Among the notable losers of the past few weeks: clean energy stocks.
Most clean energy companies are based on such terrible business ideas that you could say they are "perfectly hedged." They lose money in both good economic times and bad economic times. Their share prices are able to sink in both bull markets and bear markets.
For a picture of this hedged condition, we present the past two years of trading in the PowerShares Clean Energy Fund (PBW). As an easy, "one click" way to go long solar, wind, and various other clean energy companies, this fund has drawn in hundreds of millions of investor dollars over the past few years.
PBW was destroyed during the 2008 credit crisis. After all, if you don't have a job or money for a mortgage payment, you're not much concerned with "carbon neutral" energy. And despite last year's incredible stock rally, this fund simply drifted sideways… dragged down by the bad economics of its constituents (for instance, solar energy faces a problem called "night"). With the broad market faltering, the fund broke down to a fresh 52-week low.
Place money in your average clean energy stock? No thanks. Give us the stupendous cash flow, dividend, and compounding power of Big Oil, cigarettes, and Band-Aids.
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