This week, my column for AltEnergyStocks.com is about a safer way to invest in alternative energy: through the established, blue chip companies which are moving into the field. The column begins:
For many of my older or more cautious clients, investment in small, profitless (or nearly so) startup alternative energy companies is inappropriate. Even a diversified ETF such as the Powershares Wilderhill Clean Energy portfolio (AMEX: PBW) is too volatile due to its heavy exposure to profitless renewable energy companies such as Evergreen Solar (NasdaqGM: ESLR). Because of this, in the last year PBW has been over $24, but as low as $16.24. While such volatility can lead to supercharged profits when you are riding it in the right direction, many investors cannot sleep at night if one of their holdings lose a third of their value in just a couple months (as PBW did last year.)
Nevertheless, growing awareness of Global Warming, Peak Oil, Gas, and Uranium, and energy security worries are leading to broad interest in alternative energy among people who do not fit the typical aggressive speculator profile of people who can shrug off a 50% loss in a single holding over a short period of time.
The Blue-Chip Solution
Fortunately, not all companies involved in alternative energy are risky startups. For an investor who is willing to own stocks which are not pure-play companies, getting an exposure to quality businesses in alternative energy can actually be easier than finding quality companies among the firms whose business is purely devoted to a singe renewable energy technology. In fact, many of the industry leaders are actually divisions of larger conglomerates.
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