The hyper focus on bitcoin is causing investors to miss another huge winner this year that they can actually understand.
Bitcoin is just one of many cryptocurrencies, and it is hard to embrace, if impossible not to follow, as it hits $8,000. It isn't tangible, and it certainly is difficult to comprehend. Yet all we hear about is how it's up thousands of percent this year. So you wouldn't be blamed to figure that you simply missed the best investment of 2017 — and possibly ever.
But there's another rising trend that's literally right under your nose: renewable energy. Its potential returns might not come so fast, but I am confident it is here to stay, which is more than I am willing to say about bitcoin.
It used to be that renewable-energy stocks were heavily correlated with carbon-based energy stocks. If the price per barrel of oil rose, so did alternative energy stocks, because higher fossil-fuel prices would make renewable sources of energy more competitively priced. Same thing for the reverse. But that changed this year. The iShares Global Clean Energy ETF (ICLN) is up year-to-date by as much as the Energy Select Sector SPDR Fund (XLE) is down, and it's a huge divergence by any stretch.
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A little digging makes me want to congratulate the state of Iowa, where 37 percent of the state's energy now comes from wind and solar. Granted, if you put a major city there, the equation would change, but it's still one heck of an impressive number. But throughout the United States, the percentage of renewable energy out of the total energy mix rose from 7.7 percent in 2001 to 14.94 percent by the end of 2016. You can tell this was nearly all due to wind and solar.
Because of the rest of the world, renewables is accelerating in both use and investment. China is crushing it, as per this graphic from the World Economic Forum:
Here's a chart from Bloomberg on the impact of falling costs of solar panels on global solar-panel installations. This is a key reason why renewables are competitive with fossil fuels:
New figures that go into these charts above will keep coming out.
Of course, there's a caveat that investors would be wise to remember. These stocks have a history of extreme volatility based on multiple factors: competition from China, where the government has heavily subsidized renewable manufacturers; uncertainty over government subsidies in many nations; and a lot of attention from hedge-fund shorts.
Look at First Solar: The biggest solar stock IPO'd at $27 a decade ago, went all the way to the dizzying heights of $300 when oil hit $147 a barrel in 2008, and then dropped to $11 as if it were about to go bankrupt when Chinese solar-panel makers glutted the industry in 2011–12. But its shares are up 90 percent this year, at $60.
That's a lot of volatility the solar-panel maker came through over the past decade. Today I am comfortable saying to investors that for all the ups and downs, renewable energy is never going backward.
Call me Captain Obvious, but I have a hunch that the latest figures will show even more global commitment to renewables. The bottom line is that alternative energy isn't so alternative anymore.