@Scott,
Congratulations to a great job. All of us know it's not a easy task to get this kind of number. While you are celebrating this index's anniversary, could you briefly explain your philosophy? Like asset allocation, criteria for picking up one stock, stop measure, and how long you plan to hold each pick etc? You might have already described it before, but I think it's still good to do a rehearsal. It will be helpful for most of us.
I don't think the shale oil plays are affecting solar -- but I think the shale gas plays are driving down the cost of nat gas so significantly that solar is no longer as attractive. The forecasts seem to show this.
Nat gas consumption rises from 24.1 trillion cubic feet in 2010 to 26.5 trillion cubic feet in 2035, according to the latest DOE estimates, while renewable energy consumption in the electric power sector grows from 1.4 quadrillion Btu in 2010 to 3.4 quadrillion Btu in 2035, with biomass accounting for 30 percent of the growth and wind 44 percent. Consumption of solar energy grows the fastest, but starting from a small base it accounts for only a small share of the total in 2035.
To me Microsoft is a no-brainer if only because of the 3% dividend. Treasuries are paying under 2%. Windows 9 is coming and some excitement is building on the platform, which could be the best MSFT release in a while. The Microsoft cloud platform has gotten good reviews. Microsoft owns 1% of Facebook.
But best yet are the fundamentals which are somewhat obscene:
Market Cap: $250B
Forward P/E: 10
Operating Margin: 38%
Return on Equity: 41%
Total Cash: $50B
Annual Cash flow: $29B
If you showed Graham/Dodd these numbers in 1935 without telling them anything about the company they would be pretty impressed.
I can't say I know where it is going but a lot of companies -- especially Veeco (VECO) look incredibly oversold and I believe they were unfairly punished.
I don't thinik this has anything to do with the shale plays -- after all, look at the price of oil (still $100), it has to do with competition from Asian manufacturers, many of whom are crushing the profit margins by driving down price and taking government subsidies.
It's a lot like what happened to the steel industry when the Asian competitors entered the market. The solar players in the West are going to have to figure out how to innovate and provide better value -- like the rest of the technology players do.
Re: Good picks
driven
2/8/2012 10:35:41 AM
My guess is we'll see more companies try to win support for solar with initatives like this -- Aora Solar Ltd. is aiming to win clients from the "Facebook generation" with community-scale generators that double as giant sculptures, according to the designer of its tulip-shaped solar towers -- that make solar not only "good for the environment" but allegedly good for the soul. Does it look aesthetically pleasing to you? I'm not convinved, But that's the message.
Scott, any thoughts on where solar is headed in 2012 and beyond? Has the shale oil/gas plays changed the game?
Good picks Scott. Sometimes the market does behave in a rational manner.
Re: Nice job
Dex
2/8/2012 8:50:32 AM
Microsoft is that slow steady stock you often feel like losing because it seems so boring, isn't it? But seasoned investors know this is exactly the type of stock to hold.
Re: Nice job
Phoenix
2/7/2012 1:09:14 PM
Yes Scott that was a difficult one to predict. But overall I think the IU selections performed well. Thank you for sharing this information with all of us. Let us hope this year brings more good news.
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