Year End Update 2013 – J. Peter Lynch Solar Stock Portfolio Outperforms for 4th Straight Year
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New York, New York - January 6, 2014 (Investorideas.com renewable energy stocks newswire) Investorideas.com, a leader in renewable energy stock research for independent investors, issues a solar stocks portfolio update by solar columnist and expert, J. Peter Lynch.
Solar Stocks column at Investorideas.com:
Our Solar Portfolio dramatically outperformed the general market averages (average of the DJIA, S&P 500 and NASDAQ) once again in 2013 and even more dramatically over a 4 year time period - 2010, 2011, 2012 and 2013.
This outperformance was accomplished with no leverage and was also done with significantly less risk since the portfolio was NOT invested for close to 30% of the total 4 year period. The results also do NOT include any interest that would have accrued as the funds remained out of the market and in bonds or a money market fund.
Solar Portfolio 4 Year Track Record
Solar Portfolio outperformed the solar industry as a whole by 10 times and the major market indexes by over 3 times .
The four year cumulative returns of our Solar Portfolio compared to the Solar Industry as a whole and the Major Market Averages (an average of the DJIA, S&P 500 and NASDAQ) - assuming for illustrative purposes a $100,000 starting value for each of the initial portfolios:
Solar Portfolio $ 532,840.77
Solar Industry as a Whole $ 49,335.80
Major Market Averages $ 170,036.54
Yearly Portfolio Details
* Note: all details of portfolios are available at: http://www. investorideas.com/PL/
2013 Solar Portfolios 1 and 2 outperform markets by 400%
Solar Portfolio's + 126.98
Solar Industry Average + 124.94%
Major Market Averages + 31.47
2012 : Solar Portfolio outperforms markets by 325%
Solar Portfolio + 39.7%
Solar Industry Average - 13.93%
Major Markets Average + 12.19%
2011 : Solar Portfolio outperforms markets by 1,416%
Solar Portfolio + 17.56%
Solar Industry Average - 70.3%
Major Markets Average + 1.24%
2010 : Solar Portfolio outperforms markets by 310%
Solar Portfolio + 42.94%
Solar Industry Average -14.2%
Major Markets Average + 13.87%
Background on 2013 Solar Portfolio 1 and Solar Portfolio 2
We closed out our last position in our 2013 Solar Portfolio 1 on 16 April 2013 with a realized gain of 44.94% for the first 14 weeks of 2013.
I initiated our second 2013 solar portfolio ( 2013 Solar Portfolio 2) at the market opening on 26 June, subsequent to the introduction of President Obama's new energy policy. I thought this was a positive step, although, far from what I would consider a "appropriate step" for America's energy future, given that we are still lagging the rest of the world in acknowledging that solar is here to stay considering its worldwide implementation is accelerating with each passing month.
I selected the three most technically strong stocks (based upon my evaluation system) from our publicly traded stock list and initiated theoretical equal money positions in each security - Canadian Solar (CSIQ), Sunpower (SPWR) and Sun Edison (SUNE).
On 5 July I added two addition stocks that had given subsequent technical buy signals - Jinko Solar (JKS) and Yingli (YGE).
We took the closing prices for 2013 for each of our remaining positions - CSIQ, JKS and SPWR and calculated our total portfolio performance for 2013.
Solar Portfolio 2 closed 2013 with a gain of 56.6%, gain combined with the 44.94% gain for Portfolio 1 resulted in a total cumulative gain for 2013 for both portfolios of 126.98%
At the current time the general market still remains in a "higher" risk status, based upon certain of my technical/risk indicators and the fact that the market has had the best year in 15 or 16 years. However the majority of the "key" technical indicators - advance/decline line, various moving averages, and measures of internal momentum are telling me that this market is very strong at this time.
The end of last week saw corrections in all of our 3 remaining portfolio companies, ALL of which were slightly over sold on their 10 week distribution. All three have surged at year end and have started new uptrends and appear to have finished their corrections.
Keep in mind - you will never be able to catch the very bottom of a stock's movement or the very top. If you utilize some form of a system (a non- emotional system) that will limit your losses and maximize your gains you WILL without question dramatically outperform the indexes over the longer term, as we have clearly done over the past 4 years.
We have taken some profits and we could have made more profits IF we had held on and "HOPED" that the stocks corrected, which they did. We stuck to our system no matter what happened; as a result we had another excellent year that dramatically outperformed all markets once again this year.
The key thing to always keep the number one rule of investing foremost in your mind:
Cut your losses short and let your profits run
We have been in a Bull Market since March 2009, close to 4 3/4 years. The average Bull Market is 3.8 years - so this market is growing long in the tooth. I mentioned earlier, I have not seen any "serious" indications pointing to the end of this market. However, when the market is in a higher risk area - the changes can come quickly - so we have to adopt a defensive posture.
This is especially true since the stocks in our portfolio are very HIGH BETA stocks, our average is approximately 1.7 - which means that they, on average, are 70% MORE volatile than the general market (the general market BETA is always 1.0) - good on the upside (now) and bad on the downside. As a result, we have to MAKE SURE to stick by our stop loss points since these stocks can move dramatically and swiftly.
There is no way to really predict the future - yet solar is booming everywhere in the world, even in the U.S. - this year will be the first year ever that solar has put in more capacity than wind worldwide. The general press in the U.S. has still not caught on to the current "solar boom" or is "scared" to write about it for fear of offending some financial backers etc. But the "facts" are crystal clear - solar and renewables are "booming" all around the world and we are hopefully headed to a clean, distributed energy generation future.
I think this may be the first really visible evidence of a much more widespread transition to solar - which, in my opinion, is well over due if one considers all the facts and costs and not the silly gibberish from the anti-solar groups, the coal faction, the math challenged nuclear group and all the other reality ignorers from the flat earth society.
Change is coming! We are seeing the beginning of the end of the age of fossil fuels and with it we will see a number of investment opportunities ( both long and short) , in numerous market sectors that will begin to appear as a result of this structural change in our society.
Hint : I would not be a buyer of utility stocks.
Some Interesting and Relevant Market History - Caution Advised
History does not always repeat, but it is a good idea to at least be aware of the past so that one does not "doom" oneself to repeating mistakes of the past.
2014 is the 2 nd year of President Obama's second 4 year term. Historically, administrations going back to the Eisenhower administration (both Democratic and Republican) try to get all the negative "stuff" out of the way in the first or second year so when the next election comes up the market and the economy have turned and things are looking positive for the next election cycle.
As a result, the "bad" news is that if there is not a significant correction at the end of the first year of the cycle there is an increasing chance that there will be a significant correction in the second year. This has proven to be true in the majority of cases in the past. Does not mean, it is going to happen, just that historically it has been the case in the vast majority of the cases.
The "good" news is that historically, once the correction has taken place. The odds favor a very strong rally (averaging 50% since 1900) to the high of the following year.
Once again, this historical data does not mean that it has to happen again - but it is always wise to be aware of statistically significant historical data.
One a personal note - I have been a very good stock picker over the years, but just prior to writing this article I looked to see how I was doing year to date in my personal (non-solar portfolio) and it was UP 43.6%. That is great, but it is far better than is reasonable to expect, no matter how good a stock picker an investor think they are…….therefore
When things go too well - beware, be alert, follow your system and always remember:
Never confuse brains (how smart you are) with a Bull Market
The HARDEST THING for investors to do is to 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.
Markets have, for decades fooled the majority of investors by "Climbing a Wall of Worry" which is exactly what it is doing now. If you listen regularly to the financial news media (not a good idea) you would hear that we are having a least a "crisis" a week and that any day now the world is going to end. But the market has kept climbing that wall of worry and going higher and higher.
On the flip side once losses start to occur and keep getting worse investors generally get on the "Slopes of Hope" and they hope that their stock comes back - trust me, the "I hope my stock comes back" technique has never worked and will NOT work, now or ever.
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 - and what is most important to understand is:
What is actually happening NOT what you think should be happening.
If you look 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 2013, 2012, 2011 and 2010 with far lower market risk since we were out of the market for much of those years when the market environment was unfavorable.
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 "what to buy") - 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 ("when to buy") - 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 over 30 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, founder and 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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