Solar Stocks Portfolio and General Market Update – "Green Flags Flying" - J. Peter Lynch
Solar Stocks Status – Light beginning to shine at the end of a long downtrend
New York, New York - December 14, 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. Mr. Lynch discusses the solar stocks portfolio for 2012, his current feel for the sector and his outlook for the future into 2013.
Solar Stocks Commentary with J Peter Lynch at Investorideas.com
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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.
See solar stocks status - below for latest entry points and returns.
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.
General Market Comments - Market indicators slowly turning positive
As I said in my article of 5-20-2012 the market has 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 of May.
At that 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 its course. In addition, 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 had signaled sell signals.
Keep in mind that there was NO WAY to know if that May sell signal was the beginning of a short correction or the beginning of a longer market downtrend - all we can do is listen to our indicators and follow their lead.
When we do that we eliminate "emotion" i.e. what we THINK should be happening from our investment equation and follow our time proven indicators that show us what is REALLY happening, regardless of our opinion.
Since late November, my market technical indicators started turning positive with most currently positive and the remainder on the verge of turning positive.
Solar Stocks Status - Light beginning to shine at the end of a long downtrend
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 - this is not unexpected and is the reason our indicators told us to exit ALL our solar stocks in early March 2012.
The industry is currently undergoing extreme turmoil with negatives everywhere and nothing positive in sight:
- Lower prices on solar panels than anyone had predicted
- Compressed margins, to the point that 90% of companies are losing money
- Worldwide finger pointing as to who is a fault
- Elimination of the very successful 1603 Treasury grant program, forcing the industry to fall back on Tax Equity - which adds two problems for the industry: there is not enough of it to handle demand and it adds a significant cost to large commercial solar projects.
- A growing number of solar companies around the world are going out of business generating all sorts of media comments that are really inaccurate and based on very little knowledge of how industries grow and develop overtime.
- All of these negatives have created investors #1 fear - uncertainty. Where growing uncertainty exists, investors do not come.
With all of these negatives is there any good news that investors can take to heart and maybe see the beginnings of a light (sunlight) at the end of the tunnel?
There is an old saying on Wall Street, attributed to Baron Rothschild - "The time to buy is when blood is running in the streets" - certainly a contrarian point of view and without question - the blood is running in the streets in the solar industry. But in the stock market when all of the selling is finished (after all the bad news is out) there is usually no one left except buyers.
New Solar Portfolios Purchases
On November 29 th 2012 my indicators flashed BUY signals on three solar stocks:
- First Solar (FSLR) @ $27.21
- Jinko Solar and (JKS) @ $4.44
- MEMC Electronic Materials, Inc. (WFR) @ $2.98
As of the close today our new solar portfolio is up 19.9% in a very brief period of time.
Hopefully this is the beginning of a major turnaround in the solar sector - we will have to wait to see, but in the meantime, our indicators have signaled a Green flag for these 3 solar stocks and some very positive signs for additional solar stocks.
I will have more detail and a 2012 year end summary after the year end close.
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.
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