydrites on the bottom of the ocean look promising - not exactly clean. . .it's a carbon emitting source of energy. . .maybe that will be the new energy. . .but we just can't keep burning sweet crude at this rate.

As far as what source of energy to invest in. . .what am I? A mutual fund manager? That's why I pay him/her fer

I just think big picture guys. Don't ask me for the details

I do like hydrogen though - it's a great intermediary. . .theorectically, you could have a windmill producing hydrogen thru electolysis and it's so explosive, that you could operate a bulldozer on it after you stored it and transported it.

Going to hydrogen and getting off this screwball idea of corn ethanol (which requires oil to fertilize the crops) would be a great start.

Holy cow. . .we are so dependent on oil. For criminey's sake, we drive our cars around on it. We don't even have concrete highways.

I have a feeling my kids will just look at me someday and say, "What the hell were you thinking?" You were driving around on the oil?