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Dipping a Toe in the Golden Stuff

And I'm not talking about gold, but I liked the play on this title. Last December, I wrote about a report that claimed that solar stocks were the best play on the cleantech revolution. In that article, I analyzed the two solar ETFs: the Claymore/Mac Global Solar Index ETF (TAN) and the Market Vectors/Van Eck Global Solar Energy ETF (KWT).

At the end of the article, I said I had an open buy order on TAN. That buy order expired unfilled in January as the suckers rally progressed, but TAN then dropped to the kinds of levels I was looking for on Monday so I took a position at $5.

As I said in the December article, this is long-term. I don't expect this investment to realize its full potential for another 18 to 24 months, so patience is of essence. Of course, certain catalysts, such as a rapid rise in oil prices, could push this ETF up before then, and I would be more than happy to take a little profit if that happened (I haven't been taking a lot of that recently...). But my time horizon is two years plus here - this a play on the thesis put forth in the report that in the long run solar stocks have significant capital appreciation potential.

DISCLOSURE: Charles Morand has long position in TAN.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

was posted on AltEnergyStocks.com.

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Good work Charles,
Although I haven't done my DD on TAN, I did dip into PBD at $8.95 and GEX at $15.55 yesterday. I agree with your timelines, and I would be willing to even wait 5+ years. I feel that PBD is the most diversified ETF out there covering a range of sectors and countries. After your's or Tom's advice, I took a closer look at GEX and decided I wanted more exposure to the big alt energy companies (Vestas and First Solar)- plus take advantage of their current valuations. Lately, I've been finding it very hard to make decisions. I want in on smart grid plays like ELON, COMV, ENOC but I also want in on what I think are good deals on ESLR, ENER and FSLR. Unfortuantely, there are just too companies and too little time (and money). Hence, the need to invest in alt energy ETF's. I will take another look at TAN!

Thx Brad. I agree with your 5-year time horizon - if you have the luxury of time I'm confident you'll beat the market over five years with this investment.

Counter-intuitively (because markets are so depressed), I'm finding that right now is as challenging a time as ever to to pick stocks.

While there are some good opportunities in individual stocks out there, I think the macro environment is such that unless you know a company inside and out you're playing with fire. When GE is obligated to obliterate its dividend (http://www.marketwatch.com/news/story/General-Electric-cutting-quarterly-dividend/story.aspx?guid={B73843DE-FA51-4EE8-83AF-8E9AD243EBFF}), you know something isn't right.

ETFs are in my view a great way to play the excessive sell-off in cleantech equities without having to worry about firm-level risk.

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