The impressive gains seen from funds like TAN and the Market Vectors Solar Energy ETF (KWT) during the opening weeks of 2012 has likely led some doubters to change their tone on the solar sector.
While there is a chance that the industry could continue higher in the near term, I still feel that those looking to construct a stable, long-term portfolio are best off monitoring this corner of the alternative energy spectrum from the sidelines.
We have turned over to a new calendar year. However, it is important to remember that many of the same macroeconomic and political challenges that threatened the solar energy industry in 2011 are still in play. In the event that fear makes a comeback, investors can expect inherently risky industries like solar to return to their tumultuous ways.
Written by Don Dion in Williamstown, Mass.