President Obama is hoping that Midwest rural areas will return the favor, and provide much needed wind-generated power to densely populated cities and towns up and down both coasts of the country…

Wind turbines are huge, and not well suited to more densely populated areas. They are a natural fit in the vast open plains of the nation’s heartland, where the wind almost never stops blowing. But there’s a problem… it’s just not the one you might think.

Here’s why wind-generated power is still going to be the driving force for change in the way we use energy, and one of the biggest obstacles it has right now to getting us to where we need to be.

A Banner Year For The Wind Power Industry

2008 was a banner year for the wind power industry:

• Previous installation records were blown away, with over 8,500 megawatts (MW) of new generating power installed in the United States alone. That’s enough to light over 2 million homes.
• Wind power installations represented 42% of all the new power generation capacity added in 2008.
• The 44 million tons of carbon emissions avoided equates to taking 7 million cars and trucks off the highways.

As a result of the current recession, the wind energy installation outlook for 2009 will be somewhat muted compared to last year, with about 5,000 MW expected to be installed. But despite the downturn, the industry is still in expansion mode.

And that’s a good thing.

A lot of the stuff is engineered and made right here: domestic “made in the USA” components now make up about 50% of the average system, up from 30% in 2005. And like any other burgeoning sector, when business is booming, companies expand and hire people.

In just the last two years, wind turbine, tower and component manufacturers announced new facilities, added or expanded 70 facilities, 55 of them in 2008 alone.

It’s creates lots of jobs as well. Today 85,000 people are employed in the wind industry. That’s a 70% increase from just one year ago. It’s all good news… well almost all of it.

Where Wind-Generated Power Is Needed The Most

You see, while plenty of wind farms dot the ranchlands of the Midwest, the bulk of the wind-generated power produced is needed in the dense urban areas on the east and west coasts.

And there’s the big problem: the existing power grids won’t cut it.

Just consider: 3,000 utilities generate power and send it to 500 transmission owners. They control over 164,000 miles of transmission lines divided into three major interconnection regions: East, West, and Texas.

As an electrical engineer, I may be one of the few who can appreciate the technology, but it’s truly amazing that it all plays together.

They’re fragmented, low power grids that aren’t capable of transmitting the hundreds of thousands of megawatts that will be needed thousands of miles away from the wind farms.

The bottom line is that in order for the estimated 300,000 MW of proposed wind-generated power to get to where its needed, $60 billion will need to be spent on grid upgrades and interconnects by 2030.

The Biggest Problem Facing Wind-Generated Power

But even assuming the $60 billion was available to be spent on this type of alternative energyright now, not a dime of it would be used to build wind-generated power transmission lines.

The problem? Red tape with a capital R:

• Regulations that aren’t designed for power transmission between states.
• Rules that burden the local ratepayers unfairly with the construction costs instead of distant beneficiaries.
• Approval times measured in years, not months.

Here’s an example of how ridiculous it gets: American Electric Power (NYSE: AEP) is a public utility holding company in the business of generation, transmission and distribution of power at both the retail and wholesale level.

As part of an expansion of its network, the company erected a transmission line between West Virginia and Virginia. The construction time was two years. The approvals took 14.

Susan Tomasky, AEP Transmission President, explains the problem: “There are lots of people with authority to make pieces of the decision, and no single entity that can say ‘yes’ or ‘no’.”

Clearly what’s needed is federal permitting to locate cross-country transmission lines. The federal government has been doing it with natural gas pipelines since the 1960’s.

Looking To The Future Of Wind Turbines

So what are the chances of the fed’s saving us, and getting it done in the near future?

Better than you might think: Jeff Bingaman – Chairman of the Senate Energy Committee – has a proposal that will require comprehensive plans for grid interconnections.

More importantly, it will greatly expand the FERC’s powers to locate big new transmission lines at the federal level (bypassing the myriad of local regulations) and the authority to properly allocate their costs.

And firms like AEP and ITC Holdings Corp. (NYSE: ITC), another power generation and transmission company, are both eager to invest and build lines from the Midwest to cities in the east.

Even if all goes according to plan – which isn’t ever the case in Washington – these lines wouldn’t be in service until 2020 or so. Clearly a more streamlined approach is needed. The refreshing news is that it appears politicians are actually working on the problem.

We’ll be watching and reporting on it here and in my Energy and Infrastructure newsletter soon to be published by the Oxford Club.

Next week, I’ll be traveling with my colleagues to Vancouver, British Columbia, and speaking at the Oxford Club’s Victoria Chapter Meeting. I’ll return here the following week.

Source: Wind-Generated Power: Why Midwest Wind Power Isn’t Blowing East

The pullback by Silicon Valley’s venture-capital elite is part of a complete overhaul of its investment criteria. The big surprise is that green investments are on the hit list along with other high-tech innovations — a reversal of the save-the-planet culture that has emerged in this Mecca of libertarian funding.

An article in today’s New York Times revealed that Silicon Valley VCs are now turning to shorter term opportunities versus the long-term returns that exemplify a healthy investment climate.

Alternative energy will get more critical assessment along with the Web 2.0 hype (think social networking), cell-phone advertising, massive enterprise software development and other long-term, big-ticket products.

Silicon Valley’s turn-around on green infrastructure comes at a time when the incoming Obama administration is pushing alternative energy as a means to create a new industry and reduce reliance on foreign oil.

Investors with an interest in alternative energy now have to pick sides. Our take on green energy is that it will eventually provide a profit, but the near-term prospects have always been questionable. In short, we always advised not to believe the media hype. Now it seems that the brains in Silicon Valley are in agreement.

Having personally worked in Silicon Valley for 15 years as a marketing professional, I know first hand that there’s probably no other investment community on the planet more attracted to hype. They create it, consume it and live and die by it.

Now, as Big Media jumps on Obama’s renewable energy bandwagon, Silicon Valley decides it’s time to get off. Why the change of heart? It has to do with two clashing trends.

For one thing, total investment in renewable energy in 2007 was $3.43 billion, up 50% over 2006, according to the Venture Power Report. Solar led with an immense $1.05 billion total.

At the same time, Silicon Valley produced just one IPO in 2008, the lowest number in more than two decades and down from an average of 28 IPOs a year since 1985.

The head-on collision of record-high alternative-energy investments and a single, crummy IPO means that Silicon Valley is not expecting to see a return on their green dollars any time soon.

The San Jose Mercury News, the bible of Silicon Valley, reported on Dec. 26, 2008, “The ugliest recession in decades is expected to keep the national IPO market frozen through at least the first half of 2009 and maybe longer, according to several venture capitalists and analysts.”

So despite President-elect Obama’s promise to spend $150 billion over the next decade to promote renewable energy, Silicon Valley is saying “Show me the money.”

Richard Nixon tried energy independence and failed. Jimmy Carter promoted synthetic fuels and failed. Bush promoted biofuels and failed.

Now President-elect Obama thinks he can succeed where his predecessors have stumbled badly. Maybe he will make it work. But it’s very possible that the libertarian culture in Silicon Valley has sobered up, realizing that the government really doesn’t have a great track record of picking winners for investors.

As always, if you’re into alternative energy for the long haul have yourself a ball. If you want to keep the lights on, put your money elsewhere.

Written by Friends of the Earth in San Francisco, and distributed by BankTrack, the international network that monitors commercial and investment banks, the report offers a promising future for China’s massive and lucrative clean-up – until you reach page 15.

The report is an 18-month update of key developments on a program that China implemented to cut funding for companies that contribute to the country’s devastating pollution.

The program, China’s Green Securities policy, was launched in February 2008 by China’s Ministry of Environmental Protection (MEP) and the China Securities Regulatory Commission (CSRC). Beijing was trying to cut polluters off at the knees by making it more difficult for them to raise money.

Pollution in China is costing the economy billions, and the Communist Party knows full well that something needs to be done to maintain its blistering growth.

In 2007, the World Bank published a 151-page report that concluded the total cost of air and water pollution in China in 2003 hit $114.1 billion, or about 5.78% of its GDP.

If China continues to increase greenhouse gas emissions at the 2007 rate of 8% per year, it will double those of the entire European Union by 2020.

The destructive powers of filthy air also become apparent in acid rain. According to the World Bank report, acid rain caused over $4.3 billion in damages to crops, or about 1.8% of the value of China’s agricultural output. But it’s not just living things that suffer from acid rain. It caused over $1 billion in damages to houses and office buildings.

That’s why the clean-energy market in China is expected to generate revenues of $186 billion in 2010 and $555 billion in 2020, according to a U.S. government report.

To put that into perspective, $555 billion is what President Bush budgeted for domestic spending in 2007.

But are those huge revenue projections realistic for China?

If you get through the Friends of Earth report to page 15, you may start wondering how much money can really be made through green investments in China in the coming decade.

The Friends of Earth discovered that at the local level, banks are ignoring government mandates to verify a company’s environmental record before lending money.

The MEP has run into opposition from some local governments and banks unwilling to sanction or reduce loans for heavy polluters or high-energy consuming businesses because they are reliant on those companies for their tax base and short-term profits, according to the report.

The problem, of course, comes down to money. Locally, many provinces rely on pollution-spewing enterprises to keep the economy well-oiled. In 2008, 78% of China’s energy output came from coal, a figure that is expected to continue with no significant change until at least 2020.

Based on the Friends of Earth report, it will be another six years before the green mandate becomes national policy – and who knows how much longer after that before the local banks are forced to comply.

Advocates of alternative energy embrace the dogma “Think global, live local.” Unfortunately, that’s exactly what local bankers in China are doing today — a setback for investors contemplating green profits in China.

This from Penny Sleuth:

We don’t play politics at Penny Sleuth. Frankly, we can’t agree on politics. But that doesn’t mean smart investors should ignore what Washington’s doing. Some of the largest profits in history spawned from legislation and court rulings.

Take solar energy for example. After the introduction of the Solar Energy Research and advancement Act of 2007, investors watched as solar companies’ share prices exploded.

One of the biggest winners was First Solar Inc (NASDAQ:FSLR). The bill was brought before the House of Representatives on June 19, 2007. Over the next 12 months, First Solar’s shares jumped 300%.

Another was SunPower Corp (NASDAQ:SPWRA). SunPower’s shares blew up 151% in just six months.

Both of these gains can be directly contributed to a small bill being read in the House. This can happen on any particular day with any particular piece of legislation. We never know which bill or act will cause such run ups. But after November 4, we have a pretty good idea.

Obama Profit Opportunity No. 1:
Science’s Most Important Breakthrough in Centuries

While on the campaign trail, Barack Obama called for the ban on stem cells to be peeled back. He said that we have a duty to advance science in any way we can to cure the sick and improve the health of the world.

This should send all stem cell stocks through the roof. But if investors can pinpoint the right biotech/R&D firm, they’ll see the largest of these gains. Potentially collecting triple or even quadruple digit profits.

Fractured Spinal Cord? No Problem

Neuralstem Inc (AMEX:CUR) is an industry leader in Human Neural Stem Cell technology. Simply put, Neuralstem is working on cures for central nervous system diseases. The company currently has four issued patents and 12 more pending. Each of these are crucial to the industry. It limits competition, while providing a lucrative asset for future growth.

These patents cover a specific regenerative process where neural stem cells are administered to the area where a spinal cord fracture occurred. These stem cells grow and heal the fracture, which restores motor functions to the parts of the body where it’s been cut off.

For instance, if someone falls and fractures their spinal cord, there’s a good chance that person will lose control over the lower half of his or her body. In the past, that person would never be able to walk again. With Neuralstem’s technology, a simple injection can restore the person’s control.

Currently, the market values Neuralstem at just $51 million. Shares can be bought for around $1.60. That’s obviously too cheap. It’ll only take one bill, announcement, or speech to send shares flying. It appears that the stem cell ban will be lifted in the first 100 days of the Obama Presidency, so Neuralstem could see a huge boost in early 2009.

Obama Profit Opportunity No. 2:
Fixing Renewable Energy’s Fatal Flaw

There is only a certain amount of time during the day when windmills can produce energy. The average capacity factor for wind power is about 30%. The rest of the time, these windmills sit like giant statues, waiting for the next gust of wind. During that period — the “energy time gap” — no new electricity is going onto the power grids.

The same goes for solar power. The sun doesn’t shine 100% of the time. Even in the vast deserts of the U.S. Southwest in the peak of summer, the sun is up only about 14 hours per day. When it is up, there are problems with cloud coverage. The average capacity factor for solar power is around 25%.

Round-the-Clock Energy Storage

ZBB Energy Corp (AMEX:ZBB) designs and manufactures a special type of fuel cell storage device called Zinc Energy Storage Systems (ZESS). ZBB’s systems are used worldwide in the renewable energy fields. For instance, wind and solar farms use ZESS to store extra energy during peak hours. Then, in off-peak periods (no wind or at night), the ZESS can transmit its stored power to the grid. This system allows for continuous electricity 24 hours a day.

Here’s the best part… It only takes three to four hours to charge a ZESS. That’s plenty of time to store the solar or wind power during peak time. The company sells its systems to wind and solar farms, utilities, and commercial/industrial sites.

Banking on the First 100 Days

Within the first 100 days of Obama’s Administration, the demand will likely multiply. Obama plans to invest $150 billion to help create five million jobs in clean energy over then next 10 years. You can bet that a good portion of that money will be sent to wind and solar farms. Those farms will need to increase efficiency and storage. That’s when they’ll call ZBB.

On top of the spending, Obama has already declared he’ll push for new, strict mandates on energy and efficiency. For instance, he’s calling for 10% of our electricity to come from renewables by 2012 and 25% by 2025.

Obama Profit Opportunity No. 3:
It’s Upgrade Time

Many investors run from the defense industry when they hear a Democrat coming. We think you should jump right in. You see, the largest defense contracts in our nation’s history have come under Democrats. In fact, almost every period of the military buildup has come from a left-of-center White House…with the exception of Ronald Reagan.

As we enter our sixth year of the Iraq War and our eighth year of the one in Afghanistan, our weapons, vehicles, and equipment are desperately overdue for repairs and upgrades.

Whether you are a Democrat or a Republican, you still provide our troops with the best equipment available. It certainly wouldn’t look good for Obama to enter the oval office on day one and cut equipment upgrades to the troops in war zones.

We think he’s going to take the opportunity to “reach across the aisle” and upgrade our military’s technologies and defenses. He’ll want to do that early if he plans to get any of his agenda passed.

Niche Player in a Mega Industry

That’s why we recommend you check out Herley Industries (NASDAQ:HRLY). Herley is a leader in RF microwave and millimeter wave components. These components are crucial to flight instrumentation, weapons sensors, guidance systems, and radars.

The company currently has a backlog of $157 million, with a market cap of just $139 million. Herley’s list of customers include Northrop Grumman, Boeing, Lockheed Martin, and the U.S. government.

While you might not have heard of it, Herley has been around since 1965. It’s been designing microwave devices for the defense industry for over 40 years. The company’s technology has been implemented in such projects as the F-16 Falcon, E-2C/D Hawkeye, and the AMRAAM air to air missile.

This kind of background puts it in the front spot for any future defense upgrades. On top of that, it’s stock is extremely cheap. It’s trading at just 0.72 price-to-book, and 0.63 price-to-sales.

Defense is likely a top priority for the incoming Obama Administration. The time is right to jump in on a niche defense company like Herley.

Source: The Three Best Plays for Obama’s First 100 Days

T. Boone Pickens, oil man, hedge-fund manager and natural gas entrepreneur, made headlines earlier this year when he announced an initial investment of $2-billion in a new Texas wind farm. Wrapped in the brilliance of Old Glory, he stepped up to the soap box and declared how he would wean America off evil foreign oil. Overnight, the 80-year-old Texas legend became the most unlikely poster boy for the green energy movement.

Given Pickens’ Texas Holdem swagger, wind energy – and by association all alternative energy – took on a measure of safety that deluded many investors into thinking they could simultaneously buy their way into the Wall Street Hall of Fame and the Pearly Gates of St. Peter.

Now, it turns out, Pickens’ massive project is sucking cash instead of blowing in the wind. And in one of the most under-reported stories of the year, Pickens finally admitted that the wind farm has been put on hold indefinitely.

Just as investors followed Pickens to the alter of green, they should now also pull green from their portfolio.

The same market dynamics that forced Pickens away from wind continue to crush the green industry as a whole: difficult financing and low oil prices. Some rosy optimists still cling to the belief that President-elect Obama will wave his magic green wand and make all those problems go away. But with record unemployment, the struggle to save Detroit and expensive wars in the Middle East, we contend that Mr. Obama’s green initiatives will prove to be nothing more than campaign rhetoric for at least the first 12 months of his administration.

Certainly big money men such as Pickens, electric-car magnate Elon Musk and Silicon Valley’s new breed of green venture capitalists have influence in Washington. But we’re still not convinced that Obama, for all his good intentions, can make a convincing argument to throw billions behind green in these tough, recessionary times.

As it now stands, Pickens’ Mesa Power has already placed orders for the first phase of the Pampa Wind Project, 667 wind turbines from General Electric capable of generating 1,000 megawatts of electricity, enough to power more than 300,000 average U.S. households.

The first phase of the project, estimated at $2 billion, was originally scheduled to come online in early 2011.

He still expects to take delivery of the project’s 2,700 turbines in 2010, but their installation might be delayed until wind is more competitive economically, he was quoted as saying. Still, 2010 isn’t that far away, and the likelihood of oil rebounding to this summer’s high of near $150 by then is quite slim.

Futures of light sweet crude were trading on the New York Mercantile Exchange at about $57 a barrel, a 21-month low. Unless, Obama can create thousands of new jobs in 2009 so consumers can drive to the mall, oil prices will continue to remain depressed.

While green investments will certainly make a rebound in our lifetime, it won’t take place in the next 12 months.

This from Money Morning:

With his landslide election victory Tuesday – coupled with Democratic gains in the House of Representatives and in the Senate – U.S. President-elect Barack H. Obama II will have the ability to pursue more or less any policy he wants.

For investors who have been trying to analyze the economic outlook for the New Year, the election of U.S. Sen. Obama (D-Ill.) provides a major piece of the forward-looking jigsaw puzzle that these analysts hope to assemble. That’s because the likely trends of the United States and other economies around the world – and the relative success of different sectors within those economies – depends crucially on who’s in the White House, what policies they have, and how effectively they can pursue those policies.

Only one thing keeps the triumph of the incoming Democratic president from being totally complete: The Republicans appear to have held onto 41 Senate seats, enough to prevent the Democrat majority from overriding a united filibuster. In practice, however, there are few issues on which the Republicans will be completely united. Thus, on only a few “litmus test” issues – such as the “Employee Free Choice Act,” which removes the secret ballot from union elections – is this filibuster threat likely to be effective.

Obamanomics: From the Environment to Health Care

A review of President-elect Obama’s economic policies – characterized by the term, Obamanomics – clearly offer profit opportunities. Let’s take a closer look at some key areas to consider in 2009.

In the economics area, Obama’s two signature policies are a promise to institute a “cap-and-trade” system of carbon emissions permits to combat global warming, and a substantial expansion in state healthcare provision, notably to include universal healthcare provision for minors.

On the energy front, the support of U.S. Sen. John McCain (R-Ariz.), for the “cap-and-trade” system will make it much easier for Obama to pass legislation quickly, probably in the first half of 2009. Under Obama’s proposed legislation, emission permits will be auctioned to utilities and other businesses with substantial carbon emissions. This has the advantage of being more of a free-market approach than McCain’s plan to give away the permits for free, which would have required the creation of a huge government bureaucracy to decide who would get those permits.

Even so, Obama’s approach has the disadvantage of imposing gigantic new costs on utilities and other carbon emitters. Indeed, Obama himself has said that new coal-fired power plants would become hopelessly uneconomic under his plan – chiefly because of the costs of the emissions permits they would need. That suggests that nuclear power plants (which he does not oppose) would account for the majority of new power-station construction during the Obama presidency – although solar, wind and other power-generating technologies that look pretty and can be made to work also will fare well.

The corollary of Obama’s emissions permit program, therefore, is that an investor should sell coal-producing companies and coal-fired electric utilities, and invest in nuclear power stations and uranium-mining companies. In principle, there should also be opportunities in the solar- and wind-power sectors, but the “new energy” fad of the last couple of years has already driven their valuations to uneconomic levels.

On the healthcare side, investment recommendations are more difficult to isolate. Generally, Democrats are skeptical of the patent protections enjoyed by pharmaceutical companies – as well as the high prices those protections create – so the major manufacturers of patented drugs should be avoided.

Conversely, the producers of generic drugs appear poised to benefit from the increased spending on healthcare – especially the manufacturers of pediatric healthcare products, including pharmaceuticals – should benefit from the Obama program’s emphasis on children’s healthcare.

Financial Crisis Redux

Of all the questions investors will have about the New Year – following Obama’s victory – is what the new administration will do about the current financial crisis.

A federal bailout package – consisting chiefly of spending increases – seems almost certain in the short term; that will cause the federal deficit to balloon even more than it has already, will make U.S. Treasury bond financing increasingly difficult, and will further stoke inflation. In those circumstances, avoid Treasury bonds, except the inflation-protected buying Treasury Inflation Protected Securities (TIPS), the principal and interest of which are linked to the Consumer Price Index (CPI). TIPS currently have an attractive yield around 3.0%.

It seems likely that an Obama administration will tend to impose costs on the financial-services sector in return for the bailouts it receives – perhaps, for example, banks will be required to funnel lending into low-income areas, or toward other chosen beneficiaries. Limits on financial-sector remuneration also may make it difficult for the major banks to do business, particularly in the trading area. The Democrats have a more aggressive attitude toward “predatory lending” than the Republicans, and will undoubtedly find innumerable examples of such lending in the mortgage and credit card area over the next few years, which they will wish to punish. Hence, financial sector investments should be generally avoided.

Potential Profit Plays

On the other hand, both Obama and the Democrats seem more likely to propose bailouts for states and municipalities that find themselves in budgetary hot water because of the recession that’s sure to come (if it’s not here, already). Thus, municipal bonds, which carry a considerable credit risk under a tight-fisted Republican administration, may be thought of as less vulnerable to default under an open-handed Democrat administration with sympathy for the issuer’s problems, particularly if that municipality represents a core urban Democratic constituency.

When New York City got in trouble, U.S. President Gerald Ford – the Republican who succeeded the disgraced Richard M. Nixon – took an unsympathetic attitude and The New York Daily News captured his perceived attitude with the headline: “Ford to City: Drop Dead!” No such episode will occur under the urban-oriented, free-spending Obama!

And that makes munis a “Buy.”

Also in the “Buy” category are automobile and auto-parts companies. No matter which candidate ended up winning Tuesday, the victor would almost certainly decide to bail out U.S. carmakers, as well as the suppliers that rely on them. After General Motors Corp. (GM) was rebuffed in its bid for aid by the Bush Administration, the bailout of U.S. carmakers is now being billed as a top priority for the incoming President Obama.

Automakers such as GM and Ford Motor Co. (F) benefit from being the headliners in an iconic U.S. industry – especially because it’s one that employs lots of potential Democrat voters in industrial states and suffer from international competition that increasingly riles the more protectionist Democrats. A bailout is thus inevitable, probably without involving the automobile companies in a Chapter 11 bankruptcy. And that makes their shares worth a “flutter.”

President-elect Obama’s supporters celebrated ecstatically Tuesday night. Investors should be more skeptical. But looked at carefully, an Obama administration – and Obamanomics – would still seem to offer opportunities for profit in the New Year.

Source: Money Morning Outlook 2009: Obamanomics Offers Investors Plenty of Profit Plays in the New Year

If John McCain manages to pull off a surprise victory next week, Martin says biotech stocks will get a boost from fewer restrictions on drug prices.

This from Smart Profits Report:

One week from today, America will elect its next president.

What was a hotly contested race a few weeks ago now appears to be swinging in favor of Democratic candidate Barack Obama, but that doesn’t necessarily mean Election Night will be much less dramatic.

The question is: How will this major event and changing of the White House guard affects the economy, the stock market – and more importantly, individual investors? Many investors are already sick to death of the drama that the stock market has tossed at them this year, so aren’t likely to welcome much more.

Let’s take a look…

The Four-Year Presidential Cycle And Its Impact On The Stock Market

Despite the current rhetoric and hype surrounding the candidates’ respective policies, measures enacted typically don’t make any serious dent on the economy for a year or two after they’re passed into law.

Yale Hirsch, one of the co-authors behind the respected Stock Trader’s Almanac has studied the effect that presidential election cycles have on the stock market. And his research indicates that the market generally follows a pattern, regardless of whether a Republican or Democrat administration wins the White House.

According to the theory, here are the stock market returns between 1948 and 2007…

• The first post-election year is typically the worst performer in the presidential cycle, with the S&P 500 posting a 7.3% return
• The second year sees the highest record of bear market bottoms, with the S&P recording a 10.1% advance.
• In the third year of the presidency, the market picks up dramatically, notching up a 22.9% gain.
• The final year of a presidency sees more uncertainty creep into the market, with a 12.1% gain. That’s still above average, though.

While the past four years haven’t followed the above trend, this is an entirely different time, with the U.S. experiencing an epic financial crisis right on top of the presidential election.

And the market could easily fall back into this pattern… because right on schedule, economists foresee recession conditions over the next two years.

The Post-Election Healthcare Environment

As an investor, if you’re looking for a map of how the next cycle will play out – and who could be affected the most – a lot depends on whether the winning candidate can live up to his promises. But that can depend largely on who controls Congress and the importance of the sector.

For example, areas like healthcare, energy, education, and defense are always going to be pretty heavily funded, no matter who is running the show.

With regard to healthcare, this election is once again filled with candidates’ promises of how they’re going to create affordable healthcare for all Americans – a task that always seems to be easier said than done.

According to the International Strategy and Investment (ISI) research firm, a McCain administration would probably represent good news for firms like Pfizer (NYSE:PFE), Genzyme Corp. (NASDAQ: GENZ) and Genentech (NYSE:DNA), since they’d be less likely to face restrictions on drug prices.

In addition, McCain may not opt for as much of an overhaul of healthcare as Obama, so managed care firms could see an advantage. Obama would seek changes to Medicare and crack down on medical malpractice areas, so look for managed care and insurance companies respectively to undergo Obama’s favorite word… change.

Since both men have espoused unique alternatives to our current system, the healthcare sector will see changes regardless though.

Look To Renewable Energy Firms… No Matter Who Wins

As for energy – one of the hottest spots on the market – both Obama and McCain support crucial efforts to explore alternative energy in order to relieve some of America’s dependence on getting energy from volatile nations.

Earlier this year, McCain even went so far as to offer a $300 million reward for anybody who could design a “battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.” And both men attended former president Bill Clinton’s National Clean Energy Summit in Las Vegas, Nevada, back in August.

McCain has also thrown his weight behind greater offshore drilling and “clean coal” production, right alongside ethanol production from corn. Obama has expressed more interest in other forms of alternative energy, such as wind and solar power – two areas that could receive more subsidies and mandates under his administration.

In this respect, ISI says solar leader like First Solar (NASDAQ:FSLR), wind turbine manufacturer Vestas Wind Systems (CPH:VWS) and waste-into-energy firms like Covanta Holding (NYSE:CVA) could see benefits.

The Battle For Headlines: Economy And Market vs. Obama And McCain

The bottom line here is that while both candidates are busy championing their ideas and policy proposals to the country and certain sectors and stocks will benefit more than others from a regime change, the overall stock market isn’t going to be as affected as some people might think.

According to John Merrill, chief investment officer of Tanglewood Wealth Management, the market isn’t really paying that much attention to the candidates, no matter how much both like to speak out. “Today, the market and the economy are shaping events much more than the presidential election.”

Source: The Presidential Election Cycle… What The Obama-McCain Battle Means For Stocks

The European Union has set a target date of 2020 for 20% of its energy to come from renewable sources. The British Wind Energy Association said Britain will contribute 15%, meaning up to 40% of the country’s power will come from wind energy by the target date.

“The richest investment opportunities can be found in the fast-emerging alternative energy sector,” says Mike Burnick in The Offshore A-Letter.

That’s where oilman T. Boone Pickens is putting his money – his company Mesa Power just placed an order for US$2 billion in wind turbines. And there’s much more profit potential in other parts of the alternative energy sector too – especially alternative fuel.

• The market for ALL alternative energy sources grew 40% last year alone to US$77.3 billion and will explode into a US$250 billion industry within 10 years.
• Bio-fuel grew to a US$25.4 billion market last with more than 15 billion gallons of ethanol and biodiesel produced globally – more than double the output of just four years ago.
• The worldwide Bio-fuel industry will continue to enjoy explosive growth for years to come – expanding into a US$81 billion business within the next 10-years!

But you don’t have to wait two decades or even two years to start making serious money from this energy-sector market shock…

Fossil fuels are dead – the future belongs to alternative energy. Vast fortunes will be made in the “great fuel revolution!”

Investing in established wind energy stocks stocks is a great way to profit, says Charles Delvalle in Investor’s Daily Edge:

It seems to me that investing in green stocks is a great thing to do. What you want to do is avoid the companies that have no profits… the ones that are using very experimental technologies that haven’t been proven yet. These companies may do well in the future, but you take a huge risk by putting your money on them now.

If you think investing in clean energy is a bad idea, just take a look at the Market Vectors Global Alternative Energy Fund (GEX) and you’ll see that the sector’s been clearly moving higher. And the PowerShares Global Clean Energy Portfolio (PBD) has been doing the same.

When he’s not making oil price forecasts, Pickens is busy investing in energy. He recently announced that his investment vehicle Mesa Power was putting $2 billion into a Texas wind-energy project, boosting clean energy stocks in the process and delighting the wind-energy lobby.

“Not only is Pickens forecasting higher and higher oil prices, but he’s also putting money into new oil companies,” says Ann Sosnowski in Taipan Daily.

According to the 13F Disbursement Plan, Pickens just bought Sandridge Energy Inc. (SD:NYSE) in the first quarter of 2008. It just went public in late 2007.

So far, it’s been on a solid run, returning an 83% gain in only four months. But it’s still cheaper than the major oil companies like BP and Exxon Mobil.

Sandridge is based in Oklahoma. It looks for natural gas and oil reserves in Texas and drills for other companies. It also provides CO2 to third-party oil recovery projects.

After an initial buy in the first quarter of 2008, I anticipate Pickens buying more and more of this oil company at its still low price of $55 per share. The safest way to invest in oil is to follow Pickens’ picks… especially since this expert says oil is going to $150, far from its current level near $130 per barrel.

With more than $1.5 billion in assets, PBW is one of most popular, diversified ways to invest in solar, biomass, wind, and geothermal energy. Common sense tells us when the holy trinity of fossil fuels – crude oil, coal, and natural gas – rise in price, companies that provide cleaner substitutes should also rise in price.

Today’s chart tracks the ratio between the price of crude oil and the price of the Clean Energy ETF. When the ratio hits around 3 or below, clean energy stocks are popular and soaring. When the ratio moves past 5, clean energy shares are out of favor and lagging the gains made in crude oil.

PBW’s only been around for three years, and this indicator is pretty rough… But with oil approaching $130 a barrel and clean energy stocks out of favor, expect a rally from the “treehugger-approved” companies of the world.

Source: Clean Energy Stocks Are Due for a Big Rally