When it comes to your investment portfolio, it is important to look at both short term and long term options. This is especially true if you are an active trader. Having a few solid, long term investments in the portfolio is a good way to build a bit of a safety net. And one of the interesting investments that is getting some play as a long term option is biofuels and other alternative energy stocks.
The paradox of biofuels
Interestingly enough, alternative energy is still considered a bit of risky investment. Usually, risky investments are of a more short term nature. But with biofuels and other alternative energy stocks are also being considered for long term investment portfolios. Maybe it’s because the days of cheap oil are gone, and perhaps it is because maybe investors see that the next wave of innovation will be stable alternative energy. In any case, Forbes points this out about biofuels and other alternative energy stocks:
As the Age of Cheap Oil is now gone forever, we surmise that
institutional investors are now accumulating shares of certain leading
alternative energy companies for the long haul.
Forbes also continues by pointing out the relatively recent success (and then subsequent crash) of one company:
Earth Biofuels, a Bulletin Board biofuels play, got famous overnight
due to a celebrity endorsement from Willie Nelson for its “BioWillie”
product, a 20% biodiesel/petrodiesel mix. At the height of the biofuels craze in early May, the company soared to a market capitalization of $1.5 billion. After peaking at $7.23, shares
have fallen like an unplugged dot-com to just $0.39, which still gives
the revenue-light company a market cap of $85 million.
Alternative energy stocks are definitely volatile, but if you have the stomach and risk tolerance for the ups and downs of biofuels and also of renewable alternative energy stocks, such as wind, geothermal and ocean power, you might come out ahead in the long run.