CT Programmer

Choosing the Best Industry ETFs

Buyer beware on PBW. You may think that investing in solar is a good idea because its the wave of the future, but look at some of the companies that make up PBW, like First Solar, Evergreen and SunPower. Many of these have outrageously high PE ratios (in the hundreds). Those 3 companies alone make up 11% of PBW. When these get their long-overdue haircut (and they will), you'll see PBW take a big hit. Going green is admirable, but investing is investing and if you don't look at the fundamentals of the underlying companies, you'll get burned. Spreading your risk amongst a bunch of risky companies is not much different from buying one risky company.