July 2nd, 2009
This is a common occurrence. You heard people say that ‘the real estate sector is hot’ or ‘the internet sector is growing rapidly’ or ‘let’s buy the oil sector now. Energy price will rise again’ next year. Sounds familiar? It is. This is because these people encouraged you to invest in specific sectors.
What is wrong with sector investing? There is a common believe that rising tide will lift all boats. Therefore, when internet search is hot, then every companies in the field from Google to Looksmart will rise two to three folds, right? Wait a minute. Have you looked at the graph of Looksmart lately? If you haven’t, here is the two year graph of Looksmart Ltd. Let me show you another example. Everybody knows about the rising energy price, most notably oil. Therefore, if you look at the five year chart of energy companies from Chevron and the like, you would expect similar upward trajectory movement, right? Wrong. Take a look at a five year chart of an energy company IvanHoe Energy Inc. here.
So, should we look at sectors when investing? Absolutely. Sector search is very useful during your preliminary research. Auto sector is down. This might be a good place to find stock bargains, right? Yes. Should we blindly invest in any stocks in the auto industry? The answer is no. This goes back to the purpose of an investor. Investor exists to make the greatest return of assets possible while minimizing risk. The sensible way to do that is to compare investment alternative and pick the investment vehicles that may give investors the highest return. In the case of stock, we are looking at the expected profit of a company with respect to its stock price. This is the basis of the return on investment of stock investors.
Therefore, once you identify that the auto sector is a bargain, your homework continues. You should find companies that can give you higher return than the risk free ten year treasury bond. Currently, the ten year is yielding 4.52%. Since 4.52% is risk free, we need to find stocks that can yield more than 4.52% for the foreseeable future. Yield on a common stock can be calculated by dividing earning per share (EPS) with the stock price. If you invert this ratio, you will get the most commonly discussed ratio in the investment community, Price Earning (P/E) ratio.
Sector search is very useful in identifying future investment prospect. However, do not just blindly invest in stocks in specific sector. In the long run, stock price is correlated with the amounts of profit it can produce. Stock price does not correlate to the performance of other peers in the industry.
June 29th, 2009
It is unofficial – but around the world many of us agree on one thing: it is very likely that there will be an energy crisis in the future. We all know energy is a big issue in the contemporary world, and we have been convinced that humanity is at a crucial crossroads in its history because we face an energy shortage. Many experts believe this problem can only be solved by the use of alternative energy solutions.
By energy, I mean the fuel that drive our cars, give us electricity and enables us to enjoy modern amenities we feel so vulnerable without. Fossil fuels have been the prime source of energy for human society since the beginning of the industrial revolution. These fossil fuels have been the muscles, which have enabled us to progress and develop to such dizzying heights. We face a problem in the 21st century because our stocks and reserves of these fossil fuels are running low; this news is worsened by the fact that these reserves cannot be renewed. Many governments and private agencies have started promoting Alternative Energy Solutions to overcome the looming energy crisis caused by the depletion of the non renewal’s sources of energy that all fossil fuels – coal, all oil and natural gas – represent.
Alternative Energy Solutions include all prime movers that can use a renewable natural resource to produce energy. This may be wind, thermal energy from the earth, and wave action in the shores and solar energy from the sun. Alternative energy resources can also include new technology like fuel cells. However the primary fuel humanity has long depended on has been oil. We now know from our own projections that the oil reserves in the world are slated to be unviable by 2050. Simply put, the world is running out of gas! In addition, not to mention, time.
The utilization of other forms of energy is therefore very important. When we speak of alternative energy, it usually means the production of electricity via the use of some natural and renewable resource. What are these renewables, one may ask. Someone else may extend this line of questioning and say: Are these renewable resources as efficient as the fossil fuels? Below are some answers.
Wind energy is the word that comes to mind whenever people talk of renewable energy sources. Humans have harnessed the wind to drive machines since medieval times. In the 21st century we use wind turbines to produce electricity. As a source of power, wind is an excellent option. Wind turbines generate electricity by rotary motion that is caused by the airflow.
Some of the negatives associated with wind energy and wind turbines lie in the unpredictability of wind. For example, no wind means the turbine does not rotate and electricity is not generated. Sites are another problem; rows and rows of wind turbines are just not feasible in a city of a few million people. The most important issue however lies in cost effectiveness, most power companies are still reluctant to invest in or buy their power from companies that use wind turbines. This is changing as governments around the world have started subsidizing power generation through alternative sources like wind.
There are other possible sources of renewable energy; tidal energy uses the energy of the ocean and is an effective though rather geographically limited source of power, thermal energy from the earth taps geysers and other underground sources of heat. This is a very important source of energy in places like Iceland – it is also geographically limited in its suitability. Nuclear energy can be considered a potentially inexhaustible source of power. However, it could have many dangerous complications and most environmentalists fear its use.
New technological innovations like fuel cells are still a long way off from truly becoming substitutes to the fossil fuel powered internal combustion engines that have driven us all this far down the road. Indeed looking at all the possible sources of alternate energy and especially renewable, wind and hydroelectric projects are the only two viable long term sources, solar power is a potentially huge alternative source of energy but it has a technological handicap-we do not posses the engineering expertise to make better solar cells. Solar cells are also very costly to produce and are not cost effective – even less so than wind.
Given all the setbacks we currently are unable to overcome, it will still be some time yet before we can throw away the polluting but efficient, fossil fuel guzzling machines that we so fondly know as cars. The use of alternative energy sources is a very important area of research and demands humanity’s attention.
As soon as fuel supplies run out on us, we may have to go back to that ultimate transport machine to take us places: our legs.
June 26th, 2009
You may have seen the many different small home wind turbines you are able to purchase in the shops, yet you may be undecided whether one of these small scale wind turbines is for you. Before purchasing a turbine, you should do some research regarding; can your environment make a turbine efficient enough, what alternative energy sources can you harness, and which technology is the best value for money.
Below we shall discuss each of the three points explained above in more detail, outlining the factors relating to each.
Wind turbines only generally work to their full potential in very few areas.
To gain an efficient use of a turbine, you should do some in depth research and
a site survey into how sustainable your environment is to support a wind
turbine. For efficient placement of a wind turbine, you need to look into the
average annual wind speed and direction.
There are many references available to explain what speed the wind must be
for different sized turbines. Wind direction is only a factor which relates to
which position your place your turbine in, yet many modern small home turbines
are very mobile and you can usually twist them to face the direction you prefer.
It will be well worth your time to browse the market looking for alternative renewable energy sources. This mainly depends on your budget, but solar panels
are a very popular choice as either an addition, or a total replacement for a
wind turbine. Solar panels generally offer you a greater pound per watt, and are
also generally more efficient for home power production.
Deciding which technology is the best value for money, also ties in with the environment factor. You need to do research and decide which of the renewable energy sources is most in abundant in your region, for example if you live on a small island off the coast of northern Scotland, then you would more than likely choose a home wind turbine as you are exposed to strong winds, but if you live in the center of England (where wind speeds are usually quite low), you may opt for a solar panel.
So, as we can see here, many factors will decide on the right natural energy source for you. If you can afford to integrate renewable energy production methods into your home, it is strongly suggested, considering the current situation with global warming, that you make an attempt to install these more environmentally friendly appliances.
June 26th, 2009
Home wind energy is once again becoming very popular, and no wonder taking the
exploding energy costs into account. The demand for residential wind turbines is
growing, and we also see a lot of action on the "build it yourself" front.
Technological advances have made wind turbines very efective
The technology behind a small wind turbine has increased dramatically over
the last few years. A single wind system can therefore generate enough
electricity to provide you and your family with a comfortable amount of
electricity. We have no control over the weather sometimes the wind is blowing
and sometimes it don't. Therefore you need a reservoir to store your excess
electricity under good conditions for use under less ideal circumstances.
The Grid as your Huge backup battery
One of the most obvious reservoir is the electric grid. You sell your excess
power to the electricity company, and buy it back when you need it. This way of
operating your wind system can make it into an pretty good investment on the
longer term. And you and your family become less dependent on the uncertain
future of fossil fuels. Wind is a completely clean energy, there are no CO2
emissions generating it. Adding up these benefits home wind system becomes a
terrific insurance for your families welfare in the years ahead.
So How much is this going to cost
We mentioned before that a single wind turbine can supply your energy needs.
But what is enough, the amount of energy generated is dependent on the available
wind resource. This is a factor you need to consider, perhaps is adding a PV
system a way to increase to overall performance of your wind farm. These two
forms of energy are very complementally.
When we take the wind resources we need to operate an economical home wind
energy facility into account. You can as a rule of thumb say that you need
average wind speed of 9 to 10 miles per hour. You can do with less when you are
planning a grid-connected system. And even if you have enough wind their might
be additional advantages in partnering with the local utility company. Depending
on the state you live in there can be nice tax benefits or other grants
involved. net-metering is the the term most commonly used for this partnership.
Then you have the possibility of switching back and forth to the utility
company. When you generate enough power you disconnect from the main grid and
when you have a shortage the system automatically switches back to the grid.
When you live or have plans in that direction the cost of getting grid
connected can be so high that an alternative is the most economical choice . A
power line to the electricity grid costs depending on the terrain $15.000 to $
50.000 per mile. That can add up.
A full standalone system with backup and a solar unit is your best bet in
such a situation. A combination of wind, solar and conventional energy might be
the right choice. Hybrid solar/wind systems are amplifying each others strong
points. And a backup facility running on fossil fuel can save the day when the
weather lets you down is every way.
These combined systems drawing on PV (photovoltaic's) a wind system and
conventional generators need a custom design.
Most home owners can reduce their dependence on the local utility a great
deal by making use of home wind energy and/or photovoltaic systems.
How to move forward from here:
Be sure to check out our article about Hybrid Wind/Solar systems
Check the http://www1.eere.energy.gov/windandhydro/wind_consumer_faqs.html
American Wind Energy Association (AWEA) site
June 26th, 2009
You may have seen the many different small home wind turbines you are able to purchase in the shops, yet you may be undecided whether one of these small scale wind turbines is for you. Before purchasing a turbine, you should do some research regarding; can your environment make a turbine efficient enough, what alternative energy sources can you harness, and which technology is the best value for money.
Below we shall discuss each of the three points explained above in more detail, outlining the factors relating to each.
Wind turbines only generally work to their full potential in very few areas.
To gain an efficient use of a turbine, you should do some in depth research and
a site survey into how sustainable your environment is to support a wind
turbine. For efficient placement of a wind turbine, you need to look into the
average annual wind speed and direction.
There are many references available to explain what speed the wind must be
for different sized turbines. Wind direction is only a factor which relates to
which position your place your turbine in, yet many modern small home turbines
are very mobile and you can usually twist them to face the direction you prefer.
It will be well worth your time to browse the market looking for alternative renewable energy sources. This mainly depends on your budget, but solar panels
are a very popular choice as either an addition, or a total replacement for a
wind turbine. Solar panels generally offer you a greater pound per watt, and are
also generally more efficient for home power production.
Deciding which technology is the best value for money, also ties in with the environment factor. You need to do research and decide which of the renewable energy sources is most in abundant in your region, for example if you live on a small island off the coast of northern Scotland, then you would more than likely choose a home wind turbine as you are exposed to strong winds, but if you live in the center of England (where wind speeds are usually quite low), you may opt for a solar panel.
So, as we can see here, many factors will decide on the right natural energy source for you. If you can afford to integrate renewable energy production methods into your home, it is strongly suggested, considering the current situation with global warming, that you make an attempt to install these more environmentally friendly appliances.
