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Solar Stocks Portfolio continues dramatic outperformance - up 71% YTD

New York, New York - February 18, 2013 Investorideas.com staff: (www.investorideas.com renewable energy stocks newswire) - Investorideas.com, an investor research portal specializing in sector research for independent investors issues a solar stocks portfolio update from solar contributor J. Peter Lynch.

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http://www.investorideas.com/PL/

Our 2013 Solar Portfolio with 5 positions currently - 3 initiated on 11/29/2012 and 2 at 2012 year end is UP 71.02% as of the close Friday (2-15-13) versus the general market averages being up and average of 6.32%.

Symbol

Company Name

Curr Price

Buy Price

%Change

 

 

 

 

 

FSLR

First Solar, Inc.

34.09

27.21

25.28

JASO

JA Solar Holdings Co., Ltd

5.72

4.27

33.96

JKS

JinkoSolar Holding Co Ltd

9.37

4.4

112.95

SPWR

Sunpower Corporation

11.45

5.62

103.74

WFR

MEMC Electronic Materials, Inc.

5.34

2.98

79.19

 

 

 

 

 

 

Average Return

 

 

71.02%

 

 

 

 

 

 

Major Indexes Returns

 

 

 

SPX

S&P 500

1519.79

 

6.56

DOW

Dow Jones

13981.76

 

6.7

NASD

NASDAQ

3192.03

 

5.71

 

 

 

 

 

 

Average Index Return

 

 

6.32%

Note: this portfolio is an equally weighted portfolio - which means that there is an equal amount of money put into each position. In this theoretical example we invested $10,000 into each company.

The portfolio is generating incredible returns, especially considering that we are only 6 weeks into 2013. However, even though this is very positive, it is also very unusual. Another important factor to consider is the risk level of the general markets - the general markets are currently very overextended and in a greater risk area (overbought condition) and the likelihood of, at least a correction, is very high at this time.

As a result, of being in this higher risk environment we have to think defensively and make sure to protect some of these incredible profits.

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Minimize your Losses and Maximize your Profits

The easiest way to do this is to set reasonable "STOP LOSS POINTS" - these are selling points that an investor sets to automatically take them out of a position to "minimize" any loss.

We will watch our stocks and when a stock drops to a STOP point we will sell, if a position does not hit stop point - we will keep moving up the stop point and maximize our gains in that position by letting it continue to move up.

Two of our stocks - FSLR and JASO both hit their respective stop loss points and we sold ½ of our position - FSLR at $29.00 and JASO at $5.20 for a total profit of 14.23%. However, both stocks promptly turned around and started up again. As a result, we lost out on potential profits, but that is OK because it is MORE important to prevent large losses. It does not always work out optimally, but in the long run it will always turn out better if you focus on cutting losses and NOT letting them get very large.

New Updates Stop loss Points

For our current portfolio I am setting the following stop loss points to automatically sell 50% of existing position that hits its stop point.

FSLR = $31.00, JASO = $5.50, JKS = $7.50, SPWR = $9.50, WFR = $4.25

Note : there are many methods of setting "STOP POINTS" some can be as simple as a percentage loss you feel comfortable with, say 10% - but this is a discussion too complicated for this format. These stop points I set based upon a method of technical analysis I used to pick the stocks.

Market Psychology

The HARDEST THING for investors to do is know when to sell. That is 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.

Remember: markets fool the majority of investors by "Climbing a Wall of Worry" which is exactly what it is doing now. Once losses start and keep getting worse when investors get on the "Slopes of Hope" and try and hope that their stock comes back - trust me, the "I hope my stock comes back" technique will NOT work. 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.

If you looked at the portfolios of the most successful investors you would, in general, see the following pattern:

Approximately 80% of trades would be either small losses and/or small gains and approximately 20% would be very significant gains. This is exactly how we dramatically outperformed the markets in 2010, 2011 and 2012. We cut our losses when things did not work out and we let our profitable stock run and maximized our gains.

General Market Comments

At the current time the market is overbought at a level which historically results in a pullback in the market closer to the 50 day moving average. As a result of this I have been setting our stop loss points very conservatively in order to make you that when a correction or pullback comes we will still lock in healthy profits.

At this point the general market is weaker than solar stocks as a whole which have obviously been very active lately. But keep in mind that all of the stocks in our portfolio have beta’s of about 1.5 (beta is a measure of a stock volatility) the market has a beta of 1.0, so our stocks are 50% MORE volatile than the market. So, with this in mind, we have to be cautious with the market getting overbought and all our stocks having high beta’s.

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 36 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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