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3 Great Tips For Alternative Energy Investments
1) Keep an Eye on the Prices of Crude Oil
The higher the prices of crude oil become, the more sense alternative energy investment makes. Whereas wind power has almost on par with natural gas, resources such as hybrid automobiles and solar panels remain rather costly. The world is slowly coming out of the Great Recession, with high unemployment and quite low consumer spending. This, of course, affected crude oil prices. In fact, in May the price of crude oil fell substantially from over $90 a barrel to less than $70 a barrel. Nevertheless, as the economy continues to recover, crude oil prices will start to climb again. Moreover, the true impact of the Gulf oil spill on the price of crude oil is yet to be seen. Since it hit a low of less than $70 a barrel at the end of May, we have already seen the price climb again to $80 a barrel. If the price of crude oil stabilizes at $75 a barrel, alternative energy investments will become more feasible and attractive.
2) Think Long-Term
When it comes to an alternative energy investment, you have to think far ahead – in years and maybe even decades. You should really look into proven technology with a mass market potential. In late 2009, at the end of our rough recession, the installed capacity of wind power reached 35,000 MW, which is 10,000 MW more than in 2008! Yet even this kind of growth makes wind power only 2% of the total energy generation capacity. Now let’s take battery technology, which is a market that has a projected growth of up to $22.8 billion per year by 2012. With hybrid cars being introduced by multiple manufacturers and pushing for plug-in electric vehicles, this market is quite fresh and is now starting to bloom.
3) Consider Individual Companies instead of ETFs
A few years ago all alternative energy sectors were attractive to investors. This is no longer the case. Now it is important to consider alternative energy companies individually, much like with any other stock investment. So, you need to go for individual stocks, rather than groups of companies. You should look beyond alternative energy ETFs that make it easy to invest in different kinds of alternative energy internationally. A lot of alternative energy companies are located abroad, and the most convenient way to invest in them may very well be through an ETF. Nevertheless, you could also be making a wrong choice when picking up an ETF like the PowerShares WilderHill Clean Energy ETF. With that said, ETFs can definitely serve as a great method if you want to look for opportunities in alternative energy investment.
The Big Picture
The 3 tips presented here are designed to help you navigate the alternative energy sector. Currently an abundance of choices is available for investors, and it will only continue to grow, especially because of the Gulf oil spill. However, when it comes to any kind of financial investment, like with any stocks – not all alternative energy companies are the same. It’s important to remember that.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
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