Opinion on  Market Vectors Global Alternative Energy ETF (GEX)     Sector: Financial  >  Industry: Misc. Financial Services
Mkt Vectors Glb Alternative Energy ETF

Fast forward to 2008.

 

In a very different campaign, Barack Obama and John McCain are battling for the same office.  Like 1992, the economy has slowed.  Instead of battling unseen evil market forces, politicians are fighting a different enemy: high energy prices.  Voters are angry with rising gas prices, bloated heating bills, and fewer summer road trips.  To address the discontent, each campaign is preaching a new message: “It’s the oil, stupid!”

 

What are the candidates doing?  This week, John McCain unveiled his “ www.johnmccain.com%2FInforming%2FIssues%2F17671aa4-2fe8-4008-859f-0ef1468e96f4.htm"> Lexington Project ”.  This initiative seeks to push clean vehicle development, expand domestic oil fields, and increase choices for alternative energy.  Likewise, Barack Obama has likened the energy problem to www.barackobama.com%2Fissues%2Fenergy%2F"> a moral issue as he proposes implementing many of McCain’s ideas, minus nuclear power and expanding domestic oil production.  Despite their differences, McCain and Obama can agree one thing: America needs more alternative energy, and fast.

 

Still, demand is growing.  Even with these proposals, Obama or McCain will not affect gas prices today.  Demand continues to increase worldwide, and will probably go higher once January rolls around.  www.cia.gov%2Flibrary%2Fpublications%2Fthe-world-factbook%2Frankorder%2F2174rank.html"> The U.S. consumes 25% of the world’s oil .  That means, 1 in 4 barrels of oil is being burned in your car, your neighbor’s car, or consumed by related industries down the street.  However, the rapidly industrializing nations of China, India, and Brazil are getting hungry for the kinds of cars and other amenities that oil affords.  With oil production stable and rapidly increasing demand, prices can’t stay the same.  They must go up despite congressional posturing.  With it, alternative energy becomes even more important.

 

How do you profit from the growing demand in energy and the political push for alternative sources?  www.vaneck.com%2Fsld%2Fvaneck%2Fofferings%2Fbrochures%2FGEX_Brochure.pdf"> Market Vectors Global Alternative Energy ETF (GEX) This fund capitalizes on both the underlying fundamentals of energy demand and the attention towards non-oil sources of energy.  Plus, GEX invests in both U.S. and international companies: it’s a global play on a global problem.  Why else would you consider buying GEX?

First off , GEX plays on the whole gambit of alternative energy.  From solar, to wind, to water and even geothermal, Global Alternative Energy covers a wide array of energy sources.  The benefit is your investment is hedged by other types of developing sources.  For instance, if wind stocks decline, you could get a boost from solar stocks gaining.  GEX is therefore a diversified pick in an unconventional industry.

 

Second , GEX is backed by solid companies.  Since ETFs are baskets of stocks, they’re only as strong as the stocks in the fund.  GEX includes First Solar (FSLR), Gamesa (GAM.MC) Q-Cells (QCE.BE), and Sunpower (SPWR), all solid companies poised for even bigger gains as government R&D dollars flood the sector.  And we’re not just talking about McCain’s $300 million battery prize.  Other countries are just as anxious to push alternative energy initiatives. 

 

Third , you’re riding an intermediate-term trend with GEX with a huge potential for upside.  Since mid-March, GEX has climbed +30%.  That’s a huge jump in today’s struggling market.  The current congestion is giving investors another chance to jump aboard.  Second quarter earnings come out in July.  If expectations are met, you stand a chance to capture a big piece of the movement.  GEX should break to the upside and who knows where it will stop?! 

 

Energy is the most important topic this political season – alternative energy is the one thing on which both parties agree.  Whichever candidate takes office in January, one thing seems certain: global alternative energy stocks should benefit from the administration, even if the economy continues slowing or oil stabilizes.  Regardless, GEX is a great place to be in such an environment.