--- On Sun, 10/5/08, Mervyn Lobo <[EMAIL PROTECTED]> wrote: > > 2) If there is place I would invest in, it is in > clean/renewable energy. The bailout > > package has additional legislation that includes > promotion of clean energy in the > > US. World wide wind energy demand is currently growing > at a rate of 80% pa, while > > for solar it is around 40%. I think investing in these > sectors should be reasonably safe bets. > > > Am looking for names of such companies. Any ideas? ---> The leader in solar technology is First Solar, a company based out of Ohio. The figure of merit is cost per peak watt of power and you want the lowest cost per watt. The holy grail is $1/watt. They are about a year away from this milestone and over a year ahead of any large scale manufacturer. Other pure play solar companies are Schott and Solar World (Germany), Sun Power (USA)and Sun Tech (China). Sanyo, Sharp and BP Solar which are not pure play are also big dogs in the industry.
The risk with First Solar is that besides their stock being "expensive" (though prices are down over 50% in the last 3 months), there are some potentially game changing technologies out there that could shake up the field in the next two to three years. Unfortunately, most people cannot invest in the start ups, such as Solyndra, Nanosolar, Konarka, Global Solar, Miasole, and Heliovolt, to name a few. It is quite possible, one or two of these companies may be the next google of clean energy. Another angle to consider is the equipment suppliers such as Applied Materials (disclosure, I work for them and am therefore biased :). Our technology is very conventional, but we are applying large scale industrial processes used in the production of plasma and lcd tvs in an attempt to commoditize the technology and sell the technology to any enterprise that wishes to set up a solar shop. In India, Moser Baer and Signet are in the process of setting up their factories using Applied's technology. Wind is an even hotter market given that it is currently more cost competitive than solar. Suzlon, which is based in India, is the largest wind company in Asia and the fifth largest in the world. I am not very familar with the wind market and the various companies. For investors who dont have the time to research the various companies and technologies, there are several clean energy funds out there that one can google. As usual, if people cant tolerate risk, they should not invest here as this industry is very dynamic. > > > 3) Although everyone talks about inflation, I would > like to suggest that the reverse - > > deflation may actually occur over the longer term (2+ > years). It all depends upon > > how severe this downturn will be - bad or very bad. > > > To make this very simple, think of the US dollar as a > tomato. When there is excess > supply, the price goes down. When the US dollar goes down, > imports become more > expensive. More expensive goods from China will cause > inflation. --> I dont think it is as simple as that. You need to look at a nation's "terms of trade" factor, which considers the currency weighted average of the cost of all imported goods and services. If we were in a midst of a recession, specially if it were severe, the decrease in demand would result in a glut of those products. We are already seeing major declines in the price of many commodity products. This is fundamentally deflationary. Furthermore, if these nation's exports to the US slow down, their currencies would also tend to depreciate to compensate for their weakened economies. I also feel that there is a significant overhang in terms of production capacity for most consumer goods (cars, appliances, electronics etc), which will continue to put price pressures on most manufacturers. The collapse of the housing bubble means that this significant cost of living item is also becoming cheaper. Deflationary pressures on fuel, housing and consumables, along with the current stock melt down clearly suggest to me that we may be heading towards a period of little or no inflation at best, or deflation at worst. People who have large amounts of cash are sitting pretty at the moment. In this environment, I'd be happy getting a 4% de/inflation adjusted return. Marlon
