Chris B

The Obama Effect: Is Clean Energy Outperforming the Market?

Your observations on Beta and Alpha are spot-on. However, like you, I do best identifying trends rather than companies that individually will outperform.

The source of Alpha is often the winning of a contract, and unpredictable technological breakthrough, or the best marketing mix in the sector. Those of us who do not work full time as sector analysts would be hard pressed to identify the best of class. Then, even if we did pick the best companies in each sector, our investments would have still lost half their value in the past 1.5 years due to the bursting bubbles and resulting credit crunch.

Why not seek positive Beta then? In hindsight, the one thing that could have saved us from the 2008-09 bear market would have been awareness that the housing and commodities bubbles were about to collapse. The warning signs were all there - skyrocketing prices, euphoria, the entrance of ameteurs in real estate and futures trading. Trend watching Beta seekers should have done better than Alpha seekers, presuming they weren't afraid to sit in cash for a year or so and weren't romanced by individual companies.

We should be asking... what trends can be predicted now? If recovery is around the corner, we'll want to be in high beta stocks as they are predicted to rise faster than the market rises. If you switched from low beta to high beta stocks at the bottom, you would make money off a V or U shaped recovery (go down 1X and up 2X for example).

Unfortunately, most individual investors are doing exactly the opposite - moving to low beta stocks now that their high beta shares have lost so much.

Three Things Obama Will Do to Advance Alternative Energy

Step one for anybody trying to convince the "we can rely on coal and oil for a million years" crowd that we should perhaps diversify our energy sources is to stop using the term "green" and start using the term "money."

Why should we convert our automotive fleet to electricity or plug-in hybrids? Why build mass transit or revitalize urban cores? Because with the way things are now, our friends in OPEC such as Iran, Venezuela, and Russia have the strategic power to schedule a recession/depression in our economy by slashing production. Oil dependency puts our entire economy and our inflation rate in the hands of hostile governments. This is not theoretical, it's happened three times already (early 70's, late 70's, 2006-2008) and most Americans are sick of it. Plus how many trillions of our taxpayer dollars have been spent trying to keep the middle east from exploding into war? How many thousands of lives are we willing to give?

Why capitalize on wind, solar, geothermal, etc? Because in the long run, it's cheaper. Sure, a coal or nat gas plant might be cheaper to initially build than a comparable amount of alternative infrastructure, but then you get to buy tons of fuel for $millions$ of dollars every single day, and your electricity prices are determined by unpredictable commodity prices. Meanwhile, wind, solar, and geothermal continue to produce energy for decades with no fuel costs. Nuclear is the most expensive electricity available when you consider that the government has to pay for waste disposal, terrorism protection, and the inevitable cleanups.

There are plenty of conservative reasons to support alternative energy. The national security and economic ramifications alone justify it. To make alt. energy happen, the whole political spectrum will have to support it, and people need to quit talking about it like it was some kind of vegan hippie "green" project. It's mostly about our economic future and security.

Chinese Stock Market Bottoms: What Should U.S. Investors Do?

Agreed frflyer,

Nuclear is only economical when the taxpayer picks up the tab for the disposal of deadly waste. It is currently piling up at existing nuclear plants, which in turn creates a massive terrorism hazard that costs more taxpayer money to protect. The only energy source with a larger government subsidy is oil.

But why no discussion of geothermal? Modern binary fluid systems can generate electricity at relatively low temperatures (below boiling point of water) 24/7. Advanced drilling tech from the oil industry could allow economical deployment ANYWHERE, not just in the West/California/Alaska...

Chinese Stock Market Bottoms: What Should U.S. Investors Do?

Let's see, US consumer savings will soon involuntarily revert to the historical mean of 9+% which will result in 9% less consumption. Consumers are deleveraging after a decade of unprecedented household debt increases, housing (appliances, components, furniture) is overbuilt for at least a decade, and export-dependent China is expected to do well from here? I'll trust common sense over technical analysis any day!

This isn't the first 20-day MA break though bear trap. To fall for it over and over again, though... how do you justify that?