The World Has Gone Crazy About Alternative Energy

  • Posted by on August 28th, 2014 at 10:48 pm


They say that the cure for high oil prices is higher oil prices. The so called alternative energy sources – solar, wind, biofuel, etc. did not need high oil prices, in order to earn a spot among the best performing stocks in the past couple years.

The biggest surprise in 2013 was the performance of solar stocks. After being the biggest dogs in the market for 3 years in a row, they suddenly started to report better than expected earnings. The market noticed that there might be an undergoing change in solar industry’s pricing power and started to bid all solar shares. Stocks like SolarCity, Sunpower, Sunedison and Canadian Solar more than quadrupled in 2013 alone.


This trend has had its indirect continuation in 2014. The best performing stocks so far this year are biofuel producers. Biofuel Energy is up 620% year-to-date. Pacific Ethanol is up the more “humble” 340% this year.


The last time biofuels and solar stocks were market leaders was in 2007-early 2008, when the price of crude oil passed $100 per barrel for the first time in history and there was rampant inflation. Today, the price of crude oil is near $100 again, but its effect on public psychology has significantly diminished. We have seen this number before and we have paid for it at the gas pump. $100 is the new normal. It is not something that people complain or talk about any more. We have accepted it and we won’t notice until crude oil climbs above $150 per barrel.

crude oil

What is interesting about the recent huge outperformance of alternative energy stocks is that there hasn’t been a big spike in oil in 2013 or 2014. If anything, in 2014 crude oil is trading near its year-to-date lows as the new form of horizontal drilling called fracking has helped us to find ample new supplies of oil and natural gas. Has the market ran out of stocks to bid that it is going after them or it is seeing a bigger trend in the making? We are more inclined to believe in the latter. It remains to be seen. The truth to the matter is that you didn’t have to know anything about big macro energy trends in order to profits from the moves in solar and biofuel stocks. All you had to do was to follow price and pay attention to stocks that were showing up on the 52-week high list.

The Latest

  • Sand Is the New Gold
    Posted by on August 28th, 2014 at 11:02 am

    During the Gold Rush in the 1850s, merchants made a lot more money than gold diggers. During the fracking rush of our time, some of […]

  • Google – When Expensive Is Cheap And Cheap Is Expensive
    Posted by on August 22nd, 2014 at 8:36 am

    This week, Google marked 10 years since it became a public company. Here’s a quick reminder of the event from wikipedia: In October 2003, while […]

  • The Perfect Portfolio
    Posted by on August 7th, 2014 at 9:14 am

    Imagine if there was a way to know the best performing stocks of each year ahead of time? According to Patrick O”Shaughnessy from Millennial Invest, […]

  • When Negative Divergences Are Actually Positive
    Posted by on July 29th, 2014 at 3:23 am

    Bull markets climb a wall of worry. Financial pundits’ favorite sport is top-calling. Over the past year, a lot of digital ink has been spilled […]

  • The Most Visited Web Site In China Is Up 8000% Since Its IPO
    Posted by on July 25th, 2014 at 8:31 am

    Chinese search engine, Baidu crushed estimates again and its stock is trading at new all-time highs near $220 this morning. BIDU IPO-ed in 2005 at […]

  • Bull Market for Electric Cars
    Posted by on July 21st, 2014 at 9:21 am

    Are all-electric vehicles the future? The market seems to think so, as both Tesla Motors and its Chinese competitor Kandi Tech have been among the […]

  • The True Nature of the Market
    Posted by on July 21st, 2014 at 3:30 am

    The stock market is not a place, where for one party to win, another has to lose. It is a place, driven by cycles – […]

  • Why SuperStar Traders Sometimes Fail?
    Posted by on July 13th, 2014 at 7:12 am

    There have been quite a few cases in recent years, where extremely successful prop traders leave their banks to launch hedge funds, only to see […]

  • Are Growth Stocks Bad Investment Vehicles?
    Posted by on June 4th, 2014 at 1:57 pm

    Earlier today, I tweeted a joke about the performance of $COH If u had invested $1000 in Coach in 2006, today u have … $1000. […]