Difficult Days for Our Green Stocks (And The Rest of the Market, Too)

Let’s face it - the stock market has been rough lately. Uncertainty over our monetary policy, skyrocketing commodity prices, inflation fears, and worries about the future of the world’s oil supply have all lent a hand to making this one of the most unpredictable market environments in memory. It’s difficult to know what action to take. And make no mistake - from a short-term perspective, we can’t offer much in the way of guidance.

A Long-Term Approach to Green Stocks

Our model portfolio demonstrates this well. It seems we didn’t time the market very well for its launch, and entered a couple of our picks right before a general precipitous decline in the market as a whole, and banking in particular. In short, we’re barely out of the gates and already in the red. Were we to take a short-term perspective, we’d probably already have closed these positions out. But that’s not our strategy at Renewable Wealth. (Not that short-term trading strategies can’t work - it’s just not our focus here.)

Current Green Stock Picks

Let’s look over the choices we’ve made so far: regional banking, geothermal energy, and timber. Rayonier , our timber pick, is actually showing a small profit at the time of writing. Timber is a “forever” investment in our mind, and this perspective is only bolstered by the growing possibilities for biodiesel and cellulosic ethanol generated from timber. RYN is in our portfolio to stay.

Next we have U.S. Geothermal ( HTM ). We predicted from the outset that this micro-cap company would be volatile, and we were right. Big moves on a daily basis have been the rule, and we’re presently in the red by a good bit. But the reasons we bought into HTM have no changed. In fact, as oil continues to creep up, prospects for alternative energy continue to look better and better. HTM is a long-term hold.

Lastly we have the regional banks. The beat-down of KRE continued, and even accelerated for a while, dragged down by the shake-up at fifth-third bank. But once again, the reasons we bought in the first place have not changed. Lower sub-prime exposure, a huge dividend, and over-all solid financials. We’re holding KRE as well.

There’s always the risk when you buy that a general selloff will happen the next day. It’s the nature of the beast. But we only sell on such events when there’s some indicator that our initial analysis was wrong. So far we’ve seen nothing like that for any of our picks. So we’re hanging tight for now.

By the by, now would be a good time to remind our readers that our model portfolio is just that - a model, and does not constitute individual investment advice.

Hang in there. We know it’s tough right now. But tough times can spark innovation, and our fondest hope is that the boom in green enterprise will continue. We will be adding new picks to the model portfolio soon. Stay tuned!

Author is long RYN, KRE, and HTM at the time of writing