An interesting
article by Eric Janszen in Harper's Magazine talks about the history of bubbles and makes a prediction that alternative energy will be the next bubble (or asset hyperinflation as he calls it). The article dovetails well into the theory (that I strongly subscribe to) that the Federal Reserve is responsible for creating the Internet and Housing bubbles by holding the short rate so low for such extended periods of time. And that the current aggressive rate cuts, TAF, and TSLF will create a new bubble. Mr. Janszen makes a good case for the next bubble occurring in alternative energy, especially considering the 2008 U.S. presidential candidates views on energy regulation, the amount of Venture Captial money going into alternative energy start-ups in silicon valley, the need for the U.S. government to find work for the the big contractors coming out of Iraq, and the likelihood of Democratic congressional control.
In the words of Bill Rempel:
Find the bubbles as early as possible.
Buy them.
The trend is your friend, ’til the end, when it bends.
This is most likely your single best hope to have your personal wealth growth exceed, by a wide margin, the increase in your cost of living over time.
3 comments:
Nice post.
Do you think the bubble in alternative energy is already happening in tandem with commodities and energy in genral? Look at the 1-year on First Solar and tell me that's not bubbliciously bubbly...
I agree that the first stages of a bubble in alternative energy are in place. But if you look at SunTech Power (STP) and SunPower (SPWR), among many others, their charts really broke down in the beginning of the year. In fact, the entire alternative energy sector fell of the top ten. I believe we have another year or so of slow growth and mediocre market returns before investors jump back on board with the type of conviction it takes to create an out-sized bubble ... of the type we are looking for.
Here is something else to ponder.
Alternative energy - the stocks are expensive and the technology is prohibitively expensive to the average consumer. Moreover, the likelihood of solar banks delivering the kind of power America or any developed nation needs seems unrealistic (at least in my opinion).
As an engineer, wouldn't you agree that, pragmatically speaking, nuclear energy would be our best 'alernative energy' solution: proven technology, cost effective, relatively low-impact to the environment, a power grid already in place to deliver the electricity generated?
If nuclear power does begin to play an importance in the future, at least one set of winners would seem to be the patent owners and manufacturers of battery technology (those electric SUVs being charged by the nuclear power plant are going to need to to store a lot of juice!).
Besides ABAT, are you aware of any battery plays?
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