"I can't believe I won," cried Jordin Sparks, winner of last year's American Idol. Within seconds, industry and non-industry drones alike began formulating ways to attach themselves to her in some way, crazy in anticipation of the inevitable riches.Months later, several Wall Street types were overheard saying, "I can't believe oil keeps going higher, alternative energy stocks are going to be hot, hot, hot," and thousands of investors went wild buying shares of the dozen or so solar stocks, crazy in anticipation of the inevitable riches.
Each industry has its stars: Kelly Clarkson, Carrie Underwood and Clay Aiken -- as determined by album sales -- for American Idol, First Solar (NASDAQ: FSLR), Sunpower (NASDAQ: SPWR) and MEMC Electronic Materials (NYSE: WFR) -- as determined by stock performance -- for the solar industry.
Each industry also has its lemons: Ruben Studdard and Taylor Hicks were dropped by their labels, and Jessica Sierra sentenced to rehab for American Idol; LDK Solar (NYSE: LDK) with its margin pressures and ugly chart, Daystar Technologies (NASDAQ: DSTI) with its stock flat over the past six months, and China Sunenergy (NASDAQ: CSUN) with its stock flat over the past eight months for the solar industry.
Of course, the comparison isn't exact because American Idol has remained enormously popular for over five years while solar stocks have only caught fire in the past few months. But like American Idol, solar stocks are based on hype and association, not necessarily the quality of individual companies. Just as winning American Idol does not guarantee success, being a solar company is just as risky an endeavor and investors should remain cautious.
For the time being, it looks as though the sun might be setting on these solar stocks, so don't be afraid to be as cold as the record labels and drop the non-performers!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, the star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
Of course, the comparison isn't exact because American Idol has remained enormously popular for over five years while solar stocks have only caught fire in the past few months. But like American Idol, solar stocks are based on hype and association, not necessarily the quality of individual companies. Just as winning American Idol does not guarantee success, being a solar company is just as risky an endeavor and investors should remain cautious.
For the time being, it looks as though the sun might be setting on these solar stocks, so don't be afraid to be as cold as the record labels and drop the non-performers!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, the star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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