A Change in Energy Policy

Finally, A Real Energy Plan

Readers’ Thoughts on the National Debt

In Case You Missed It

Whether or not you agree with the outcome of Tuesday’s presidential election, there’s one pledge that President-elect Barack Obama made that will benefit all of us, as citizens and investors–his energy plan. For too long, we’ve had administration after administration that failed to recognize the energy problems we are facing now and will face in the future. Finally, we have a leader who is promising to reduce greenhouse gases, get the U.S. off its dependence on foreign oil and create Green jobs.

This isn’t about being a Republican or a Democrat or an Independent, it’s about the realization that our oil supply isn’t going to last forever (or, if it is, it’s going to be more and more expensive to get) and we need to do something about it. We remind you often that not taking action in your stock portfolio is a sure way to lose money, becoming paralyzed by a lack of a plan doesn’t work in investing; the same goes with a national energy policy.

Before being elected, Obama laid out a comprehensive energy plan, and according to his campaign Web site, he plans to:

  • Help create five million new jobs by strategically investing $150 billion throughout the next 10 years to catalyze private efforts to build a clean energy future.
  • Within 10 years, save more oil than we currently import from the Middle East and Venezuela combined.
  • Put one million plug-in hybrid cars–cars that can get up to 150 miles per gallon–on the road by 2015, cars that we will work to make sure are built here in America.
  • Ensure 10% of our electricity comes from renewable sources by 2012, and 25% by 2025.
  • Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80% by 2050.

Obama’s plan is ambitious but necessary, and if passed by Congress (admittedly a big if) it will help propel the Green sector forward. Strides have already been made in the alternative energy field and many young companies are poised to make more, especially as more funding becomes available.

Obama’s pledge to create new Green jobs will not only stimulate our hurting economy, but will fuel the fire in the Green sector. Obama wants to create more Green jobs by injecting money into the private sector to allow companies to use all available resources to improve existing Green technologies and invent new ones.

As more Green jobs are created, more advances in alternative energy technologies will become available. This will allow greater numbers of people (directly or indirectly) to use wind power and solar power to heat their homes and get their electricity and more people will start driving hybrid cars.

Cabot subscribers have already enjoyed great investment success with some of the Green sector’s leading stocks. Cabot Market Letter subscribers rode First Solar (FSLR), the market-leading thin-film solar technology company, from 70 when first recommended to a high of 300 in the course of a year. Thanks to Cabot’s time-tested method of technical and fundamental analysis, we took some profits along the way before finally recommending selling the position when shares still traded above 220–before the stock’s plunge to 95 last month.

And as editor Brendan Coffey reminded us last month, “Cabot Green Investor readers also profited from Green stock recommendations even in this difficult year. We called for buying wind turbine and high-efficiency wire maker American Superconductor in May when shares traded at 26. The stock quickly rallied to above 40. Seeing that shares were technically overbought, we recommended selling half of our position at 41, just six weeks later. After more market fluctuations, we took the remainder of profits at 32 in early August. Shares are now at 13. American Superconductor is a business we believe has long term potential in its developing relationship with major Chinese firms, and we continue to watch it. It’s one of the 10 Green companies we are keeping readers abreast of right now for when the market has finally formed its bottom and the time to buy is right.”

But we feel that’s just the tip of the iceberg.  Many young Green companies are poised to break out once the market turns positive and more are sure to follow should Obama’s energy plan be put into action.

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In 2005, Hansen Natural gained a whopping 570%. In 2006, NutriSystem was up an amazing 480% in 11 months. Last year, stocks like JA Solar were up 200% in seven months, DryShips was up 510% in10 months and Research in Motion was up 149% in seven months.

Even during this year’s bear market, Cabot Top Ten Report has found winners in stocks like Cleveland-Cliffs, which doubled in four months, Continental Resources, which rose 160% from its recommendation its peak, and Walter Industries, which moved from 42 in January to 112 in early July.

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Last week I wrote about the U.S. national debt and I received many comments from our readers, some of which are found below. If you have something to say about this or any other topic, please send us an email or head over to the blog, http://www.iconoclast-investor.com.

“The good news regarding the debt: If these bailouts work, we’ll get that money back in a few years. Much more troublesome is the debt we had already accrued through 2007 …

“A reasonable approach is not to worry about paying back the deficit. That seems impossible. What does need to be done is balance the budget, which will be painful but is possible over a few years’ time. If we do that, then the burden of the interest on the debt will lessen over time.

“But does the nation have the willpower to do even that? I doubt it.”


“I believe your numbers that we owe are terribly incorrect if you consider that those people who don’t pay any income taxes now, the additional ones that will not pay taxes under Obama’s new plans and how do we account for those who can’t pay their mortgages? Seems to me the numbers will increase significantly per middle class American. How frustrating is that?”

“Someone important said long ago, (I don’t remember who), that democracy works fine until the politicians discover that if they pass out entitlements, and gifts to the public, they can get re-elected. When they fully comprehend that principal, democracy fails.
“Our politicians have learned this well.
“I fear that your wish for fiscal responsibility is a far off pipe dream.”

“Keep pounding on the debt issue. It is the most serious problem we have had since the Great D. In all likelihood, we’ll print more money, which will lead to serious inflation. God forbid China redeem its Treasuries, although they are talking about it. And, they’re talking to the Russians about more trade agreements, particularly on energy.”


“The national debt? It’s disgusting and we’re just now seeing how dangerous. I blame both houses of Congress since they initiate the bills that become law. The president can only push, but that’s important as well. I only hope that as the nation works through this we do not return to our old reckless credit ways. But I fear greed is the larger driving force.”

Best Regards,

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Invest Like the Oracle of Omaha

In a recent op-ed in The New York Times, Warren Buffett, laid out his plan to capitalize on the recent stock market crash. His mantra: “Be fearful when others are greedy, and be greedy when others are fearful.” It’s clear that right now, fear has reached a fever pitch. Buffett, one of the world’s most famous investors, isn’t predicting the short-term moves of the market, but he’s betting that in the long-term, the market will rebound and move significantly higher.

Buffett went on to say, “Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”

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In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, we have links below to each issue.

Cabot Wealth Advisory 11/3/08 – The Future of America

On Monday, Timothy Lutts wrote about the election that took place on Tuesday and how despite the economic crisis, things will get better. Tim focused on four sectors that he believes will lead the way: alternative energy, government, health care and dividend stocks. Dividends have been neglected in recent years, but the recent bear market means that more companies will be thinking about increasing their dividends to make their stocks more attractive, and that those that don’t have a dividend might consider instituting them. Featured Stock: Apple (AAPL).


Cabot Wealth Advisory 11/6/08 – Market Timing Simplified

On Thursday, Paul Goodwin wrote about his Simplified Cabot Marker Timer, which can help you decide when to get in and out of the stock market. It’s particularly important right now as the market is showing some signs of life, but not enough for us to give a green light. Paul also wrote about his frustration with the government’s lack of an energy plan and his hopes that he’ll see one within his lifetime. Paul also wrote about an investment that could work out well once the Simplified Cabot Market Timer gives a buy signal. Featured Stock: S&P 500 Index (IVV) and S&P 500 Growth (IVW).


Cabot Wealth Advisory 11/7/08 – The Stock Market is Not the Economy

On Friday, Michael Cintolo wrote about how the economic news will probably get worse and how you should be prepared to see some hugely bad, once-in-a-lifetime readings on economic data. Mike also wrote about how the stock market probably won’t care much about this as it’s looking into the future and has likely priced much of this information into the market.  Mike also discussed a stock with a new, revolutionary product that reacted well to its third quarter earnings report. Featured Stock: Volcano (VOLC).


Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory

Editor’s Note: Cabot Green Investor combines Cabot’s time-tested growth stock picking criteria with finely tuned market timing to keep subscribers in the best stocks at the right times. Editor Brendan Coffey is currently building a watch list of Green stocks that are poised to break out as soon as our market timing indicators tell him the time is right. Get on board today to start getting ready for the next bull market with a sector that’s poised to be a leader.


P.S. From Editor Paul Goodwin: “In my Cabot Wealth Advisory on November 6, I gave the wrong symbols for the iShares S&P 500 ETF and the S&P 500 Growth ETF.  It’s not clear to me how I got the first letter of each wrong.  Fortunately, there are no stocks or ETFs that trade on U.S. exchanges under the symbols I gave.  So, without giving any excuses, I’d like to apologize for any confusion this might have caused. The correct symbol for the iShares S&P 500 Index Fund is IVV. The correct symbol for the iShares S&P 500 Growth Index Fund is IVW.”


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