Turn On Alternative Energy

Over the long run, what could be more certain than the rising price of oil?

Now, if this opener sounds familiar, it's because I just used it to open another article.

That article covered alternative ways to buy oil, to effectively create your own virtual private backyard reserve. Why? To hedge against the next inevitable price spike.

Doing so now sure makes sense to me, with oil prices near a two-year low and the Saudis driving a $50-a-barrel price floor.

But buying oil isn't my topic this time. Instead, as energy prices slump, it also looks like a good chance to invest in alternative energy.

With numerous tax credits, a Democratic-controlled Congress and new California initiatives on global warming, the wind (no pun intended) should be at your back.

But like oil, in what way? Building windmills in your back yard? Planting corn in your front yard? Converting grass clippings to biodiesel? There must be better ways.

It's a challenge. Most companies in the field are in, or just beyond, the venture stage.

There are so many good ideas: fuel cells, hydrogen, solar, wind, biomass (including manure) conversion. The trick here -- and it's the same trick we learned the hard way in the dot-com boom -- is to learn to separate good businesses from good ideas.

And when we can't do that, it's time to either avoid the sector altogether or employ professionals who know what they're doing.

Like most sectors these days, there are ways to play the entire sector with funds, although at this stage only three choices exist.

Click here for the video version of this story from Jennifer Openshaw.