Friday, October 03, 2008

Quote of the day - from solar stocks expert at Investorideas - recent column-
"Remember, it is NOT how much money you make when the market goes up, but it is how much money you keep after the market has gone down. "
read the full column here :

Excerpt -

There are three things that are important to understand regarding investing in the current renewable energy industry:

Just the Beginning of the Renewables Boom — This is "just the beginning" of the birth of the renewable energy industry. The renewable energy industry is at the same stage now as the automobile industry was in 1900. We are seeing the first few companies becoming public and we will see hundreds more over the next decades. It will be an exciting time for investors and there will be ample opportunity for investors to make money and also help the environment, which is a welcome change from the fossil-fuel dominated energy sector of today.
Highly Volatility — At this early stage of development there will be excessive volatility in this sector until it becomes a more mature industry. Investors must carefully select their entry points and be patient. This sector is NOT for the faint of heart. Investors have to be careful only to invest a portion of their portfolio, which they have designated for "higher risk" investments. These will be the stocks that you can make the most money on, but also the ones you could lose the most on. Risk and reward have always been intrinsically linked and this is no exception.
Pending Legislation Key to Short-Term Uncertainly — I expect that we will see some pending solar legislation pass in the congress before year end, perhaps even today, since it has been attached to the bailout bill. If this happens the legislative tide will raise ALL SOLAR STOCKS and well as the entire market. Where it goes from there and how far the stocks rebound is any ones guess. One thing for sure, investors will have to be nimble and be prepared to take some short term profits.
If it does NOT happen this year, there will be a further drop in solar stocks, until 2009, when I am relatively sure some form of legislation will be forthcoming. Once this occurs I think it will light a fire under solar stocks and they will make a strong run up in the beginning of the year. However, next year there will be problems in the solar industry, for example: excess silicon supply, margin compression and PE contraction (which we are currently seeing to a large degree). But in the shorter term, I see solar stocks making another run up as just another step in their eventual movement to a booming industry of the future.

In conclusion, it is important to remember to be patient and not to overreact to this crazy market with its incredible volatility and short term “panic” psychology. I have seen this type of panic many times in the past and it is “usually” seen at or near market bottoms.

There will be plenty of opportunities in the future for the patient, level-headed investor. You need to have your cash reserves ready when the time is right. As I have said a number of times in the past, the best way to make money is not to lose it!

Remember, it is NOT how much money you make when the market goes up, but it is how much money you keep after the market has gone down.


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