The theme this week on the Retirement Quick Tips Podcast is: Sure Fire Bets That Fizzled Out

Today, I’m closing out the week with talking about green energy. One area of investing that as a group hasn’t done well is green energy. This is surprising given the strong push towards alternative energy sources like solar, wind, and the technology advancements that have make hybrid and electric cars more common. And more recently, with the controversial emphasis on ESG investing, I would have expected that alternative energy companies would have fared well over the last several years. 

Of course there have been many individual winners in this space, but looking at the market broadly it paints a very different picture. The index fund ICLN - diversified global clean energy ETF is a good benchmark for the overall returns in the green or clean energy space. It’s lost about 60% of its value since it’s 2008 inception - so very bad returns over a very long period of time, when most everything else has seen strong gains since this time. 

I think the lesson here with investing in green energy is that being too early on a trend can be very painful. It’s likely that the winners and losers with respect to climate change will take decades to sort out. It’s still very unclear how we solve this climate change problem and many alternative energy sources are still proving themselves to be unreliable and needing government subsidies just to survive and have any chance of competing against the still cheap and abundant energy source of fossil fuels.

Despite the explosive growth and tremendous amount of capital that’s flooded into renewables and the politicization of this topic, that’s unlikely to overtake oil any time soon, meaning that investors who are interested in investing in green energy, need to be aware of the real risks and should be very patient if they want to tilt their investment portfolios in this direction. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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