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 to the economy shouldn’t be any big surprise but we’ve been waiting for confirmation. And this week we’re getting such. With two big name and influential forces talking recession ahead -- that’s Martin Feldstein who chairs the National Bureau of Economic Research, the board which documents when recessions start and end, AND powerhouse investment bank, Goldman Sachs, the one investment bank which hedged their subprime holdings and the firm thought of as the smartest on Wall Street -- investors have started pulling out of more & more sectors. The previously hot alternate, clean, green energy sector is one of them. Over the last four days a number of the Chinese solar stocks have pulled back 20% or more. Schwartz View: This has been one of my favorite sectors all last year and remains a big favorite of mine for the long and longer term. Remember, I’m convinced a critical mass in favor of alternate energy is now in place (and have been running lots of updates supporting my view). Still, with the stock market breaking major support and some investors starting to pull the plug on cyclical sectors like high tech, from here on, let’s put a hold on the alternate energy sector for the time being. In point of fact, this is one sector where investors, reviewing their portfolios today, can take some money off the table. Schwartz Recommendation: Take some profits. Maybe half of your position. But keep an eye on the group. If the economy responds to monetary and fiscal stimulus, maybe we’re just seeing a correction and can get back in somewhere not far down the line.