Investment Opportunities in Energy

U.S. Financial Mess “Powers Up” Investment Opportunities in Energy

by David Fessler, Advisory Panelist, Investment U
Wednesday, June 11, 2008: Issue #806

Sometimes investment opportunities present themselves in very different ways. “When You’re in a Hole, Stop Digging” was uttered a few weeks ago on CNBC’s “Squawk Box” by David M. Walker, President of the Peter G. Peterson Foundation.

David is one of those people that is so captivating that when you hear him speak, you can’t help but stop what you’re doing and pay attention.

His was a simple plea, directed at our nation’s congressional leaders: When you run out of money, stop spending. Don’t promise to provide programs and services you can’t possibly deliver. Even the talking heads on CNBC got it.When I explained it to my 12-year-old son Noah, he asked me how the government could spend money it didn’t have. Perhaps we should put sixth graders in charge of the Government Accounting Office…

It’s a simple math concept that most of us can easily understand, regardless of your political views. The “goes-outtas” can’t be more than the “goes-intas” as I like to say.

Raising The Awareness Of Our Nation’s Future

The Peterson Foundation’s mission is to raise the level of public awareness of this and other serious sustainability challenges that threaten our nation’s future.

It’s no small task, but given the nature and urgency of the challenges, a worthy and important one. And its Chairman, Peter G. Peterson, is serious. In the inaugural launch of his foundation this past February, he committed one billion dollars of his own money, and that’s just for starters.

The 81-year-old Blackstone Group (and former Lehman Brothers) CEO had this to say at his inaugural press release: “I have never seen so many simultaneous challenges that I would describe as undeniable, unsustainable and virtually untouchable politically. We’ve reached the make or break point in American history.”

He continued, “Now is the time to put politics aside, put the country first, and begin to solve these problems with courage and clarity. This is the moment in our history when we [need to] do what is necessary to remain a first-class country.”

To say the Foundation has its work cut out for it is an understatement…

The Greatest Investment Opportunities of Our Lifetime

While these problems will provide our nation’s greatest minds with formidable challenges, the future solutions they come up with represent perhaps some of the greatest investment opportunities we (as investors) will have in our lifetimes.

More on those investment opportunities in a moment, but first, consider the Peterson Foundation’s initial focus on issues that affect nearly every American, and many outside the country as well:

Entitlement benefits: With 78 million Baby Boomers retiring, Social Security and Medicare unfunded fiscal promises exceed the nation’s annual GDP by a factor of three.

Current account deficit: Out of control government spending has ballooned the nation’s debt to over $9 trillion, and it continues to increase at the rate of $1.57 billion a day, leaving the United States utterly dependent on foreign capital.

Ballooning health care costs: Health care costs in the United States are more than double those of the rest of the developed world, and there’s no appreciable difference in the quality or length of life. To make matters worse, 47 million Americans go without any health care coverage whatsoever.

Disproportionate fossil-fuel consumption: With only 5% of the world’s population, the United States consumes 25% of its crude oil, leaving the nation completely dependent on unstable, rogue nations for much of its supply. “We can’t drill our way out of this problem,” states Walker. And as a byproduct of all the oil burning, the United States is contributing far more than it should to the global warming problem.

Competitive voids in the nation’s educational system: Nearly half the young in our nation’s cities and 30% of all youngsters fail to get a high school diploma, resulting in the United States falling further and further behind in the competitive global economy.

As a retired engineer, I believe that each of these challenges are solvable, and ordinary folks will rise to the occasion, just as they have when difficult problems have presented themselves in the past.

“Every problem is just an opportunity in disguise,” an old but wise farmer told me a few years ago.

So where do we find these investment opportunities?

Finding Investment Opportunities Through Energetic Solutions

While we could identify many companies that will benefit from the issues addressed above, the investment opportunities that will have the greatest short-term solution and impact on the nation’s financial health is in energy.

As prices for fossil fuels continue to soar, solar, wind and geothermal will begin to displace oil and natural gas as sources of electrical power. As the world begins to wean itself off fossil fuels, companies who provide towers, turbines, batteries and inverters for wind generators will also do well.

Solar panel manufacturers, geothermal steam turbine makers and other energy “pick-and-shovel” companies are all places to consider putting investment dollars to work.

Good investing,

David Fessler

Today’s Investment U Crib Sheet

Peter G. Peterson and David M. Walker have a serious mission ahead of them. You can check out their progress at www.petergpetersonfoundation.org. In the meantime, think, solar, wind and geothermal.

The number of companies pitching the newest energy solution has exploded. Just be sure to look for energy stocks that are profitable now, with significant growth potential. Here are two of our free research reports that can help you make sense of some of the investing options out there now… Alternative and Renewable Energy: New Sources of Investment Profits Investing in Water Stocks: Four Ways To Profit From The Age Of Water

For shorter-term gains, take a look at Alex Green’s Momentum Alert trading service, where he finds companies with accelerating earnings growth, heavy institutional sponsorship, new products and increasing market share… and whose stocks are in pronounced uptrends.