Here's a Pick That Will Shine Through the Global Energy Crisis
Let's face it: We could all use a little more cash these days.
As of this morning, oil hovered around US$125 a barrel. That's a small improvement from the US$135 high recently, but it still means we're paying around US$4 at the pump right now, as summer driving season begins.
If you're the person who does the grocery shopping in your family, you know that food prices have soared in the last couple years too. In fact, a recent USDA report just announced that world market prices for food have jumped 60% in the last two years.
So with spiraling food and energy costs eating away at your wealth, a significant chunk of your discretionary income is disappearing. And if that wasn't enough, the stock market remains less than inspiring - the major markets are still suffering from the ruins left from sub-prime.
What's the solution? How do you shed some light on your portfolio during these dark days? You can start by taking advantage of the hottest new funds on the market...
If you have read any of my articles or heard me speak over the last year, then you already know how much I like exchange traded funds (ETFs). As my colleague Mike Burnick has said, ETFs blow mutual funds right out of the water with their superior liquidity and low costs. I couldn't agree more.
Well I just found out about a new ETF that you should absolutely take a look at.
Get a "Tan" and Fuel the World at the Same Time
One of my favorite ETF managers, Claymore, just released the Claymore/Mac Global Solar Energy Index ETF (TAN) in April.
Why solar power? The solar power industry has been around for decades but I think it is finally coming into its own. The costs for solar production are coming down at the same time energy demand is soaring.
Meanwhile, there's a huge swing in government policies around the world towards using solar polar. Out of sheer necessity, expensive fuel is forcing governments to search for mores cost effective alternatives - like solar power. If you combine all these factors together, then you have a very compelling story for this alternative energy source.
Also, my research tells me professional investors are also beginning to pay more attention to this exciting sector, which means money is headed towards solar power companies.
Once Risky, Now Valuable
In the past, I didn't touch solar energy because I thought solar power was a little too risky for my particular investment methodology.
I'm both a certified financial planner and a retirement planner, so I'm extremely risk adverse by nature. Every investment decision I make depends on the potential risks and how I can possibly reduce them.
The problem with solar power stocks is that many are very small. These small-cap stocks are subject to what's called "event risk." "Event risk" is impossible to measure because it refers to any outside event in the market that could affect a stock (from a CEO scandal to a hurricane). Tracking such factors is just not my style.
25 Different Companies, All in One Easy Trade
With this one solar ETF, you gain access to 25 different solar stocks in a single trade. It's also a global basket of stocks, which I like even more because it means you have limited exposure to the dollar.
Currently the ETF is invested approximately 30% in China, 29% in Germany, 26% in the U.S., 7% in Norway, 4% in Spain and 3% in Switzerland. With that kind of blend, you can get more diversification and seriously reduce your risk at the same time. Not only that, it shows you just how much of a global story solar power has become.
One caveat: Please remember solar power is still an emerging industry and so TAN will likely be more volatile in the short run than other ETFs that track more established industries. But if you are like me and believe this is the time for solar energy to really shine then this is one investment worth considering.
Let's face it: We could all use a little more cash these days.
As of this morning, oil hovered around US$125 a barrel. That's a small improvement from the US$135 high recently, but it still means we're paying around US$4 at the pump right now, as summer driving season begins.
If you're the person who does the grocery shopping in your family, you know that food prices have soared in the last couple years too. In fact, a recent USDA report just announced that world market prices for food have jumped 60% in the last two years.
So with spiraling food and energy costs eating away at your wealth, a significant chunk of your discretionary income is disappearing. And if that wasn't enough, the stock market remains less than inspiring - the major markets are still suffering from the ruins left from sub-prime.
What's the solution? How do you shed some light on your portfolio during these dark days? You can start by taking advantage of the hottest new funds on the market...
If you have read any of my articles or heard me speak over the last year, then you already know how much I like exchange traded funds (ETFs). As my colleague Mike Burnick has said, ETFs blow mutual funds right out of the water with their superior liquidity and low costs. I couldn't agree more.
Well I just found out about a new ETF that you should absolutely take a look at.
Get a "Tan" and Fuel the World at the Same Time
One of my favorite ETF managers, Claymore, just released the Claymore/Mac Global Solar Energy Index ETF (TAN) in April.
Why solar power? The solar power industry has been around for decades but I think it is finally coming into its own. The costs for solar production are coming down at the same time energy demand is soaring.
Meanwhile, there's a huge swing in government policies around the world towards using solar polar. Out of sheer necessity, expensive fuel is forcing governments to search for mores cost effective alternatives - like solar power. If you combine all these factors together, then you have a very compelling story for this alternative energy source.
Also, my research tells me professional investors are also beginning to pay more attention to this exciting sector, which means money is headed towards solar power companies.
Once Risky, Now Valuable
In the past, I didn't touch solar energy because I thought solar power was a little too risky for my particular investment methodology.
I'm both a certified financial planner and a retirement planner, so I'm extremely risk adverse by nature. Every investment decision I make depends on the potential risks and how I can possibly reduce them.
The problem with solar power stocks is that many are very small. These small-cap stocks are subject to what's called "event risk." "Event risk" is impossible to measure because it refers to any outside event in the market that could affect a stock (from a CEO scandal to a hurricane). Tracking such factors is just not my style.
25 Different Companies, All in One Easy Trade
With this one solar ETF, you gain access to 25 different solar stocks in a single trade. It's also a global basket of stocks, which I like even more because it means you have limited exposure to the dollar.
Currently the ETF is invested approximately 30% in China, 29% in Germany, 26% in the U.S., 7% in Norway, 4% in Spain and 3% in Switzerland. With that kind of blend, you can get more diversification and seriously reduce your risk at the same time. Not only that, it shows you just how much of a global story solar power has become.
One caveat: Please remember solar power is still an emerging industry and so TAN will likely be more volatile in the short run than other ETFs that track more established industries. But if you are like me and believe this is the time for solar energy to really shine then this is one investment worth considering.
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