Solar Stocks Portfolio and General Market Update – Red Flags Flying: J Peter Lynch
New York, New York - May 22, 2012 - Solar stocks report at Investorideas.com
Investorideas.com, a leader in renewable energy stock research for independent investors releases solar stocks commentary from solar expert, J Peter Lynch.
Solar Stocks Commentary with J Peter Lynch at Investorideas.com
Current Portfolio Status
Since early March (3-6-2012) our solar portfolio has been out of the market and 100% in cash.
The total return of the 2012 portfolio has been a gain of 18.98% with a total holding time of 7 weeks. Once our indicators told us to exit our stocks, we moved quickly and sold our positions.
Remember that the HARDEST THING for investors to do is know when to sell. There is so much emotion, fear of missing out and general over all doubt. This is exactly why you have to set specific, non-emotional prices to exit if things do not go right. You cannot allow your emotions to get involved and take over your thinking.
Trust in your system and follow it regardless of what you think "should happen". Once you try to impose your will on your portfolio you will stop paying attention to what is most important - "what is" NOT what you think it should be.
Remember this system has enabled us to significantly outperform the rest of the solar sector and the general markets in 2010, 2011 and 2012.
A perfect example of NOT following your system is painfully illustrated below. Since we closed out the portfolio the 5 solar stocks that were in the portfolio did not do too well as you can see from the table below.
2012 Portfolio Stock Performance since last position was sold out on 3-6-2012
|Symbol||Company Name||Price||% Change|
|CSIQ||Canadian Solar Inc.||$2.70||-5.26|
|GTAT||GT Advanced Tech||$4.30||-42.97|
|TSL||Trina Solar ||$5.70||-17.99|
|YGE||Yingli Green Energy||$2.52||-30.96|
| || ||Average Loss||-27.66%|
If we had held on to our positions and HOPED they would come back – we would be DOWN 27.66% and for all practical purposes stuck waiting for our stocks to come back – NOT a good position to be in and one that is totally avoidable IF you can just let go and follow you discipline without added emotion.
We adhered to our system and did not question whether to sell or not. If one of our positions hit the designed stop point we sold – without question. By doing this we minimized our losses and rode our gains as far as we could.
Remember - the #1 rule of investing: Don't Lose Money or more accurately stated:
Cut your losses and let your profits run
General Market Comments - Red Flags Flying, move to the sidelines.
Last week’s market was a significantly down week and triggered most of my technical indicators starting in late April all the way up to the most recent major indicator turning to SELL on Tuesday the 17 th.
At this point the general market is what I would characterize as being in a RED FLAG environment in which I would move to the sidelines and wait for the market to run it course. We have entered the markets seasonably UNFAVORABLE season (May – Oct) which historically has been a terrible time to be invested. In addition, all of my technical indicators has signaled warning, with the exception of one, which I expect will turn negative next week. Since solar stocks as a whole have much higher volatility (beta) than the general markets we have seen then fall much further than the market in general.
But on average solar stocks are 80% OVERSOLD with a number of them being oversold by significantly greater than 100%. At some point, I am sure that they give us another buying opportunity (at least a trading opportunity) later this year. But with all the confusion in the solar industry at this time it is difficult to determine when - more discussion on that in the next article.
Keep in mind that periodic corrections are normal in the stock market – all current indicators are telling me that this may not be just a normal correction in the market and therefore warrants serious investor attention.
Background Analysis Notes
Keep in mind that there are two basic types of equity (stock) analysis. Below are a brief description of each and its primary purpose:
Fundamental Analysis - this is the analysis of the fundamental financial condition of a company to identify which stocks you may want to buy when the timing is right. This form of analysis will give you NO indication of the best time to buy a stock or sell a stock.
Technical Analysis - this form of analysis will tell you "when" to buy a stock and when to sell the stock. It will do this by showing you (in chart format) the basic interaction of supply and demand and when the two change and shift which will indicate a time to buy or a time to sell.
Mr. Lynch has worked, for 35 years as a Wall Street security analyst, an independent security analyst 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, an early 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 has from time to time been a financial/technology consultant 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.
Read Solar Stocks Commentary with J Peter Lynch at Investorideas.com
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