Don’t Quit Your Day Job – Personal Finance, Economics and Investing

Not all of us have surplus money stacked up under our mattresses.  But it isn’t very hard to believe that after careful budgeting and hard work we can put away some money for the future.  When we finally get to this point some of us see many opportunities and are unsure of what to do with our money.  Personal investing can be a very opportunistic option and can pay off greatly if money is put in the right places.  We strive to put away money for investing, and then have no idea of what investment opportunities are available and which are the most advantageous.  It is important to research different roads we can take before we get to them.

The New “Oil”

Polycrystalline Silicon (Polysilicon) is something that we use everyday and we don’t even recognize it.  Almost all semiconductor based systems use Polycrystalline Silicon.  What exactly does this mean?  It means that nearly every electronic device in your life uses Polycrystalline Silicon, be it your car, stereo, microwave, camera, computer, television (you get the point).  In a technical sense, the components which make up electronic devices, such as diodes, transistors, rectifiers, and all sorts of digital and analog circuits use Polycrystalline Silicon.  Many people like to think of how rich they would be if they invested money in Microsoft during the early 80’s.  But the later implementation of Windows to personalize the computer blew up the semiconductor market and in turn the Polycrystalline Silicon market.  It is interesting to think about how rich we may be if we invested at the source as well.

World Semiconductor Sales, 1982–2002. Data: World Semiconductor Trade Statistics (WSTS).

You may be asking why it may be important to invest in Polycrystalline Silicon now, after computers have been around for so long.  Not only is Polycrystalline Silicon used in computers and electronics but it has a wide range of other uses.  It is a key component in solar panels.  As our economy is highly stressed due to reliance on petroleum based products, we are constantly looking for alternatives.  A renewable source of energy, such as solar panels, can never be a bad place to invest your money.  It has been more expensive in the past to supply solar energy due to high demand and low supply.  This is all changing as we speak.

Solar panels are very important in energy production even though efficiency rate is typically less than 20%.  Engineers are working to increase this efficiency rating and one small breakthrough could blow the ceiling off of the solar panel industry.

Photovoltaic Production, Worldwide (Prometheus Institute)

Skepticism

Although currently production of solar panels is slowing down, the industry will continue to grow far into the future.  Because the production of Polycrystalline Silicon has increased so sharply, the prices have fallen drastically.  The economic downfall has decreased the demand and the industry has reached a plateau.  When the economy turns around, the demand for solar panels will increase again and you will be in great position to collect returns.  The market is still too immature, rendering sharp supply and demand changes.

The economy is in bad shape and many markets seem to be declining.  Polycrystalline Silicon is not immune to this economic downfall.  Although it seems that the prices may be dropping due to over supply and decline in demand, it is due to turn around in the future.  Analysis by iSuppli predicts a turn around as soon as 2011.  The thing to keep in mind is that when investing we must look at the overall picture and think about prices in the long run.  Also, generous government subsidies distort demand and may increase incentives for solar investment.

The Future

It is hard to think of our world without computers anymore.  They are becoming increasingly important in nearly every industry and every household.  Regardless of computers themselves, the components that they are made of are even more widely used.  All of these electronics along with solar panels use Polycrystalline Silicon in order to exist.  As electronics become more important in our lives and the pursuit of renewable energy increases, it may be a very wise decision to invest long term at the source; in Polycrystalline Silicon.

Our energy demands will continue to rise.  The world population will also continue to rise.  We need to create more energy but lower our emissions.  Oil and coal do not seem to be the solution to our problems.  “Green” energy is usually more expensive and less efficient than oil or coal. Because both oil and coal sources are limited, the supply will diminish: driving up the price.  In the long run solar energy will become more and more important.

Check out the following ETFs which invest in solar, if you’re interested:

• Claymore MAC Global Solar Energy Index (TAN)
• Market Vectors Solar Energy (KWT)

Disclaimer: I’m not a financial advisor.  Talk to yours.  Any topics mentioned in the above article are solely my opinion, and should only be used as a starting point for your own explorations.

Solar panel thumbnail sourced from www.flickr.com/photos/44124348109@N01/3730751907, shot by Steve Jurvetson.

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