Robbing Athena to pay Dionysius
I have a stock trading theory that I think should work. Perhaps it’s over simplified, but I’m unable to describe it in the correct trading terms.
There are some trends in our society that are inevitable. We can all see that some things will be issues over the next 3-5 years. I think oil will be at $100/barrel within 5 years.
I think this oil crisis is going finally spur some investment in alternative energy. The administration doesn’t seem to have a direction, but there is some investing going on all the same. Bill Gates’ personal investment firm just put him into Pacific Ethanol. I’m willing to go along with that call. I looked around at the trade association PEIX belongs to. They’re environmental evangelists by and large. They are mainstream corporations run by people that really believe in what they’re doing. What could be better? I mock bought PEIX April 13, at $16/share. PEIX closed at $39 today. I think the sector is still a good buy. They’re in a growing market that’s (slowly) getting attention because of public pressure. The Bush administration has been burned several times in the last year. They have only been able to deliver rhetoric concerning alternative fuels and bio energy. As gas prices go up, pressure will mount for something more substantive. I think the government will finally get into the alternative fuel business in a big(ger) way this year. That will bring the market microscope back onto this sector, and there should be a couple of hot stocks emerging over the summer. The RFA is a good place to start browsing the industry.
I mock bought gold at $602 back in April. Today it traded over $700 for the first time. I don’t think gold is a sure thing, though. If the Democrats take over, they will favor a stronger Dollar. Along with upward pressure from oil prices, etc. a stronger Dollar will do what to gold? Buying at $600 seems like the last entry point. Now I’m just waiting until it tops out, or starts getting too volatile.