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The Next Dot-Com Sector

By Dr. Steve Sjuggerud
Monday, June 11, 2007

Earlier last week in Iceland, our group of 50 True Wealth subscribers visited a "clean-energy" power plant.

Truth be told, we weren't even supposed to go there... My original plan fell apart.

I was a bit concerned about this backup plan... Who wants to go to a power plant?

But "clean energy" is a billion-dollar buzzword these days. And this place – Nesvajallir – is as "clean energy" as it gets. Nesvajallir provides electricity AND hot water to the capital city of Reykjavik and the surrounding area.

A word or two about this power plant... Nesvajallir sits right on top of a split in the Earth. The building is literally being pulled apart two centimeters a year. Apparently, half of the building is on the American Plate and half is on the Eurasian Plate. The building has expansion joints and large cracks at these points. Here's how the place operates...

Steam rises from the ground. Nesvajllir first uses the fiery hot steam to create clean electricity. The steam can then be reused, as it's still unbelievably hot. So next, it is used to heat pure water coming off of the glacier. Then, thanks to gravity, huge insulated pipes take the hot water 17 miles into Reykjavik. It reaches Reykjavik at 86 degrees Celsius, which is 186 degrees Fahrenheit. The hot tap water scalds a few unsuspecting kids and tourists each year.

Surprisingly, we didn't see a single employee at the plant, outside of the woman giving us the tour. The thing runs itself, and it's spotless. Also for the greenies, it hard to believe it, but it emits significantly less carbon dioxide than even wind power, apparently. It's all quite a feat.

Since this was a "clean energy" power plant, many folks were very interested. And later in the week, our group had a presentation from a "clean energy investment company." I came here interested in bonds, because of their extraordinary profit potential. Many in the group, however, only perked up when the six-foot, blond-haired, blue-eyed Icelandic girl appeared... She gave a speech on her clean energy company.

"We just raised $100 million in May, but we've spent it already," she told the crowd.

"Tell us more," you could see in the crowd's faces.

"We won a contract in the Philippines..." she went on.

"Of course she did," I thought. She had $100 million of other people's money to spend. No wonder the money is gone. But this didn't deter investors...

"How can we invest in your company?" many wanted to know. I had no interest in this investment. Surprisingly, not a single person asked HOW they'll make money, or even IF they'll make money. Actually, scratch that, one person from the back asked "Are you profitable?" You can guess the answer... She batted her eyes, winked, and said "not yet."

I felt I was experiencing the dot-com mania all over again. Nobody cared when the company might make money. Even if the company eventually makes money, it still doesn't mean the investors will make money. Yet she could have accepted seven figures in checks right there.

"When can we get in on your next round of money raising?" people asked her. I couldn't believe it. She just told us they spent $100 million in a month, without any profit to show for it. Why would you give them more?

Because clean energy is the new dot-com. You don't bother with things like profits when you're changing the world, I guess.

If you're bold, one way you can play this trend is through the WilderHill Clean Energy Powershares ETF (PBW). If clean energy turns out like the dot-coms, this fund could soar, until it crashes. Like the dot-coms, we can't say how high it will soar, or how far it will crash.

If you're bold, you can give it a shot. Just don't get sucked into the hype and risk losing all your money. Make sure you use a trailing stop... so you could ride it up and get off on the way down...

Good investing from (finally) sunny Iceland,


Market Notes

Suncor (SU)... oil sands
Apple (AAPL)... computers and iPods
Amazon (AMZN)... online retail
Nokia (NOK)... cell phones
Google (GOOG)... search engine
Terra Industries (TRA)... agricultural chemicals
Mosaic (MOS)... agricultural chemicals
CF Industries (CF)... agricultural chemicals
Anheuser-Busch (BUD)... agricultural chemicals
BHP Billiton (BHP)... diversified commodities
Teck Cominco (TCK)... diversified commodities
Northern Orion (NTO)... copper and gold
National-Oilwell Varco (NOV)... America's largest oil rig maker
ExxonMobil (XOM)... America's largest oil rig operator
Transocean (RIG)... America's largest offshore oil driller
Tidewater Inc. (TDW)... America's largest offshore oil rig supporter
Fluor (FLR)... energy infrastructure
Foster Wheeler (FLWT)... energy infrastructure
Jacobs Engineering (JEC)... energy infrastructure


Travelzoo (TZOO)... online travel
VeraSun Energy (VSE)... ethanol producer
Starbucks (SBUX)... coffee shops
Genentech (DNA)... biotech
JDS Uniphase (JDSU)... networking
Hovnanian (HOV)... homebuilder
Pulte Homes (PHM)... homebuilder
Standard Pacific (SPF)... homebuilder
Whole Foods (WFMI)... whole paycheck

– Brian Hunt

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