The last two weeks have been a roller coaster ride for the stock market. The Dow Jones Industrial Average had its largest ever up and down point swings one week apart. With the large amount of recent volatility, alternative energy stocks have been heavily beaten down in price. Oil futures have also dipped below $80/ barrel this week, causing even further sell off energy related stocks.
With the recent decline in stock prices across the board, one may wonder if this is the time to own a risky alternative energy stock. Many of these companies rely on debt to finance their operations and long term loans will be harder to obtain in the near future. Even if banks and other financial institutions have the money on hand to loan out, they will be much more selective in their loan processes.
When considering the above mentioned risk factors, one may think stocks (including alternative energy companies) have been beaten down to very low price levels. Many of these have solid financials and good management, but have been pulled down along with the market. Although many of these seem like a steal, it may be awhile before the markets recover. Alternative energy requires a high amount of technology and many investors may flock to seemingly safer blue chip companies during times of financial hardship. Time horizon is an important factor to consider when investing in any stock, especially alternative energy. Recovery of the market is very unpredictable. Emotion can be difficult to contain, but one must keep a long term perspective when investing these days.
With the recent decline in stock prices across the board, one may wonder if this is the time to own a risky alternative energy stock. Many of these companies rely on debt to finance their operations and long term loans will be harder to obtain in the near future. Even if banks and other financial institutions have the money on hand to loan out, they will be much more selective in their loan processes.
When considering the above mentioned risk factors, one may think stocks (including alternative energy companies) have been beaten down to very low price levels. Many of these have solid financials and good management, but have been pulled down along with the market. Although many of these seem like a steal, it may be awhile before the markets recover. Alternative energy requires a high amount of technology and many investors may flock to seemingly safer blue chip companies during times of financial hardship. Time horizon is an important factor to consider when investing in any stock, especially alternative energy. Recovery of the market is very unpredictable. Emotion can be difficult to contain, but one must keep a long term perspective when investing these days.
Stumble It!
No comments:
Post a Comment