BREAKING DOWN ALTERNATIVE ENERGY

Alternative energy has been a very hot topic as of late throughout the world of investing, so here is a breakdown of what all the fuss is about.

There are 6 main types of alternative energy being discussed today; wind, hydro, solar, biofuels, fuel cells, and LED's.

Wind - This industry is already competitive with oil and gas since it costs the same as oil and gas when it comes to generating electricity. However, the downfall of this industry is the fact that there are not too many available sites since this is not exactly the newest technology.

Hydro - Again like wind growth, hydro power is limited because of a lack of sites. Another big negative of hydro power is the fact that it destroys the environment, along with the communities and ecosystems of many species.

Solar - The cost is expected to become competitive enough in the next 5-10 years to make a large impact. Furthermore, of the 5 types of alternative energy it appears that solar has the most potential in the next 25 years. Best of all, solar power relies on the sun, the most abundant source of energy known to mankind.

Biofuels - Probably the most talked about of the group, biofuels like ethanol are probably the best near-term option for replacing fossil fuels, but also pose the least rewards through conservation.

Fuel cells - after many years of research, fuel cells are still far from being efficient so this technology probably has the least chance to succeed in the near-term. However, they will surely be very useful one day, especially in cars.

LED's - as discussed in the previous article "One in a lifetime opportunity", LEDs are a force to be reckoned with. LEDs should hit their peak in 2010. For more on LEDs and a company which we like very much (symbol: CLRK), please check Darwinian's article.

As for companies in these industries that have been put through the MGR Coefficient; only 2 have been completed which are TSL and ESLR. TSL received a score of 2.35 while ESLR received a score of 3.44

THE EVOLUTION OF THE ETF

ETFs have became a huge market and provide a hybrid of a mutual fund and a stock. ETFs were first mainly a collection of stocks, but have now evolved into many different forms. For example, ETFs now exist for currency markets. If you believe that the Yen is going to move higher, you can buy an ETF which replicates the movement of the Yen. A list of such ETFs can be found at http://www.currencyshares.com/home/CurrencyShares.rails.

Also, ETFs now exist which actually move opposite to a certain parameter. For example, the symbol QID is an ETF which moves at twice the rate in the opposite direction of the NASDAQ 100 Index. A list of such ETFs can be found at http://www.proshares.com/funds. You can also find ETFs for sectors at this link.

All in all, it looks like ETFs have proven to be a good way to invest your money, especially if you can not decide between investing in a mutual fund or a stock.

AROUND THE WORLD AGAIN

As of right now the Nikkei is down about 3% and the Hang Seng is down about 2.50%. This may be a reaction to what happened in the American markets today when the Dow fell 1.97%, the S&P 500 fell 2.04%, and the NASDAQ fell 2.15%. However, in my opinion this will lead to yet another horrid day tomorrow for the American markets, so all you bargain hunters and value buyers get ready to go shopping soon because the big sale is on!

THE MGR COEFFICIENT'S PERFORMANCE

In 2006, the Dow Jones Industrial Average had an outstanding return of 16%. Many people made great returns on their portfolios; however, it is easy to make money in a bull market since 3 out of 4 stocks move in tandem with the market. It is in a bear market that an investor can really prove their worth by beating the indexes and making money, while others stand by and watch their investments sink. In times like these, an investor needs an outstanding system to beat the market.

Here is how The MGR Coefficient did over the past 3 years compared to the major indices:

In 2007 (YTD as of March 3), a portfolio based on stock and mutual fund picks ranking high on The MGR Coefficient achieved a gain of 3.87%. This return beat the S&P 500 by 6.07% (which is down 2.20%), beat the Dow Jones Industrial Average by 6.67% (down 2.80%), and beat the NASDAQ by 6.47% (down 2.60%). Using The MGR Coefficient currently (as of March 7^th) I am in the top 3% of over 200,000 participants in the CNBC.com challenge called The Million Dollar Portfolio Challenge.

THE MGR COEFFICIENT WALKS THE WALK WITH A COOL MILL

CNBC.com is hosting a Million Dollar Portfolio Challenge in which participants receive a "fake" million dollars to invest in stocks (with certain limitations). I signed up and for my portfolio I basically divided the money 3 ways and invested it into the 3 top ranking stocks according to the MGR Coefficient. As of right now, my portfolio is in the top 3% of all participants.

Another point for the good guys...

IT'S A SMALL WORLD

As of right now the NIKKEI is up about 1.22% and the Hang Seng is up about 1.97%, both gapping up. Looking at the after market activity here in the U.S., many stocks on my watch list are up significantly after hours so I would expect to see a bullish run tomorrow. Since the global markets effected us negatively, they should effect us positively as well on this move upwards.

The magic number 12,000

The DJIA fell over 120 points on Friday, showing that investors are not done running for the exits. I think the DJIA may fall to 12,000 but I do not look for it to fall past that as 12,000 was the psychological barrier before and should now be the support. Looking at the last 6 months
(chart from http://finance.yahoo.com/q/bc?s=%5EDJI&t=6m&l
=on&z=m&q=l&c=) any dips towards 12,000 were quickly reversed, especially in November where it actually turned around right on 12,000. I think this shows that once we hit 12,000 in the near future, or come very close to it, investors should pull the trigger. However if we go below 12,000 and stay down there for a little while, investors should be careful as the next stop could be pretty far.













Looking at the last year to date in the chart below (chart from http://finance.yahoo.com/q/bc?s=%5EDJI&t=1y&l=on&z=m&q=l&c=) from the last year, the next stop could be 11,500 as support was found there in September. If investors remain spooked and panic even further after reaching 11,500, then our next stop could be 10,650 as there was a double bottom seen there in June and July of '06, the last real sign of weakness in the DJIA before this week.

MOVIN' ON UP

After the Dow fell more than 200 points today, it staged quite a comeback. This is a healthy sign and not since last June have we seen such a volatile price movement in the Dow Jones Industrial Average. Although these last 3 days of the market have been very volatile, I believe that overall the outcome is positive.

In this entry, I wanted to say that although it is difficult for investors to step up to the bat when the prices keep plummeting, the best buying opportunities were seen in these last 3 days (especially the first "crash" day) since almost every stock was down a lot. If we agreed with the masses and sold when they did or bought when they did, that would be mean we think like them and that is not true since the masses do not make big money in the stock market. Whenever you see the media and every investor being very bullish you should be very cautious and begin to sell because you know you are at the top of the cycle at this point And, when everyone is talking about how the stock market is crashing, that is when investors should be buying stocks hand over fist to get the bargains that make K-Mart look like Whole Foods.