Thursday, April 3, 2008

Old Energy Beating Clean Energy To Smithereens (PBW; XOP)

My first thought on seeing the headline was maybe it's time to go 130% net long of the alt energy. My second thought was 150%. We've posted on the underperformance, see below.*
From ETF Expert:

Most market watchers believed that yesterday's 390 point rise was yet another one-day wonder. Perhaps. Then again, it was the kind of sharper-than-cheddar rally that told investors why they can't afford to stay sidelined with 100% of their cash forever.
(Note: If you see the economy recovering in the 2nd half of 2008,
consider the ETFs in this column.)

Investing involves risk... yes. There's a risk that short-sellers will mercilessly beat the market back down every chance they get. There's also the risk that the U.S. recession becomes something deeper and darker, making it difficult to support a heavy allocation to stock assets. However, there's also the risk of letting fear keep you out of a profitable decision....
...Speaking of horses, what's happening to alternative energy? Renewable, transitional, clean and green? Wall Street journalists and retail investors used to ask me frequently about exchange-traded fund possibilities.

So I gave them. (Read "Small Energy: Leaner, Cleaner and Greener.")
Yet a large part of "alt energy" investing has fallen 20%-30% from highs. The PowerShares Wilderhill Clean Energy Fund (
PBW) has suffered one of the deepest downside slides.
Long-term investors in "alt energy" may certainly like the prospects of their investments doing exceptionally well... 3 years out circa March 31, 2011. Ahhhh... but what about backing the horse that's winning in the moment?

Welcome to old energy via oil and gas exploration. In particular, the S&P SPDR Oil and Gas Exploration/Production Fund (XOP) is one of the only exchange-traded investments that has managed 1-day, 5-day, 1-month, 3-month, 6-month and 1-year gains....MORE

*March 19: Powershares Wilderhill Clean Energy vs. The S&P 500 (PBW)
March 6: Old King Coal vs. Wilderhill Clean Energy (BTU; PBW)
And a bunch of posts that mention PBW.
(don't you love the blog search feature?)