Green Energy: Is it Worth Your Investment Dollars?

I’ll be honest, I’m not the growth investor type. I try and stay out of sectors that are running too hot, and I tend to be skeptical of hyped up sectors and stocks, as people get in too late and bail out too early, and I don’t want to be “that guy.” So, with this in mind I’ve been widely interested in environmentally friendly technology and developments, but as a consumer, not an investor. I’ve stated repeatedly that environmental alternatives will only take off when they are less expensive than traditional methods. People are driven by money, and it’s VERY unusual that you see widespread adoption of any technology that’s more cumbersome and expensive than the method it attempts to replace.

Consumers purchase things like a Toyota Prius not only because they want everyone to know they’re (somewhat…) environmentally friendly, but also because the Prius is seen as a hedge against rising energy prices. Toyota has been a great investment over the past few years, but it’s not really a firm you’d associate with the green movement.

You have to be very selective when finding an environmental investment. Don’t take my word for it, but stay away from Ethanol. There are too many problems associated with it’s use to be a long term solution. Also be wary of solar companies that have insanely high valuations. Take lessons from the past (tech bubble) and focus on under-appreciated stocks or holdings. Most importantly, stick to positions that suit your investment style.