Follow the Mutual Funds: Solar Is Bottoming

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Everybody sees gloom for solar and renewable energy in the near term; downgrades are flying every day on Wall Street. Yet the stocks are bouncing back from 52 week lows nicely, and apparently the bottoming process is underway.

...since September, solar stocks have tumbled 80-90% from their 52 week highs, and wind energy stocks also crashed. The financial crisis poured oil on the fire, making things even worse. In the last few weeks, most solar companies guided lower for their next quarters due to mainly two reasons: sluggish sales in Europe and weakening of the Euro.

So does this mean investors should abandon solar stocks? Absolutely not - on the contrary, it is the time to buy stocks at this moment. What Warren Buffett said is so true: “Buy stocks when everybody else is panicking.” But, the fact is, not many investors follow it because when the market declines to the bottom, fear destroys proper judgment, hence no average investors purchase at the bottom. Only professionals such as market makers, mutual fund and hedge fund managers have the guts to bottom fish and get the maximum profit.

The solar sector is under such an environment. Everybody sees gloom for solar and renewable energy in the near term; downgrades are flying every day on Wall Street. Yet the stocks are bouncing back from 52 week lows nicely, and apparently the bottoming process is underway.

There are a few reasons why solar may be bottoming. Crude is bottoming out; the downside extreme is apparently overdone, just like the extremes when oil was trading $147. Both President Obama and China government will bring new life into the solar sector, and this time it will be truly different, “green” thinking may change many generations to come.

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