2010 Great for the Stock Market and even better for certain Solar Stocks
The Market in 2010
Solar Stocks and Market Commentary with J Peter Lynch
Point Roberts, South Salem, New York – December 31, 2010 - Investorideas.com, a leader in cleantech stock research tools issues new solar stocks commentary from solar contributor, J. Peter Lynch.
Solar Stocks Commentary with J Peter Lynch -
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2010 was certainly a year to remember. It had its ups and it had it downs, but in the end it was up an average of 13.87% (averaging the three major indexes – see table below) that is a far better than the average year and despite a constant barrage of terrible news the market continued to climb its “wall of worry”.
With everyone worrying about jobs and the economy the year seemed to be a never ending sequence of one bad set of news after the other. But if there is one think I have learned over the years is NEVER to listen to the talking heads on TV or to the hundreds of “experts” all over the internet who tell you what is going to happen tomorrow based upon what has happened today. That is silly and also, more importantly, impossible. No one can know what is going to happen or why it is going to happen, if you pay close attention you will eventually see that everyone is clearly guessing and guessing is NOT one of the tools that a successful investor employs.
The Importance of seeing “What is” verses what we think “should” be
Let me give you a totally NON logical example that will make it clear that guessing and perhaps "logical" are not really good tools for an investor. I think I can safely say that the top topics for 2010 and the ones that are on everyone's mind are: jobs, the economy, the housing crisis and the persistent recession as it drags on. So, given that background, what do you think were the top 3 market sectors in 2010 in terms of returns for investors?
Give up? Can't even guess?
Well they were:
All of them are consumer related and we all KNOW (for sure?) that this is a terrible recession and that the economy is in bad shape and that it would be impossible for consumer related areas to do well, right?
Wrong! They not only did well they were the best 3 areas.
So what can we learn from this?
What we can learn is that an investor has to STOP thinking they KNOW what "should be" given the circumstances as the investor sees them and realize that the most important thing is NOT what you think should be but "WHAT IS". If umbrella sales are going thru the roof during a massive drought - forget about what you "know" - BUY umbrella stocks!
The Best and the Worst of 2010
Now that you know the three best areas for investors in 2010, what was the worst area for investors in 2011?
The worst area for investors in 2011 was the solar sector, specifically the PV sector that we follow closely it was down and average of 14.6% in a very good year (up 13.87% on average) for the market.
Based upon this fact, it would be terrible to invest in this area for any sane investor? Correct?
Well in general, yes. If you bought each of our solar stocks you would have been down approximately 14.6% for the year. However, if you bought the "best" of the solar stocks - our solar seven, you would have been up an average of 42.94% more than 300% better than the general market averages.
2010 Stock Returns Comparison
|Stock Symbol||Current Price||%Change 2010|
|Solar Seven 2010|| ||+42.94%|
|All Solar PV Stocks 2010|| ||-14.60%|
|S&P 500 1259.78 12.97|
|Dow Jones 11585.38 11.1|
|NASDAQ 2666.93 17.53|
|Major Indexes Average|| ||+13.87%|
Solar Seven Selection Criteria
Back in the beginning of 2010 I explained that we were rating all of our solar stocks and that the seven strongest stocks – later named – “The Solar Seven” were the strongest stocks among the industry. My rating system is a proprietary combination of various relative strength measures, technical measures and some fundamental components.
What can we learn from this amazing performance in a terrible solar market?
What we can learn is that there are always stocks going up somewhere, even in a terrible market and if you select the “strongest” stocks in a given market segment you will, on average, do quite well. Even if, they are umbrella’s in a drought – regardless of what you “think” you know, always remember that “what is, is” and always buy the strongest stocks in a sector or market. You may not always know “why” something happens, but you will, on average, do much better than most investors and most likely better than the market.
Mr. Lynch has worked, for 33 years as a Wall Street security analyst, an independent security analyst an investment banker and private investor in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this field. He was the contributing editor for 17 years to the Photovoltaic Insider Report, the leading publication in PV that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He is currently a private investor and advisor to a number of companies. He can be reached via e-mail at: SOLARJPL@aol.com. Please visit his website for the promotion of solar energy - www.sunseries.net
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