Monday, October 23, 2006

Sun may be setting on solar stocks, but will rise again

Solar stocks have outperformed the average NASDAQ stock by an amazingly wide margin -- almost 100 times. With California's major solar legislation and other states following suit, solar has exploded in the past few years. However 2006 wasn't a repeat of 2005; in fact, solar was one of the worst sectors to be invested in.

Why? Wall Street analyst J. Peter Lynch explains that this is just gravity at work. Solar stocks shot up so fast in 2005 that there was nothing left to do in 2006 except come back down. He still thinks the future of the solar industry is bright, but that the sector is now oversold.

I've been surprised with how often I see solar power in the news (I live in wind country so that's mostly what we talk about up here). Watch for how government policies and private ventures continue to effect this sector.

1 comment:

ricardo said...

Solar stock will shot down. People will install more than the system can build them. Sure