MARKET MATTERS: Solar eclipse shouldn’t darken your energy investments

In the middle of the day on Aug. 21, the skies over a chunk of America will go dark as the bulk of the U.S. population

In the middle of the day on Aug. 21, the skies over a chunk of America will go dark as the bulk of the U.S. population experiences a total solar eclipse.

The eclipse, wherein the entire sun will be blacked out by the moon passing between it and the earth, will darken skies from Oregon to South Carolina, along a stretch of land about 70 miles wide. While the eclipse won’t be total in much of the country, there still will be plenty of shadow to go around.

For me, the solar eclipse should be something of a jolt for investors, consumers and those government officials with responsibility for the nation’s energy policies.

For investors, it should be a reminder to consider adding solar and other alternative energy companies to their portfolio. For consumers, it should be a reminder that the environment is fragile and needs our day to day help, through conservation, recycling and waste reduction. For government officials, it should be a reminder to strengthen efforts to improve the environment.

Despite sections of the country being in the dark when the sun is out of commission, so to speak, the eclipse should not be viewed as a reason to dismiss solar power production as a key element of our nation’s energy requirements.

While the temporary darkening of the sky may be unsettling to some, for savvy investors it should be a time to consider investing in all types of alternative energy, including wind, hydrogen-based fuel cells and even water.

So how does one invest in alternative energy? Of course, it is worth researching the myriad companies directly involved in alternative energy. But there also may be potential alternative plays — solar energy “farms,” for example. And what about the specialty metals companies that supply sophisticated alternative-energy projects?

I’ve found that simple research into the top alternative-energy companies offers a way to start evaluating potential investments. Is there a history of increasing revenue and earnings? Do you believe the firm’s primary product will have wide appeal? Are there significant stumbling blocks that might prevent success?

For many years, fuel cells, for example, have been a valuable energy source for NASA and the nation’s space programs. A handful of companies now focus on this industry. While profits seem to have eluded these firms, there are lots of believers in the long-term success of this hydrogen-based energy source. An individual’s investment timeline may — or may not — be able to take such a long-term approach.

As for solar energy, 2017 is not likely to see any major technological breakthroughs. However, the cost of solar installation continues a steady decline, making it competitive with other energy sources in some markets.

Like other types of energy generation, governments worldwide tend to subsidize solar power in various ways. There remains a risk that this support could terminate at some point — perhaps for political or even economic reasons. As with any investment, every individual must decide for him or herself what level of risk is tolerable.

Renewable energy, often called green energy, is growing internationally at an ever-increasing rate. Is there a battery-maker that looks promising in this investment sector? The potential opportunities are seemingly endless.

So while sections of the country may briefly go dark on Aug. 21, that doesn’t mean we won’t be able to detect significant light at the end of the green energy “tunnel” and be able to identify at least a few solid alternative energy investments.

Joseph Matthews is a Financial Advisor with the Wealth Management Division of Morgan Stanley in Fairfield. He can be reached at 203-319-5165 or by email at joseph.matthews@morganstanley.com. The information contained in article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. Morgan Stanley and its Financial Advisors do not provide tax or legal advice. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney LLC, member SIPC.

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