Green Investing. Make Money. Save The Planet.When I first heard about green investing or socially responsible investing I thought: from what I know about Wall Street, is it possible to make money from helping the planet? The only money I know to have been made on the Street was from stealing, insider trading, selling derivatives or waiting for a company to lay off 30% of its work force….then selling the stock for a few extra points. Ok, I’m just kidding. We all know Wall Street exists for our safe & sound financial well being. Green investing and SRI (socially responsible investing) are different. SRI screens for companies that are fair to employees, respects workers right and have policies against corruption. In addition, these companies are not involved in military activity, pornographic exploitation and harmful products. These firms are also concerned about environmental safety. Hearing these qualifiers you would think I just eliminated the S&P 500, The Dow and NASDAQ. I haven’t; one of the funds that invest in companies such as these is the Domini Social Equity Fund(DSEFX). The focus of this page is on green investing. I did touch a bit on alternative energy elsewhere in the site…….but now we drill down some more.
Green investing: solar energy, wind power, biodiesel, waste management, nuclear power, harvesting energy from the ocean. It’s all within this category. Although some may disagree on the nukes part. Alternative energy, eco-friendly products and whatever else it takes to escape from the rocketing price of oil. The time is right to invest in this category. I’m not saying that because I saw Al Gore’s movie. I’m say that because venture capitalists, investment banks and a lot of other really rich guys are pouring billions of dollars into this sector. When the big money flows in, I follow. I’m sure you’re aware however….these are long term plays. The word is, opportunities in traditional technology plays have been drying up. Citigroup, Lehman Brothers and UBS have issued widely circulated reports on risks and opportunities for investors because of climate change. They argue that global warming can no longer be ignored as a factor in investing. The areas I hear about most often are solar energy, wind, biodiesel and clean technology. I’m also hearing that ethanol (biodiesel) is losing its allure. Currently, I’m counting ethanol out as an investment strategy. But that could change. Technology could find a way to run a car on beer for all I know. Let’s take a quick look at ethanol. Ethanol is an extremely clean burning fuel source. It’s also made in the U.S.A. (hallelujah!). Production comes from the distillation of corn. To produce significant amounts of this fuel you need to harvest lots of corn..….utilizing large amounts of land. This also puts a strain on nearby water supplies. The increase in demand for corn raises prices for those who use corn as a food source. Unfortunately, ethanol will never be economically or environmentally viable without government subsidies.
Why is solar power so hot? Solar energy captures useable energy from the sun. And luckily for the western world, the sun is not owned by Saudi Arabia, Iran or Venezuela. Right now the solar industry is divided into two areas. Solar PV (photovoltaics) is a technology that converts light into energy. Due to the growing need for solar energy the manufacture of solar cells and solar photovoltaic array has doubled each year since 2002. The other area of solar to consider is called solar thermal. This technology uses heat from the sun to generate hot water. This is huge in China and other developing countries. As of now, solar thermal presents no investment opportunities for investors. Although solar PV is expensive, this is the way to go for green investing. A compnay called Evergreen Solar manufactures the crystalline silicon wafers that are the primary components of PV cells, which generate electricity when exposed to sunlight. Symbol is ESLR
Even though Wall Street and investors are pouring money into solar stocks and wind power, they’re all not going to make it. This is the beginning of some great opportunities. It’s risky to play individual companies…..although some safer bets can be found in companies with exposure to solar power. These would be: BP, GE and SU. Here’s a way to play solar with an ETF. Claymore/MAC Global Solar Energy ETF (TAN), which invests exclusively in companies that provide solar energy products and services. This is ETF is new. After scouring the web for solar recommendations, I’ve come up with the following assortment. But try sticking a wind tower on your front lawn that ranges between 80 – 120 feet. That lawn ornament will not make you a neighborhood hero. I like wind, but mixed in a fund with other clean technologies. Here is a list of funds that encompass a range of clean technology: SPEGX, WGGFX and QCLN. Some clean technology ETF’s worth checking out are: PBW, PBD and GEX. Ok everybody. Green investing just may be the next internet boom. Not right now of course. A lot depends on oil prices and whether society really wants to embrace alternative energy. But let me leave you with this small bit of insight: According to venture capitalist John Doerr, Google’s first funder, energy is “the mother of all markets”. In 2007, clean tech was the fastest growing category of venture investing in the U.S. Bottom Line: Energy is the biggest business in the world. Oil stocks too expensive? “Here comes the sun, and I say It's all right….” - George Harrison
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