Principles of the Stock Market : Clean Energy

BUY CLEAN GREEN! BEST INVESTMENT THEME FOR DECADES

Richard Schwartz — Thu, 01 Oct 2009 13:24:00 GMT

CLEAN, GREEN UPDATE. THE NEXT BIG THING IS HERE & WORKING WELL!

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Starting back in December 2006, I started writing about the next BIG THING. And have updated it for you continuously ever since. Happily I started on this theme right before the 2007 boom in solar stocks. Since I eat my own cooking, so to speak, I was able to capture some doubles and more in companies like First Solar (FSLR), Suntech Power (STP) and a couple others. Hope you were too. That solar boom is over, for the moment -- a good time to nibble, with today’s oversupply of solar but other subsectors of the greater clean green energy universe are now having their day in the sun (pun intended). “Smart grid” stocks, those that help reduce, measure and regulate power usage have recently been hot and I’ve long recommended EnerNOC (ENOC) and Comverge (COMV). Disclaimer! I own small portions of both but can and do change positions without notice. And that’s even before America really starts to modernize our national power grid. Wind and natural gas stocks have been doing well now as have battery and other storage technology after General Motors threw out that figure of over 200 miles per gallon coming with their Chevy Volt. I did publish a decently all-encompassing list back on June 6th, 2008, right in the midst of the 17-month downtrend and asked you to “print, keep handy and archive” it for future use. Last Wednesday, I listed a few additional technology companies which have one foot in clean green and before that, on September 18^th, I posted a winnowed down list of my December 2006 list of about 80 clean green companies outperforming for possible near term trades. And of course a couple times recently I’ve again recommended that new clean green global mutual fund that Steve Leuthold and crew are now offering, which I recommended to you just back in July, that’s Leuthold Clean Green Tech (symbol LGCTX).

I CONTINUE TO BELIEVE THIS IS SHOULD BE #1 THEME FOR LONG TERM INVESTORS and thus let me pound the table again today (even though it’s not Friday when I’ve gotten in the habit of giving you YOUR CLEAN GREEN WEEKEND UPDATE; I’m a man of routine my friends say.). Just want to point out that holding a bunch of clean green stocks is still working well. What I’m finding is that some good news item seems to pop every few days about one of the stocks in my own IRA portfolio, almost totally composed of small lots of lots of clean green companies, and/or also for many of those stocks on my larger shopping list of clean green. My IRA is up over +30% this year and I’m only 50% invested! (Note! I’d be much less invested if this was my fund management money. Like monies that are designated to only go into sector funds or that only can be moved around minimally or that has no clean green choices, again like the money management I do for others.) Anyway, whether it be wind, geothermal, energy storage, battery technology, fuel cells, etc. etc, whatever, there are lots of clean green niches, I’d buy ‘em all and cover all bases. Yesterday one US wind company got a big contract from a Chinese firm and popped +10% (in a ragged stock market), that’s happened numerous times as China pushes clean green too. Back a week ago a reader sent me an email that three of his very low priced clean greens were all up nicely that day when he checked. I hold one of them so I won’t mention that name but two others I used to hold, not right now but maybe I’ll buy them back on weakness down the road, were Medis Tech (symbol MDTL) up +24% and Hydrogenics (HYGS) up +13%. Schwartz View: Bottom line, pull out my original shopping list of clean green, which I’ve run in various and updated forms numerous times over the last couple of years, review it and then buy small amounts of lots of clean green stocks. That way when a breakthrough occurs, wherever you’ll benefit while the rising tide carries all ships (almost all) over time. That was my original game plan for all of us and remains so and continues working nicely. By the way I’d buy BEFORE the scheduled December Copenhagen global conference. The rationale again is the world is going clean green because it has to. We all know that. Going clean green creates new jobs which we desperately need, cuts down on oil money somehow finding its way into terrorists hands and respects and protects Mother Earth. And when we forget we have to go green for a brief moment, some report about global warming comes out and reminds us.. China knows it, Europe knows it and America, our scientists, our government, our businesses (who wants rules in place so they can move forward with capital spending plans), our venture capitalists know it and our everyday Americans know it. All except for the pure unadulterated capitalists holdout contingent who won’t admit such because in their blindered view “it hurts business.” Let me say again: There is a critical mass for going Code Green and a critical mass means there’s no stopping it, maybe something, some event, can hold it back for a time, but there’s no stopping it.

THIS IS THE #1 BEST INVESTMENT THEME FOR THE NEXT COUPLE OF DECADES!

Come on, get on board!

BUY CHINESE SOLAR

Richard Schwartz — Tue, 14 Apr 2009 13:20:00 GMT

GLOBAL VIEW. China’s Growing SOLAR Niche. China’s domestic-investor only stock market, the Shanghai Stock Exchange Composite continues to rise. Looks like Chinese investors are setting themselves up for more trouble after the Shanghai exchange rose some 514% from mid 2005 to October 2007, then fell -73% through October 2008. But before that next collapse happens, I see Chinese solar stocks as good buys here. Let’s review the larger picture first, then I’ll talk China and renewable energy.

Asia Bottomed Five Months Back? Remember ASIA in general hit its last bear market lows back last year. China, Hong Kong, India, Japan, Korea, Indonesia, Malaysia and the Philippines all last hit lows last October, along with some Latin American developing markets like Brazil and Chile. That’s six months ago thus way past the normal three weeks to three months counterswing rally time frame. So is Asia in a new mini bull market? Other regions of the world, meaning the US and CANADA and most all of EUROPE continued lower until just last month. So by my Principle of Relative Strength, which recommends always (almost) focusing on those countries, markets, individual stocks showing relative strength or outperformance, Asia in general is the area for us to concentrate our attention on today. I previously wrote last Wednesday and Thursday how well known Bob Prechter, Jr. and his Elliott Wave International advisory service says parts of Asia are now in a big bear market RALLY phase in the cycle. Like an A wave back up which can be powerful, long lasting and sizable. And I also pointed out how “hot” and well known, Swiss investor Marc Faber is now saying buy Asia on any “setbacks” (there hasn’t really been any). And I ended last Wednesday’s report with a buy recommendation on India, offering up as one way to trade or invest, the India Fund (symbol IFN) which closed Wednesday at 18.25. IFN closed yesterday at 20.69. So in general Asia is where the best action is now. Plus regular readers will remember even before that, back on February 10^th, I recommended investing in Chinese agricultural and offered up a list of stocks which you could choose from (I bought one of the 13 stocks listed; did you buy any?). Plus a few days prior to that, I went to great effort and posted the whole 100 stocks separated by industry sector on the USX China Index for you to print out, keep and go shopping from.

China In A Sweet Spot. That’s because the Chinese government, with it’s unique, command-style quasi-free marketplace, blending capitalism and government management still has great and speedy influence. They can rapidly decide on a, any, direction for the country and quickly move down that path. Not like us here in America with our democracy. We take lots of time getting any bills passed (but when we do agree on a new law, we get better if not implementation). Of course, China still has to fight its widespread corruption and pay offs at every step forward so their implementation is harder. Still, perception is everything in the short term in the stock market so implementation problems aren’t a concern over the near term. And near term the Chinese government has just changed the laws to encourage solar (and other renewable energy like wind energy use). Back on March 26^th China “introduced a subsidy for solar projects of more than 50 kilowatts that could pave the way for increased sales of rooftop systems.” One analyst projected that this change could increase solar demand this year by 58 megawatts and 232 megawatts annually by 2012. This announcement moved Chinese solar stocks up the most ever in one day and the rally in Chinese solar is now in its third week and still looks solid. One London analyst said after the announcement that: “China has the potential to double the solar market, soak up the excess capacity that’s out there, and get manufacturers back on their expansion plans.” Another report said: “China is closing older coal-fired plants and implementing clean energy to fuel economic growth.” The government itself said its going to implement its “solar roofs program” to accelerate the application of solar energy. Schwartz View: Good for you China! Just lead by example, that’s the way to do it. Don’t worry about what other countries are doing. (What we should do here in America too regarding renewable energy.) A more recent announcement says China is writing a new renewable energy law and on that news solar and wind stocks jumped again. The essence is that China wants to increase renewable energy usage to 10% of total energy consumption by 2010 (from 7.5% in 2005). Go China Go!

BUY CHINESE SOLAR. Net, net, I recommend buying Chinese solar!

SOME CHINESE SOLAR STOCKS

Mkt Analyst Next

Symbol Company Name Price Cap Ratings EPS Business Line

STP Suntech Power Holdings 14.49 2170m 7-12-11 5/21/09 China’s largest solar manufacturer

YGE Yingli Green Energy 7.67 964m 7-6-2 5/15/09 PV modules and PV systems

LDK LDK Solar Company 8.04 928m 1-8-5 5/12/09 Multicrystalline solar wafers

JASO JA Solar Holdings 3.58 589m 6-7-4 5/11/09 Solar cells

TSL Trina Solar Ltd 13.21 388m 3-6-4 6/5/09 Solar-power products

SOLF Solarfun Power Holdings 4.73 252m 0-3-5 5/21/09 PV modules

Disclaimer! I own a small amount of Yingli Green Energy but can and do change positions without notice.

For a FREE week's sample of my complete daily letter, please email me at RichardStk@aol.com

What Obama Rally?

Richard Schwartz — Tue, 27 Jan 2009 15:04:00 GMT

WHAT OBAMA RALLY? The Obama Rally hasn’t proven to be have much substance, at least not yet. If we track stock prices back to Election Day, November 4^th, the stock market hasn’t done much, in fact the S&P 500, the pro’s benchmark, is down -13.43%. Then, since Inauguration Day, January 20^th, again the stock market hasn’t gone anywhere either, the S&P is down -1.59%. But I still have hope. At look at my wall charts, or anywhere access charts, shows the stock market in general is down near the bottom end of its last three month trading range. But not broken below! So for aggressive traders the odds say now or soon is a good time to buy, to go long, for a bounce at least to the top end. Of course, only for those traders who can pull the trigger on losses if the bottom end of this range suddenly falls out. (Many say they are traders but can’t get themselves to sell when they are supposed to, can’t stand taking losses.)

A Target Date For Traders. We also now have a target date to shoot at which is always helpful. Remember the original target date to unload after the year end Santa Claus rally was the first couple of days of 2009, which looking back proved a perfect strategy with the Dow topping out on the first trading day of the year, Friday, January 2^nd and giving us a second chance to sell above Dow 9000 on the following Tuesday, January 6^th. Since then, nada. Stocks have fallen sharply the rest of January, closing below 8000 last Tuesday & kicking off trading today at Dow 8116.03. Past history, not to be forgotten, let’s move on.

Stimulus Plan Passing. Now we have passing the very important, about $800 billion dollar, economic stimulus plan to shoot at as a “selling on the fact” date. In other words, an opportunity to buy stocks here, the stocks which should benefit from the government money going towards specific industry niches and sectors. So I’ve been compiling a list of potential beneficiaries which I want to unveil this morning. My suggestion is to buy a couple of even a package of the below stocks with the plan to sell them when a bill passes Congress. Right now I hear the target date to get a plan passed is mid-February. The backup plan, in the stock market we always need an exit plan and a backup plan when we get involved, is to sell half on bill passage and keep half if the stock market has convinced us that the last three months was indeed base building and we’ve started off on a new short term or cyclical, mini bull market, encompassed in our larger secular bear market.

SMART GRID TECHNOLOGIES. This is the area where we need to modernize America’s electricity/power transmission system. As Michael Morris, CEO of American Electric Power detailed recently our power grid was originally built piecemeal by local utilities and designed to serve only local regions. Thus it’s “far from being an efficient national-delivery system” and “hasn’t seen significant investment for more than 30 years.” The concept is we need a more powerful nationwide transmission system to get power from one part of the country to another, where needed. Especially now that we’re also going to bring online new renewable energy sources like wind and solar. If we could shoot the solar power generated in the desert to population centers with the flick of a switch, consider the efficiencies.

So first off, here’s some choices by Seeking Alpha, a boutique research firm:

Price Mkt Cap Wall Street Ranking Business Line

COMV Comverge $4.16 91m 7 buys, 6 holds Demand response provider

ENOC EnerNOC 9.11 184m 8 buys, 6 holds, 1 sell Demand response provider

ITRI Itron 60.01 2068m 9 buys, 8 sells Smart meter reader

Schwartz View: The concept is for grants to utilities for projects which allow utilities and their customers “… to track and manage the flow of energy more effectively, curb peak demand, reduce blackouts and integrate renewable energy and storage (including electric and plug-in hybrid vehicle batteries) into the grid.” I’m big on this as it makes good sense to me. We need a modern, cutting edge transmission system. Disclaimer! I own small pieces of all three companies above, either in my own IRA or in my trading accounts. And can and do change positions quickly and without notice.

RENEWABLE ENERGY. This is the part of the plan which provides money and tax credits for renewable energy providers and research and development in energy conservation and energy efficiency. Two companies poised to benefit from clean, green renewable energy companies, according to a Bloomberg article authored by Thomas Black on December 17^th are:

AKNS Akeena Solar 2.00 58m 1 buy, 6 holds Solar energy

CREE Cree, Inc 19.80 1752m 7 buys, 5 holds, 4 holds Energy efficient lighting

Schwartz View: I don’t know why the only solar stock on Mr. Black’s list was a penny stock. So beware! But there are lots and lots of solar stocks which could benefit led by market leader First Solar (FSLR), so let me expand this list.

FSLR First Solar, Inc. 139.05 11,275m 27 buys, 8 holds, 2 sells Thin-film tech solar modules

ENER Energy Conversion 24.79 1133m 7 buys, 10 holds, 3 sells Thin-film solar laminates

SPWRA SunPower Corp 28.80 2153m 21 buys, 11 holds, 3 sells Integrated solar products

INFRASTRUCTURE. Besides our electric power transmission grid another part of America’s infrastructure which needs rebuilding and modernizing is our transportation system originally built by President Eisenhower in the 1950s. It’s in dire need now and President Obama plans to spend the largest sum of money since it was built on updating it. Again, this is pointed not only to creating jobs now and in forthcoming years but will put us where we want to end up, with a modern system capable of helping America stay globally competitive in shipping our goods around the country and overseas. Some companies I’ve read about, and common sense tells us will benefit, are:

CAT Caterpillar 32.67 19,707m 7 buys, 13 holds, 3 sells Earth moving equipment

CX Cemex SAB 8.33 6768m 3 buys, 9 holds, 3 sells Big cement provider

CRH CRH plc 24.08 12,818m 1 buy, 1 hold Irish cement co covers US

MTW Manitowoc Co 6.21 809m 3 buys, 8 holds, 2 sells Maker of assorted cranes

QUIX Quixote 4.03 37m 1 buy, 2 holds Highway safety products

TEX Terex Corp 13.94 1322m 8 buys, 8 holds Heavy duty trucks/cranes

ENGINEERING. There are numerous other sectors which should benefit in rebuilding our roads, bridges, national parks. Some engineering firms are:

JEC Jacobs Engineering 40.56 4986m 9 buys, 5 holds, 2 sells Construction management

FLR Fluor Corp 41.04 7449m 11 buys, 4 holds, 3 sells Construction services

ABB ABB Limited 12.20 28,338m 9 buys, 0 holds, 1 sell Power technologies.

Disclaimer! I don’t own any of the remaining 14 stocks above. But I’m watching them and may buy some and/or change positions quickly and without notice at any time.

SCHWARTZ SUMMING UP. There are lots more companies which should benefit. So I plan on providing more names all this week in this space, stay tuned. But generally, this trading and possible investment idea is based on “Trader Vic” Sperandeo’s view (read his two books) that government intervention changes the ground rules of the game and thus provides eagle-eyed traders with money making opportunities. Opportunities for those investors who understand the underlying economic principle involved and then time their moves properly. I agree. Money should flow to some companies for years, buttressing their businesses while other parts of our economy suffer. By the way, big China advocate is basically doing the same for himself, but over in China. China has a major stimulus plan in place also and in fact is implementing it much faster than here in the US because of their command style of capitalism. Rogers sees agricultural, water and infrastructure in China as not even knowing a global recession is on. The play here is similar.

Good trading, speculating and investing!

We Need To Move Past Oil!

Richard Schwartz — Fri, 25 Jul 2008 13:49:00 GMT

YOUR ALTERNATE CLEAN, GREEN ENERGY WEEKEND UPDATE

With not much stock market stuff to write about since I don’t want to recommend buying or selling this morning as we all should have our portfolios hunkered down and pretty much in place for a rocky and rough summer by now. Sure, stock market aficionados can always fine tune their portfolios and do some long and short trading, trying to scalp some profits here and there while long term investors stand pat, but with not that much going on, please let me rant and rave a little about those people out there who are slow in moving forward on American’s vital energy issue. And, don’t get me wrong, we all have to change our mindsets about energy and life in America and it will take everyone their own period of time since we’re all coming from different lifestyles, histories, jobs and places. Still, change is a coming now – I agree with George Soros who writes he sees America and the world moving from an established order and certainty to great change and thus greater uncertainty -- and we’ll all have to adapt. No problem for us Americans as that’s what we’ve always done; we’ve always adapted to change well.

“Drill, drill, drill!” I almost can’t believe Larry Kudlow on CNBC this morning. That’s his mantra: Drill, drill, drill. OMG (Oh my gosh!) I have to believe Larry, “a great American” no doubt and always bullish, is living on another planet or is somewhere back decades in time. He just doesn’t get it! But then I shouldn’t be so harsh on Larry. Millions of American’s still don’t get it as well. Though I’m delighted to see T. Boone Pickens gets it as he is now paying millions for TV ads publicizing The Pickens Plan, his idea to harness America’s wind corridor running north to south from Canada to West Texas, replacing natural gas as an energy source for cities and use that natural gas to power America’s vehicles.

Anyway, Larry just will have to realize that economic growth isn’t the be all and end all. Near term growth is just near term growth. We really need long term, sustainable economic progress to make the US and world a more prosperous place. And that switching from oil today, while a big burden now, is the best thing for us and for future generations to come. Thus we shouldn’t be doing anything to drive down oil and thus gas prices today. We need to leave them be because high and higher gas prices now will help drive America in getting off oil by creating profit in developing alternative power sources. That more and more Americans see this already and those that don’t will soon wake up to this fact going forward, and are or will be willing to sacrifice for the good of the country. And that this major change over – like moving to indoor plumbing, to railroads, to cars, to electricity in generations past – can be and should be done.

So my major #1 point is that we don’t want to drill for oil any more! Certainly not lift the moratorium on offshore drilling like President Bush has just proposed and Larry got all excited about. Or go up to Alaska and ruin one of the last remaining unspoiled parts of our planet and home. For what? Temporary relief and to lower by a dollar or so gas prices now? And then a few decades from now, when we use up that offshore and Alaskan oil, we’ll just have to address the same issue once again?

You’re not convinced? You still want to know more reasoning why we shouldn’t drill for oil any longer? Well, because we have to move beyond using oil as a power source. That’s the bottom line. We immediately have to start putting any and all plans in place now, today, to stop using oil and dirty coal as well. Now, I know what some of you are thinking: “Richard, get realistic! That’s impossible.” Maybe Larry Kudlow and George Bush 2 are thinking that too, that there’s no way to get off oil and coal. But someone has to give them a (loving) slap across their cheeks and wake them up to coming change. It is a total change of mindset but it’s happening here and all over the world. It’s happening here with movies such as Wall E. Lucy saw that movie with her granddaughter Elizabeth and says it make her more into a green believer. And the influence that movies have is great, thus every kid who sees the movie will be left with the unconscious thought that they’d better live a green, clean, low carbon footprint life.

And, as I’ve consistently written since December 2006, I’ve noted a critical mass already built up supporting a change in how we live on this planet. From scientists, to governments to large and small business alike, to venture capitalists, to individuals. Supported by logic, the reasoning that using a cleaner energy source will: (1) be a major, maybe knock out blow to global terrorism, (2) create millions of new jobs in the US and globally and thus spur the whole world into a new more prosperous phase and of course, be a big step forward in leaving Mother Earth at least as clean and healthy as we found it, just the right way to live. Back in December 2006 as a result, I took my own advice to you all and started using 95% of my IRA account to just buy small allotments of any and all companies involved in inventing, using, working on alternative, clean renewable energy sources. I’ve posited here time after time that fortunes will be made by those companies and individuals pursuing this same course. Thus I’ve listed many times in this space as many companies involved in alternative power as I could find. Solar companies, wind companies, battery technology, hydrogen tech, geothermal, thin film solar technology, energy savers, and on and on and on. And I must say this strategy has worked. My Ira has risen while the stock market has been on a slide for the last year now.

SCHWARTZ SUMMING UP. Sure we still need oil and coal today and let’s find more where we can, where we’re already drilling. But we need a new mindset in America and I see it as already occurring, already in place and inevitable that it’s going to change America and the world as we know now it. Better to ride this incoming tide, open up our minds to new thinking by ourselves rather than have it forced down our throats. Some will not see this major change coming or resist it, not being able to adapt to a new world ahead, but not so my readers, I hope. There’s so much support already that there’s no going back so the sooner we all cross over to the other side of this vital energy issue the better.

Respect The Bear But Nibble On Energy Savers

Richard Schwartz — Tue, 15 Jul 2008 13:52:00 GMT

MORE RECOMMENDATIONS ON MY NEW ENERGY SAVERS THEME

On Friday, June 13^th, I began a new investment theme, what I called the Energy Savings (Savers) Theme. Essentially a new theme is when some macro force is seen as boosting a whole group of companies, not just one hot company with a new product. And a macro force is one that isn’t going to dissipate quickly.

I began this theme by recommending five companies which should benefit from business in general looking for ways to save themselves energy, and thus money, listed below. Then on Wednesday, June 18^th, I followed up recommending another four stocks, also listed and updated price-wise below. Today, let me recommend two more companies which fall under this same energy savers category as well, also listed below. I first recommended stocks in established uptrends but that strategy is sketchy because when a bear market is on, most all stocks go down, it’s just a matter of time. Today chart patterns show one stock in a sideways trend which just dropped considerably, Altai Nano, and one stock in an uptrend on a sharp pullback, American Superconductor. Summarizing what’s in the table below, I’ve updated my two previous recommended groups and added the two new recommendations below that.

June 13^th, 2008 Recommendations

ENERGY SAVERS

Buy Current

Price Price Business Line

CPST Capstone Turbine Corp. $3.41 3.50 Low-emission turbines; hybrids

BCON Beacon Power $1.72 1.30 Flywheel-based power systems

WGOV Woodward Governor $37.78 35.64 Energy control systems

MXWL Maxwell Technologies $12.57 11.11 Power conversion/purification

CHP C&D Tech $8.40 8.74 Reserve power systems

Disclaimer! I own a small amount of CPST. And plan to buy small portions of the stocks above. Update: I now own a small amount of Beacon Power as well.

June 18th, 2008 Recommendations

ENERGY SAVERS

COMV Comverge Inc. $12.73 13.95 Peak electric demand reduction

ENOC EnerNOC, Inc. $15.65 20.74 Manages electricity consumption across networks

ITRI Itron, Inc. $94.75 88.60 Computerized electric, gas & water meter reading

BMI Badger Meter $50.04 52.50 Water meter measurement

Disclaimer! I own a tiny amount of COMV and may buy some of the others as well.

Schwartz Update: Comverge and EnerNOC both had big up days yesterday. In spite of the down stock market. They seem to being coming into fashion now, being discovered as the notoriously, tortoise-moving utility industry is starting to realize what they offer and employ their energy saving products.

Today’s New Recommendations

Price Mkt Cap

ALTI Altair Nanotech $1.80 152m Supplies a variety of nonmaterial & nanotechnology

AMSC American Superconductor $32.15 1258m Provides superconductor products

Disclaimer! I own a little of Altair and am watching America Superconductor to buy a small position.

Altair is testing their battery and energy storage products with AES Corp (a utility company). American Superconductor is testing chilled superconductor wires in the Holbrook Superconductor project on Long Island. AMSC is seeing much increased revenues; ALTI is still in the revenue start up phase. Please check both company’s business lines and satisfy yourselves before dipping your toe in the water.

Schwartz View: Since we’re deeply enmeshed into a big, bad bear stock market, proper strategy is not to jump into the above recommendations with your normal financial allotment or size. The best way I’ve found is to buy a small portion of stocks you like, figuring that they will probably go down for awhile with the general market. But buy a little since you don’t want to miss the boat departing! And buying a little gets you actively involved. Holding shares makes you more aware of daily or weekly price movements and keeps you interested in what news comes out about your investment and what news comes out about the industry. Again, today’s modern technology, a.k.a the Internet, allows you to list this stocks and prices you bought them and get a free dynamic update whenever you want it. And you can designate also having any related news reports for a stock or industry come right to you automatically as emails. It’s great!

Again, I would suggest buying a small amount of some of the above 11 recommendations, on weakness. Then keeping yourself informed as to their price progress or regression and the industry news with the plan to buyi more down the road.

Good investing!

Let's Face Our Problems! Americans are Ready.

Richard Schwartz — Fri, 11 Jul 2008 14:13:00 GMT

HERE’S ANOTHER’S BIG PICTURE VIEW. A longtime regular reader emailed me his opinion of the current US residential housing market yesterday and how the government is handling things, writing:

‘It seems now to me that the "gov" is tweaking things to "hold it off." By that I mean that if you allow phony mortgages for years and pump up the price of homes, when that collapses home values must drop to the "normal" level. Pushing this pain off to the future only makes it more protracted and worse. I see a worse "bear" than you.’

I answered this way, with a couple of tweaks myself for today’s broader readership: .

“I agree. The way our political system and US government is currently put together it's always in the politicians own best interest to put off resolving trouble. Thus they never face trouble head on. Economists see this and note it as it occurs (like in the current housing crisis) but nothing every changes. Re: the current housing debacle, all the effort, like you say, has been to postpone trouble. Which means we can't get through it, it will linger & linger.

“Obama's plan is to put on all Congressional deliberations and votes on public TV so the public can watch what goes on and who votes for what. Hopefully that may change things and we can move from a representative democracy to a participatory democracy whereby the public gets a vote on all large issues. Therefore we get back to more equitable representation for all.

“Even business is fed up with the current lobbying system. It costs business a fortune! They now need to fund a large, extraneous lobbying budget. So business wants to end the whole lobbying system but can't while their competition keeps on lobbying. Just like business wants a cap & trade emissions scheme and other regulations. If our, or all, governments were to just say here's the new rules, no lobbying in Washington, or over in the pollution emission area, here’s the rules on how to operate going forward, these rules would apply to all business so all could see that no one would get an advantage. We do desperately need new, enlightened leadership!"

Schwartz View: It’s just like those suggesting we explore for more oil and open up more protected lands. We’re still heading in totally the wrong direction with wrongheaded thinking completely. We all just need to get a brand new mindset that we’re not using any more oil, let’s have America lead the way in getting off burning oil (and coal). Thanks goodness for one well known investor doing some out-of -the-box thinking, the long time oil man, Boone Pickens! Go Boone! I’m 100% behind The Pickens Plan, unveiled earlier this week. If you haven’t heard of it or you missed my Wednesday review and raves about it in this space, please let me know and I’ll email you some info. Or just google it and read about it yourselves. Briefly it calls for putting up wind turbines in the wind corridor from Canada down to Texas and using that energy to replace natural gas usage and start using that natural gas to power cars. I love it! And I’m all for any other similar plans anyone else comes up as well. America generally wakes up and responds only where there is a crisis. Let’s get America working as a team toward the right goal!

Yay for the Pickens Plan!

Richard Schwartz — Wed, 09 Jul 2008 14:19:00 GMT

YOUR ALTERNATE CLEAN GREEN ENERGY UPDATE

Finally! A Plan! The Pickens Plan. Kudos to Mr. Boone Pickens!

Yep, it finally came down to a long time oil man to propose a way out of our energy bind. Obviously, it’s only a first step and it has a lot of hurdles and a long way to go before implementation, but Boone Pickens’ proposal is a great first step. We have to get the ball rolling and the country pulling together again. Plan on seeing advertisements about Pickens’ plan because he plans on publicizing it & has the money to do so.

The Pickens Plan:: To dramatically reduce on dependence on foreign oil.

As Boone Pickens unveiled yesterday, he wants to have private industry fund and build thousands of wind turbines in the middle part of America, in what he calls a wind corridor, running north to south from the Canadian border to West Texas. Which can generate about 20% of our electricity needs! Then transport this wind energy to the Midwest, South and Western metropolitan areas by private industry building electric power transmission lines. This will free up the natural gas now used to fuel these Midwestern, Southern and Western regional power plants. We can then redirect this natural gas to replace imported oil as a fuel for transportation vehicles (cars, etc.). Yay!

Schwartz View: Mr. Pickens goes on to request a monthly report on the reduction in foreign oil imports and the progress of development and implementation of natural gas fired vehicles. I’m 100% for this plan and all others of similar ilk. We do have a serious crisis on our hands and we need to get started now in addressing it. Again, I believe there is already critical mass built toward solving the increasingly critical issues of terrorism, global warming or global pollution, a new impetus to growth and our own national security. And all can be resolved by getting off the use of the dirty power source of oil. Go Pickens Go!

* Finally, many boos for the Group of Eight (G-8) leaders who couldn’t agree on anything about energy in their just finishing up three-day meeting in Japan. They all know something needs to be done but they can’t agree on anything. And our President Bush is one of the worst offenders. I like the man but am anxious to see someone replace him because he just doesn’t get it. America is ready to sacrifice for the worthwhile goals of national security, job growth, fighting terrorism and respecting and cleaning up our planet, but he’s locked into a very bad and losing position and to top it off, is stubborn. Hey, being stubborn when wrong is a big no-no-in investing in the stock market, why not in politics too?

The G-8 statement? They will cut greenhouse gas emissions by at least 50% by 2050. Regular readers know when any proposal goes out more than 10 years or so it’s just a sop. And this statement has no plan, no measurements, no starting point, just about nothing. We truly need new global leadership!

New Investment Theme Unveiled!

Richard Schwartz — Fri, 13 Jun 2008 13:54:00 GMT

A NEW INVESTMENT THEME FOR YOU TODAY. Quiet, don’t tell anyone about this new theme until you get invested. Anyway, finding a successful theme early on, before the crowd finds it, is one of many different ways to profitable investing in the stock market. I’d say it’s one of the best for all time frame investors. Regular readers will remember we found the REITs theme early on, rode that for years and how well it served us. Then, more recently, a year and a half back or thereabouts, we got on the fertilizer theme, stocks like Potash, Mosaic, Agrium, etc. which is still ongoing, and the solar energy theme. The solar energy theme gave us doubles on stocks like First Solar, Suntech Power and SunPower. Other themes I haven’t been as lucky with have been energy and global infrastructure. But I must say I’m learning, and hope you are too, that we need to stay with a theme when we find a good one like a dog with a bone as many super investors/traders advise. Themes can and generally do run a lot longer than anyone would believe. Anyway, today let me introduce my new theme to you.

The Energy Savings Theme. Let me call it, for lack of a better name, the Energy Savings Theme. You see I’m reading about how now, after $4.00 gas has became a reality, how individuals are coping by “lowering the thermostat, eating out less, buying cheaper version of products then need, spending less on clothes and medicines and changing the education plans, …” Also by buying less food, driving less, buying fewer necessities, closing off parts of their home, spending more time outdoors (to save on AC), taking on 2^nd jobs, buying more efficient energy systems and appliances, using less water, changing to compact florescent light bulbs and more. So it only makes sense to me that businesses and corporations are already doing the same thing or discussing the same, how they can use less energy in their business models, where to get energy savings. If I was a top honcho at just about any company, I’d be holding meetings centered on this issue, that’s for sure. And from what I read many companies like General Motors and many industries like airlines believe higher energy costs are here to stay. Thus they have to plan for that long term scenario, start changing how they operate now. To me, that’s the beauty of and necessity of today’s high energy prices, this tough love. Americans absolutely need to change our lifestyles toward using less energy. Doing so will pay off very handsomely over time in key ways. It will get us off oil and thus our dependence on people and countries who don’t like us and want to harm us. It will get America’s finances, so badly out of whack, back in shape. And it will help preserve and respect the planet we live on as it’s quickly becoming too late. Have you noticed the 50-year snow storms in China, their massive horrific earthquake and the 100-year floods plaguing Iowa & our Midwest right now?

Anyway, this energy savings theme is going to be widespread, and go corporate as well as individual, with company after company jumping on board in some form or manner, one group of businesses interested in and investing in new energy savings products and services, doing the buying, while another corporate sector will be highlighting their products and services they offer which save energy, doing the selling,

Thus let’s start this theme today by highlighting one sub sector of my already ongoing alternative, clean green energy theme. That is what I’ve previously termed the Power Conversion/Energy Controls companies. Thus below I’ve pulled out of last Friday’s fairly all-encompassing shopping list of companies working on powering the world with clean green energy. I went through each stock and looked for stocks already in uptrends and that save other businesses energy by using their products. Here’s the list:

ENERGY SAVERS

CPST Capstone Turbine Corp. $3.41 Low-emission turbines; hybrids

BCON Beacon Power $1.72 Flywheel-based power systems

WGOV Woodward Governor $37.78 Energy control systems

MXWL Maxwell Technologies $12.57 Power conversion/purification

CHP C&D Tech $8.40 Reserve power systems

Schwartz View: While I believe we’ve in for an extended bear market, I do believe there may be some groups and stocks which can make some upside progress. And remember, I’ve posited that energy and related stocks should outperform early on in this first year of this bear market. While I wouldn’t bet too much on anything right now, I would suggest starting a small in size portfolio with the above fire stocks.

Disclaimer! I own a small amount of CPST. And plan to buy small portions of the rest of the stocks above.

Don't Let Hot Solar Stocks Distract You!

Richard Schwartz — Fri, 23 May 2008 14:29:00 GMT

YOUR WEEKEND ALTERNATIVE, GREEN CLEAN ENERGY UPDATE

I haven’t issued a clean, green update in quite a while. Distracted by other areas. But watching my IRA consistently grow – holding almost only alternative, clean, green stocks -- in spite of today’s iffy stock market makes me desire to get back to this bullish trend. To refresh regular readers and/or to prep new readers, let me reiterate I’ve detected a critical mass now built worldwide to back any/all alternatives to using oil and coal; dirty fuels in general. Obviously one goal is to get energy prices down for the long run, a critical need to boost, not drag on, future global economic growth. But secondly, to change the awful, long established pattern of funding many of our stated enemies, rogue governments and terrorism in general by buying what they have; OIL! And thirdly, of course, to change another long-entrenched, bad habit trend of polluting and killing off planet Earth. I mean Earth is our home after all and we’re ruining it at an accelerating pace. So today we have at least three solid reasons to get rid of using oil as our power source; (1) price, (2) to win a war and (3) to live up to the responsibility of the custodianship of the planet, to leave our kids something livable. Any one of these reasons alone should be reason enough to change.

Moving on, my constant reading of investment information shows most everyone is lined up behind this goal of powering the world going forward by using clean energy sources. Businesses, governments, scientists, venture capitalists, individuals, governments, just about everyone except for President Bush and a few blinkered, therefore almost blind, “business first at all costs” advocates like the publishers of The New York Post and Investor’s Business Daily (the two primary papers I read daily; it’s awful their nearsightedness!). But “the trend is our friend” in this vital, critical global challenge, finally! As opposed to back in the 1970s when the world wasn’t worried about, there was no issue with, global warming. And we can certainly make this massive changeover! We switched from wood to oil. We build railroads from coast to coast. We invented and implemented electricity and telephones and the Internet. We now have indoor plumbing. We moved from horse and buggy to cars. And on and on. So there’s no doubt we can stop using oil and coal to power ourselves. We just need some real leadership to do so. Even without that leadership almost every day I see step by step progress being made. This morning, it’s a story about how big companies like Google, Chevron and Goldman Sachs are betting big and building solar power mirrors in the Mojave Desert to power Southern California.

What brings me to today’s investment tie in and idea. That is for investors to follow my tack since it’s proving so successful. That is to buy a little of each alternative, clean green energy company one can. And I don’t mean just the solar companies. Sure they’ve had a big boom and are therefore now on everyone’s radar screens. First Solar (FSLR) is up 885% since I first began this alternative energy theme back in December 2006. SunPower (SPWR) is still up 125% over the same time frame, after being up 287% at its peak. Most other solar stocks have soared as well and stolen all the attention. And I would still own these stocks, buying them on weakness anytime. The news almost consistently is great and when some glitch does comes along, like the last couple days in Solarfun (SOLF), it goes back on the shopping list to buy.

But this morning I want to raise a clarion call for investors to not forget or overlook the rest of the alternative, clean green energy stock complex. While solar and wind get all the attention there are plenty of other technologies and ideas out there and likely the real long term solution to our three –pronged, and now critical, problem with (1) the high price of energy, (2) paying our enemies for their oil and (3) to cleaning up the planet before it’s too late, will come out of somebody’s garage like Microsoft, Google and others did. Thus I would buy little pieces – no one can predict which individual company – of battery technology, natural gas for cars, electric motors, power electronics, fuel cell tech, meter reading, distributed generation, etc., etc., etc. I don’t mean to profess I deeply understand these technologies but I do know there’s lots and lots of companies in this space.

I won’t give you a list of the exact 15 or so companies I own in my IRA today. For fear of conflict of interest. But I plan to rerun the full list of alternative energy companies I used to run when I first started writing about this theme back in December 2006. And update it to include many more companies I’ve found since. For today, suffice it to say, almost daily, the news from these companies is bullish. One day it’s a signed contract to provide services or products. Another day it’s a report about how strongly revenue growth is occurring. Another day it’s about how much money venture capitalists are pouring into discovering some new energy source. Another day it’s Governor Schwarzenegger saying the changeover to clean energy will provide much needed job growth. And on & on. Stay tuned next week for more on this.

Look Back & Learn: Lesson One; Stay With Trends! It's Super Profitable!

Richard Schwartz — Thu, 15 May 2008 14:27:00 GMT

LOOKING BACK: One major day-trading tenet is to look back at each trade & learn from both your successes & mistakes. This rule should apply to investing, speculating, everything. So let me do so today.

THE SOFT AGRICULTURAL THEME. Yesterday I cleaned out my files and found when I first began writing about “AG” stocks. It was exactly two years ago now, in May 2006. Below are some excerpts:

* * *

Written May 17^th, 2006

THE CASE FOR OVERWEIGHTING AGRICULTURE AND FOOD STOCKS

I would posit that the commodity bull may now start being led by the agricultural commodities like wheat, corn, sugar, soybeans and other agricultural related commodities.

My Rationale. The rationale here is that as the world gets a little richer, err, let me change that to read as the world develops a larger middle class, in China, India, Brazil, Eastern Europe, Russia and more, this new middle class buys food. I heard a commodity analyst on CNBC say that when a person moves into the middle class (when food and shelter becomes standard fare), when a person makes $10 a day versus $1 a day, the first thing he does is to increase the quality and quantity of his food intake. Makes sense to me. With the global middle class truly expanding greatly and rapidly during this growth spurt (by the limited definition of middle class) because of globalization, demand should rise for agricultural commodities like corn, wheat, barley, etc. And it would fit well with Morgan Stanley’s Steven Roach’s recent writings as well. In the same article whereby economist Roach argues that the run up in industrial metals is way overdone, a bubble as I mention above, he quotes China’s latest five year plan which decreases its focus on commodity-intensive exports and encourages its focus on consumer-led growth. I would say that means billions of Chinese will be buying more and better food soon, wouldn’t you? And elsewhere the same.

Written May 18, 2006:

MORE ON MY NEW AGRICULTURAL COMMODITY THESIS

I began this new thesis on Monday when I first suggested overweighting agricultural related stocks, or “AG” stocks as I think they are called in the business. Then yesterday I offered up the basic rationale behind this new overweight allocation recommendation. Let me repeat and expand upon my reasoning again this morning because the investment rationale is the bedrock principle. If this economic principle is economically sound and correct in its timing, we should make money overall. If not, well, then not!

Commodity Bull Market: Phase 2. On the other hand China’s new plan is to encourage a different growth strategy which encourages consumer-led growth. That means more consumer spending to me. And that means the new Chinese middle class will first start spending more on food, expanding their diets. Remember any country that is (1) growing wealthier and (2) has billions of people has to spend its new found wealth on something. And China says they are going to encouraging more consumer spending.

And its not just China which has gotten wealthier by the world economy expanding and coming closer to together because of more free trade. (In spite of the war on terror.) Latin America has really been helped out as well. Remember Brazilian banks are now finding its profitable to make consumer loans to their citizens! (I wrote about that.) That’s another indication of a new middle class forming. (Again don’t think of developing country’s middle class as the same thing as in America. Middle class meaning people have the means to finally not worry about a roof to sleep under and where the next meal is coming from.)

And its not just China and Brazil growing wealthier and thus developing a new middle class. . Think India, Eastern Europe, Russia, and more.

Schwartz Conclusion. My sense thus is there is a wind at the back, a tide coming in, if you will for foodstuffs and thus anything agricultural related. Farms, grain companies, companies producing or shipping agricultural commodities, fertilizer companies, commodity traders, etc., etc. etc. and on and on.

Written May 19, 2006:

Continuing on with my new theme I proposed on Monday, that agricultural commodities are going to take the lead from industrial commodities (the base metals) in phase 2 of this long commodity bull market, let me make a couple more comments and then start offering up the “shopping list” I promised you.

Brazil makes ethanol out of sugar, the US makes ethanol out of corn, biodiesel is made out of byproducts. Analysts are saying when people make $10 a day instead of $1 the first thing they buy is better food. But the extrapolation from ethanol to agricultural commodities in general is not mainstream quite yet, thus we have a “first mover” advantage. And by looking at the charts of corn and wheat and other foodstuffs I can confirm we’re early on into the ag commodities bull market. Corn just started perking up last December, wheat in early May, cocoa is still trading sideways.

Thus we’re in a way earlier stage in foodstuffs than industrial metals but still it’s the same commodity bull market. Over time we’ll probably see more new ETFs, this time in agricultural commodities, come into play but we mustn’t wait around for that. Look what happened to silver just now when that ETF came out! ETFs usually come out just in time to suck the public in at some type of top, someone’s got to buy when holders want to take profits, right? Bottom line I believe the next big thing is going to be anything to do with agricultural stocks. So I’ve begun a shopping list below. But please remember, don’t just jump in without checking where each stock stands! As an example, the stocks having anything to do with ethanol, yes they are in the ag group, have just ran way up and may hurt you badly unless you’re very careful.

AGRICULTURAL COMMODITY SHOPPING LIST: The very beginning!

Price Price %

5/18/06 5/14/08 Gains

ADM Archer-Daniels-Midland 39.80 43.07 +8% Processes agricultural commodities

MON Monsanto Company 83.25 122.63 +195% Tech-based agricultural products

POT Potash Corp. 93.20 198.80 +539% Produces potash, phosphate and nitrogen

MOS The Mosaic Company 16.40 125.16 +663% Produces crop nutrients to ag communities

AGU Agrium Inc. 25.91 86.68 +234% Produces fertilizers and related products

UAP UAP Holdings 20.35 ???? ???? Distributes crop protection, seeds, etc.

CF CF Industries 16.97 136.27 +716% Manufacturers, distributes fertilizers

TNH Terra Nitrogen 19.45 142.77 +634% Produces nitrogen, fertilizer, seeds

Schwartz Update: I filled in yesterday’s closing prices above and the % gains. Note: Some stocks have had stocks splits and or spin offs so the numbers may not seem right.

Written May 24th, 2006:

THE INVESTMENT CONCEPT: INFLATION FINDS ITS WAY INTO FOOD NEXT.

Remember my new investment concept or thesis here is that commodity inflation is going to find its way over into the agriculture and foods sector next. The speculation and demand for industrial metals, while still probably robust going forward depending on economic growth, has blown its top. Thus after this first, big commodity bull market correction is over, and it could run some time, in a 25-year bull market a correction could last from three months to three years says Jimmy Rodgers, famed investor who first called this commodity bull market, I expect commodity leadership to come from, to shift over to, the soft commodities, namely the food and agricultural stocks and almost any related ag stocks like farm equipment companies, etc.

Schwartz Lesson & a New SCHWARTZ RULE:

“When you find a solid, working theme, stay with it!”

This is a rule put forth in both of Jack Schwager’s books if I recall correctly, in both The Market Wizards and The New Market Wizards. One wizard trader in particular was an expert on staying with a trend, like a “dog with a bone.” And I must say I’ve seen first hand staying with trends work very well over the last few years. Maybe after writing today’s piece and seeing for myself the incredible results out of my fertilizer recommendations, I’ll learn to not be so flighty and thus stay with multiyear trends much longer in the future, like the REITs trend I identified early on in its big multiyear move up which ran from the beginning of 2000 to the beginning of 2007, like today’s ongoing commodities bull market and the still running and hot alternative, clean green, wind, solar trend. Yep, when we unearth a new trend with strong underlying economic fundamentals (macro economic trends which don’t change for years) we gotta milk it for all its worth. “Are you listening Schwartz?” You better be!

Monday Weekly Letter: Full Sample

Richard Schwartz — Mon, 03 Mar 2008 14:20:00 GMT

PRINCIPLES OF THE STOCK MARKET A learning, teaching, always evolving stock market letter and advisory service Seventeenth Consecutive Year of Publication ; Letter #1; Sept 18, 1990 Mon day, March 3 rd , 2008: Three people yesterday told me they were sick...(read more)

Political Big Picture

Richard Schwartz — Wed, 27 Feb 2008 14:33:00 GMT

Anyone who is into politics, please skip this section as it might just really irritate you! Today’s longer range perspective or The Big Picture as I call it revolves around American politics. Although I detest politics here goes. It starts with the assumption...(read more)

Clean & Green

Richard Schwartz — Thu, 21 Feb 2008 14:54:00 GMT

FINALLY, YOUR CLEAN GREEN WEEKEND UPDATE Don’t forget about me, says the green clean business sector. Good point. Since the blow off top in the solar stocks and my resulting recommendation to take some profits in solar and clean green alternative energy...(read more)

Take Some Profits in Alternative Energy

Richard Schwartz — Fri, 11 Jan 2008 14:40:00 GMT

The alternate, green, clean energy sector. TAKE SOME PROFITS! Looks like the alternate energy sector & its stocks are closely tied to the strength & health of the economy, even more so than the sector is tied to the price of oil. This close tie...(read more)