The Week in Solar Stocks: Impossible Germany
NEW YORK (TheStreet) -- I'm pretty sure the rock band Wilco's lead songwriter Jeff Tweedy was not referring to some frustrating investments he made in solar stocks when composing lyrics for the song "Impossible Germany," but the last few weeks' action in solar stocks suggests that the title works pretty well for the alternative energy sector.
In the past week, "Germany to Kill Solar!" headlines hit the wires. This was, notably, one week after the "Germany Saves Solar!" headlines led solar stocks higher. Ionesco and Beckett would be hard pressed to create theater as absurd as the solar sector trading often presents for the investing public.
To recap: German demand in the fourth quarter of 2011 wildly surpassed expectations, with a demand frenzy ahead of 2012 annual subsidy cuts and cheaper-than-ever solar panel prices leading to what would be a few years' worth of installations for much of the world in a few months in Germany. That in turn led to bullish calls from Wall Street that the left-for-dead solar sector was back, and in Wall Street parlance, the shares oversold.
And that's not all.The fact that Germany had installed 3.5 gigawatts of solar in the fourth quarter for a grand total of 7.5 gigawatts in 2011 would, no doubt, lead the Germany government to conclude -- for the umpteenth time -- that its method of slowing the growth of solar through gradual subsidy reductions wasn't working. As such, Germany would have to take an even harder line against solar in 2012, but (always a "but" when politicians are involved) that harder line would probably take half the year to define by the German parliament and as such, the demand frenzy in Germany would continue through the first half of 2012, with one last boom fueled by the fear of the subsidy cuts to come. Look up tortured logic in the dictionary and you might find German solar market supply/demand dynamics and German solar subsidy policy as listings number one and two. Fast forward to this past week when the German hard line had already been set - at least according to Bloomberg, which reported that German Environmental Minister Norbert Roettgen (who has historically been an avid proponent for the solar industry) put in place an overhaul to Germany's current solar incentive scheme, moving to monthly vs. bi-annual cuts. Solar shares tanked.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV