Investing in Clean Tech
Source: Forbes, David Serchuk††(6/8/09)
"If you are bullish on oil, it may be prudent to be bullish on alternative energy too."
The reason is because as the dollar goes down in value, as it has recently, oil and other commodities rise in price; a classic hedge against inflation, says Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research. This is not all bad for those interested in investing in alternative energy. "If you are bullish on oil, it may be prudent to be bullish on alternative energy too," he says.
Conversely, should such alternativesólike hydrogen, wind and solaróbecome economical enough to drive down the demand for oil they will also lower its price, making it more attractive once again. Truly, traditional fuel sources and alternative fuel sources share somewhat of a symbiotic relationship. Again, though, the bad news is that clean tech offers little in the way of performance diversity against oil, concentrating your portfolio.
Frederick says that for those with investments horizons of at least five years there might be some opportunities within the alternative energy sector, but "you may need a lot of patience."