I will have a table at "GreenfFest" to be held at Howard Community College in Columbia, Maryland on Saturday. I will be available to talk to people about investing in "green" companies (actually the more prevalent term in the investment world seems to be "Cleantech").
In line with my overall philosophy, I would limit direct exposure to this sector to 20% of total assets. I would recommend, as well, that investment in a single ETF be limited to 5% of assets and for a single company it be 2.5%. This is a volatile sector where you could hit a homerun or easily strike out.
Today there are a lot of forces converging to make this a significant growth area. But it also is an area of intense competition and is affected by the price of fossil fuels.
Solar seems to be the first area of promise with wind power a distant second and biofuels a sort of wild card. Geothermal and wave power are on the fringe. All of these face an uphill battle to become competitive with a massive infrastructure that is already in place. From a different perspective, there is a lot being done to become more efficient (energy efficient homes and office building construction etc.) and to clean up fossil fuel energy production.
I look at this a bit like bio-tech. Bio-tech companies have enormous potential, but the specific companies are very difficult to analyze unless you are a scientist and want to specialize in the area. The drugs are complicated, there are trials, companies burn through cash and many have never made a profit, patents expire etc. In the end, I think it is best to select a good ETF or fund that is well diversified. To me, it is exactly the same with "green " companies.
Thus, if you want to do good and do well at the same time, I would recommend ETFs. FAN will get you windpower and TAN will get you solar. Check these out on Yahoo Finance and, in particular, their specific holdings. There are, of course, many other ETFs - these are just examples with cool (pun!) tickers.
As usual this is intended to be educational. . eaders should do their own research and consult with an advisor before making an investment.
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