With the launch of bitcoin futures and the growing hype of investing in bitcoin as it hit $ 19,000 might blind the investors to miss another winner this new year. While bitcoin is intangible and definitely difficult to comprehend, the renewable energy sector is not only easy to understand, it also has enormous growth potential. It goes without saying that vast majority of investors have missed out on the bitcoin bandwagon, however, according to the leading green energy investment guru Michael Dinich, green energy sector is actually ripe for a long bull run which every investor can make use of.
Michael Dinich, also adds that despite wide acceptance of renewable energy, the sector as such has gone under the radar for a little too long. According to him, the returns in this sector might not come as fast, but the sector is a true gold mine for long term investors who are looking for foolproof multibagger stocks.
Anyone following energy prices and share markets around the world can easily figure out the correlation between carbon based energy stocks and renewable energy stocks. In layman’s term if the price of crude oil rose, so did the price of renewable energy stocks. This is because with higher oil prices renewable energy costs will become more competitive. However, this correlation changed in the year 2017 as the iShares Global Clean Energy ETF (ICLN) was up to the same extent the Energy Select Sector SPDR Fund (XLE) is down, this huge divergence is due to continuous reduction of production costs of green energy. So going forward lower oil prices will not have any significant impact on green energy sector, however, high oil prices will accelerate the growth of the segment. With oil prices today (1/10/2018) hitting $70 per barrel, highest since 2014, the future of renewable energy companies has never looker rosier and we can safely conclude that the sector is at an infection point and investors can bet on a long bull run.
The United States is also playing key role in this paradigm shift. Especially states like Iowa where a little more than 37% of all energy comes from renewable sources. The following table illustrates the consistent growth of green energy in the US over the past decade.
According to Michael Dinich, active investors of the past decade are wary about the volatility of this sector, where stocks that returned 1000% profits but within a couple of years crashed to destroy investors’ wealth. It is also important to factor in the uncertainties of government policies across the world related to renewable energy subsidies. However, he also adds that the renewable energy sector has matured a lot and is more stable now. So, forget the bitcoin bandwagon and start investing in fundamentally strong renewable energy companies.