New York, New York - June 11, 2012 - Investorideas.com, a
leader
in cleantech stock research, issues an updated column from well
known solar analyst, J. Peter Lynch , commenting on solar stocks and the
general markets.
Solar Stocks Commentary with J Peter Lynch at Investorideas.com
Read other articles from Mr. Lynch, Exclusively at InvestorIdeas.com
http://www.investorideas.com/PL/
Current Portfolio Status
Since early March (3-6-2012) our solar portfolio has been out of the market and 100% in cash.
The total return of the 2012 portfolio has been a
gain of 18.98% with a total holding time of 7 weeks. Once our indicators told us to exit our stocks, we moved quickly and sold our positions.
Remember that the HARDEST THING for investors to do is know when to
sell. There is so much emotion, fear of missing out and general over
all doubt. This is exactly why you have to set specific, non-emotional
prices to exit if things do not go right. You cannot allow your emotions
to get involved and take over your thinking.
Trust in your system and follow it regardless of what you think
"should happen". Once you try to impose your will on your portfolio you
will stop paying attention to what is most important - "
what is" NOT what you think it should be.
General Market Comments - Red Flags Flying, move to the sidelines.
As I said in my last article (5-20-2012) the market has triggered
most of my technical indicators starting in late April all the way up to
the most recent major indicator turning to SELL on Tuesday the 17 th of
May.
At this point the general market is what I would characterize as
being in a RED FLAG environment in which I would move to the sidelines
and wait for the market to run its course. In addition, we have entered
the markets seasonably UNFAVORABLE season (May - Oct) which historically
has been a terrible time to be invested. In addition, all of my
technical indicators have signaled sell signals.
Keep in mind that there is NO WAY to know if this is the end of a
short correction or the beginning of a longer market downtrend - all we
can do is listen to our indicators and follow their lead. When we do
that we eliminate "emotion" i.e. what we THINK should be happening from
our investment equation and follow our time proven indicators that show
us what is REALLY happening regardless of our opinion.
Solar Stocks Status
Since solar stocks as a whole have much higher volatility (beta)
than the general markets we have seen then fall much further than the
market in general - this is not unexpected and is the reason our
indicators told us to exit ALL our solar stocks in early March 2012.
The industry and the solar marketplace are currently undergoing
extreme turmoil with negatives everywhere and nothing positive in sight:
- Lower prices on solar panels than anyone had predicted
- Compressed margins, to the point that 90% of companies are losing money
- Worldwide finger pointing as to who is a fault
- Elimination of the very successful 1603 Treasury grant program,
forcing the industry to fall back on Tax Equity - which adds two
problems for the industry: there is not enough of it to handle demand
and it adds a significant cost to large commercial solar projects.
- A growing number of solar companies around the world are going out of business
generating all sorts of media comments that are really inaccurate and
based on very little knowledge of how industries grow and develop
overtime.
- All of these negatives have created investors #1 fear - uncertainty.
Where growing uncertainty exists, investors do not come. As a result
you can see from the table below that the industry has had a tough year
and all stocks are STILL in down trends:
With all of these negatives and depressed stocks is there any good
news that investors can take to heart and maybe see the beginnings of a
light (sunlight) at the end of the tunnel?
Well there are a couple of things we can look at and say that they
may be the early beginnings of some good news and maybe the first sign
of a buying opportunity:
- It is really hard to imagine that the news can get worse - so maybe good news will somehow fill the void.
- There is an old saying on Wall Street, attributed to Baron
Rothschild - "The time to buy is when blood is running in the streets" -
certainly a contrarian point of view and without question - the blood
is running in the streets in the solar industry. But in the stock market
when all of the selling is finished (after all the bad news is out)
there is really nothing left but early buyers.
- After a number of years of downward movement - solar stocks are
down an average of 76.66% since 2010 stocks tend to rebound and
outperform and average year by close to 3 fold.
- Small positive changes are starting to show up. One of our
solar stocks - CSIQ has had its recent price move above its 50 day
moving average - a positive short term sign. A couple of the stocks now
have positive monthly momentum - all of the others have negative
momentum and mostly all have negative weekly momentum….
In summary, there are no real clear signs that the turn is coming,
but there are a few early indications that something positive may be
starting - look for more of the stocks crossing ABOVE their 5o day
moving averages as an indicator that things are looking better. But
remember, that the general market is responsible for over 50% of the
movement of individual stocks so that may further delay the solar
segments upturn.
Background Analysis Notes
Keep in mind that there are two basic types of equity (stock)
analysis. Below are a brief description of each and its primary purpose:
Fundamental Analysis - this is the analysis of the fundamental financial condition of a company to
identify which stocks you may want to buy when the timing is right. This form of analysis will give you NO indication of the best time to buy a stock or sell a stock.
Technical Analysis - this form of analysis
will tell you "when" to buy a stock and when to sell the stock.
It will do this by showing you (in chart format) the basic interaction
of supply and demand and when the two change and shift which will
indicate a time to buy or a time to sell.
Mr. Lynch has worked, for 35 years as a Wall Street
security analyst, an independent security analyst and private investor in small emerging
technology
companies. He has been actively involved in following developments in
the renewable energy sector since 1977 and is regarded as an expert in
this field. He was the contributing editor for 17 years to the
Photovoltaic Insider Report, an early publication in PV that was
directed at industrial subscribers, such as major energy companies,
utilities and governments around the world. He is currently a private
investor and has from time to time been a financial/technology
consultant to a number of companies. He can be reached via e-mail at:
SOLARJPL@aol.com. Please visit his website for the promotion of solar energy �
www.sunseries.net.
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