Clean, green and alternative energy are seen by many as exciting investments for the future. In fact investment guru Jeremy Grantham has called them the most-exciting investing opportunity for the next 50 years. But how well does this asset class perform? For the most part it tracks oil, which is both good and bad. It's good because this class looks attractive as black gold rises in price. But it's bad too, because the performance of this asset class of the future looks, as often as not, as a comment on the strength, or lack thereof, of the dollar.
The reason is because as the dollar goes down in value, as it has recently, oil and other commodities rise in price; a classic hedge against inflation, says Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research. This is not all bad for those interested in investing in alternative energy. "If you are bullish on oil, it may be prudent to be bullish on alternative energy too," he says.
Conversely, should such alternatives—like hydrogen, wind and solar—become economical enough to drive down the demand for oil they will also lower its price, making it more attractive once again. Truly, traditional fuel sources and alternative fuel sources share somewhat of a symbiotic relationship. Again, though, the bad news is that clean tech offers little in the way of performance diversity against oil, concentrating your portfolio.
Frederick says that for those with investments horizons of at least five years there might be some opportunities within the alternative energy sector, but "you may need a lot of patience."
The reason is because as the dollar goes down in value, as it has recently, oil and other commodities rise in price; a classic hedge against inflation, says Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research. This is not all bad for those interested in investing in alternative energy. "If you are bullish on oil, it may be prudent to be bullish on alternative energy too," he says.
Conversely, should such alternatives—like hydrogen, wind and solar—become economical enough to drive down the demand for oil they will also lower its price, making it more attractive once again. Truly, traditional fuel sources and alternative fuel sources share somewhat of a symbiotic relationship. Again, though, the bad news is that clean tech offers little in the way of performance diversity against oil, concentrating your portfolio.
Frederick says that for those with investments horizons of at least five years there might be some opportunities within the alternative energy sector, but "you may need a lot of patience."
