danno

Portfolio Outperformance Due to High Beta?

A caveat for reliance on Beta is that it's highly subjective. Naturally it's backwards looking, but what's important to note is how much it changes as the time period measured changes.

Next, why is the S&P the relevant benchmark here? There are more relevant indices to use, IMHO.

Green Stocks: A Better Way to Play?

Okay


On Sep 28 04:06 PM Tom Konrad wrote:

> Danno,
>
> 1) This is not cherry-picked data... this portfolio was designed
> to be a track the mutual funds at lower cost with more tax efficiency.
> It did not work that way; why I'm trying to do now is figure out
> why. The risk adjustment you suggest is what I'll be looking into
> in the second article in the series. Other adjustments will follow
> if that does not prove sufficient explanation.
>
> a,b, and c) Please read the original article where I constructed
> the portfolio (Click on the very first link in the article), and
> you will understand how all the stocks you object to got there: They
> were selected from the portfolios of the mutual funds I'm comparing
> them to.
>
> 2) I don't know how you can disagree with my analysis, since my analysis
> was "This portfolio outperformed and I'm not sure why, but I'm hoping
> I'm on to something." I have not shown anything yet, except that
> I've stumbled across something worth looking into.

Green Stocks: A Better Way to Play?

I am very skeptical of Dr. Konrad's analysis.

1) To compare returns without adjusting for risk (not to mention management fees, or taxes is foolhardy, at best. A CFA should know better than that.

- The mutual funds are tax-inefficient, have high management fees, and less liquid, and rarely beat the indexes.

- One could have bought a Russell 3000 ETF or other similar Indices and gotten similar returns at lower risk and cost, or it one wanted to stay consistent with the green theme, bought PZD and still taken less risk and earned about 60% ROI.

- Dr. Konrad's inclusion of non green or alternative energy companies certainly undermines his claims as well.

a) SJI - South Jersey is predominantly a regulated energy utility - nothing green about that rate hikes and demand are what drives its profits.

b) what on earth is Citrix doing here? Is this a typo?

c LXU: LSB Industries is still first a manufacturer of bulk chemicals, many of them very nasty. It has a hydronic and ground-source heat-pump business, but it's not a very "clean or green" company

3) Playing such short-term movements is not really investing, but rather trading or speculating. Dr. Konrad hasn't shown us any long-term outperformance, but rather cherry-picked data.

The Trouble with Chinese Solar Companies

Mr. Cordes: Does it bother you that virtually all the Chinese PV companies (withe the exception fo Suntech which owns some decent IP) are pursuing exactly the same strategy of vertical integration with increasingly little to differentiate them? Seems to me that's a recipe for price driven commodity market where the only "winners" are the low-cost producers. And who knows whether profitability in the sector then will ever earn a positive EVA?

It seems to me that Q-Cells is quickly losing it's technological edge and will have to compete more directly with it's Chinese peers, and that Evergreen has licensed away a good deal of the upside of this market. What can you see in the Chinese and Taiwanese PV companies that is anything that supports a strong 3-5 year outlook (i'm not talking about these short-term trading chumps, but for investors)? I certainly don't see the R&D and innovation to suggest that they will be able to compete on any basis except prices which scares the bejesus outta me.

PowerShares WilderHill Clean Energy ETF (PBW) Holdings

Actually, I take that back. PZD is diversified way beyond alternative energy so it's not a pure-play energy ETF. It's a good ETF, but it's not a good direct comparison to PBW. QCLN is a good comp to PBW, but it's no better, in fact, its worse. I'd have to stick with GEX as a better direct comp.

PowerShares WilderHill Clean Energy ETF (PBW) Holdings

This ETF is a nice short-term investment, but the strategy for long-term sucks. There's no investment merit here and the risk-adjusted return is poor. If you have to pick so many companies in the same sector then you get too many losers. Seems like there's a lot of stocks here that have little to do with altnernative energy, are in bio-fuels from food crops, or just plain lousy companies. I'd have to agree, that GEX, or PZD, or even the new solar ETFs (for trading) blow this puppy out of the water.