Market Vectors Glbl Alter. Engy ETF Trst (AMEX:GEX)
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I think that alternative energy is a great sector to get into. Oil reserves might not run out in the near future, but eventually they will run out. There will have to be slack taken up by forms of energy because people won't stop using energy.
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The next great bubble.
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This one's a no-brainer. If you don't buy into the future of alternative energy, then... well, I suppose then you'd be the no-brainer
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With energy prices going up, alternatives will become more popular - and green too.
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ETF with weighting toward wind and solar, international.
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Next President will have to listen to alternative resources or face the people whom elected him/her into office. If you want change, save us from ourselves.
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I've been very interested in adding a Solar ETF to my folio for some time. This is a wonderful growth sector but there are so many companies in the game it is difficult to determine where to invest. An ETF broadens the risk significantly. I was originally attracted to PBW however GEX has outperformed since launch. Love GEX's substantial holdings in Renewable Energy and Q-Cells, companies I want to own but can't purchase directly through my broker. This sector was overvalued in 2007, but ETF's like GEX are flexible and can rebalance holdings to take advantage of the huge growth solar will sustain through next decade.
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The reason why oil is trading so high is uncertainty coupled with
anticipated continued growth in demand. The price is more or less a
function of projected growth in future demand not present supply.
The automobile market in China and other parts of the developing world
is likely to exhibit continued growth.
OPEC issues many statements publically because they are a political
entity as much as anything. Many of the member states are enjoying
the benefits of high oil prices. There will likely be a lack of
consensus to significantly increase supply. Uncertainty overshadows
the whole market with Iraq, Iran, Russia, Venezuela and Nigeria all
exhibiting their own versions of instability coupled with a motivation
to promote and optimize their own agendas. High oil prices benefit
the producers whose leadership will not look to long term consequences
on world economic growth or long term demand.
GEX reflects the ability to de-couple future demand for oil in several
ways. Most major automobile manufacturers have established active
committments to deploy plug-in hybrids which will significantly
increase electricity demand (in the future). A weak dollar will shift
more manufacturing to the US and maintain Chinese domanence in most
markets. A way to incrementally increase electric generation in
pocket-sized capital expeditures is through the use alternative
energy. Nuclear will be the backbone but these projects take decades
and billions of dollars. A solar array or windfarm costs an order of
magtitude less but more importantly is deployable in less than 2 years
(in many instances). GEX also reflects a decoupling of the price of
energy generation from commodity markets partially insulating a local
economy from price shocks and uncertainty. It turns an economic
problem into an engineering challenge. One critical strength in solar
and wind is that it can deliver energy where water resources are
scarce. Nuclear, coal, natural gas etc. all depend on large
quantities of water as a cooling source. Scarcity of water resources
will continue to place pressures on local economies to seek
alternative energy sources. Additionally, the space requirements for
solar and wind are such that you can place a solar array on the roof
of your factory and a windfarm above the growing crops. You cannnot
place a coal burning plant on top of your factory and a nuclear power
plant requires significant land resources. The efficiencies and
advantages of alternative energy sources will play themselves out in
an accelerated fashion as more advanced manufacturers and local
economies realize these advantages.
There is no active support for strengthening the dollar coming from
any influential entity. The looming recession of 2008 will likely
curb growth and therefore tame inflation enabling the Fed to cut rates
further (which will put downward pressure on the dollar). Many
Chinese and Japanese banks are placed in an unusual position of both
holding a large amount of T-bills and are internally pressured to buy
more debt because of large dollar denominated reserves. The middle
east is likewise holding a lot of dollars. If OPEC begins trading
crude oil in Euros there will be marked downward pressure on the
dollar boosting exports from the US and slowing growth in many parts
of the world. Unfortunately, most of the world economy is based on
American consumption. A weak dollar will place pressure on local
markets to become less dependent on imports shipped to the US.
Wether or not any of this translates into continued upward price
growth in GEX is (in the short run) unknown. But in the long run I
believe the Buffets of the world will see alternative energy's
potential and then the next dot com era will begin - so-called
".energy".
I have not mentioned global warming and all the politics associated
with that. That is another discussion altogether.
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Fossil Fuels are in finite supply. Both public and private reserch Money is flowing into Alternative energy companys' and governement sponsored projects. This industry is set to take off and will flourish when Oil breaks the $100 a barrel barrier by June of 2008.
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No-brainer of the EFTs.
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Alternative energy will outperform utilities in the future
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With Global warming such a hot topic. Companies doing the green thing. Investors want to ride this wave. I’m big on ETF’s. They diversify for you. Softening any down swings and running on trends.
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Embrace the future.
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It used to be that the single most important development for investment in clean energy was the price of oil. When oil gets more expensive, interest in alternative energy (renewable energy) goes up. But the emerging push to de-carbonize the energy supply suggests this historic trend may be moderating. If true, it would be a paradigmatic change in the sector, brought on by consumer and business awareness and driven by a new political policy.
The U.S. spends about $600 billion a year on energy. Most of this (83%) is from fossil fuels. Hydropower produces 6%, nuclear 6%, and the rest is biomass, wind and solar power. But despite being the world's largest energy consumer, the U.S. has historically lagged Europe in clean energy investment. This appears to be changing, with some $4.9 billion in venture capital, $3.45 billion in public market capital and $8 billion in asset financing for U.S. sustainable energy in 2006 - slightly less than the European Union.
Moreover, as the clean energy industry develops, efficiencies emerge and costs go down: banks will lend when projects are familiar and increased competition in lending leads to innovative financing for new projects. Given the historic performance and future expectations for the U.S. dollar (oil is USD-denominated), I don't expect crude prices will come down much in the near future, either.
Good long term investment choice, especially for those who want to diversify their portfolios.
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