Solar energy was given a boost last week after $18 billion in tax credits for clean energy were tacked on to the bailout bill to ease its passage through Congress.

Since then, however, concerns of oversupply have whacked solar stocks. This prompted Goldman Sachs (NYSE:GS) to downgrade several solar companies to a “sell”.

J. Cristoph Amberger says the current financial crisis will hurt investment in solar power. He recommends investors sell their positions while they still can.

This from Today’s Financial News:

Two key solar stocks are being hit hard in early indications. First Solar, Inc. (NASDAQ: FSLR) had already cut its 52-week high of $317.00 by more than half. Trading below $140 today (down 10%-plus), it’s still twenty bucks above its 52-week low of $124.96.

SunPower Corporation (NASDAQ: SPWRA), too, has been decimated. (In fact, “decimated” — meaning a violent elimination of a tenth! — seems too tame a term to describe what’s happened!) The stock is worth just a third of its 52-week high of $164.49, trading just above its 52-week low of $52 right now.

My own recent recommendation of Yingli Green Energy (NYSE:YGE) is down to $7.59 (-10.50% just today) for a total loss of -55.58%.

I do not believe the stock will double any time soon for us to break even on it. Goldman Sachs’ change of direction tell me we’re in for a sea change in the attitude toward solar companies in general, beyond the upheaval in the current market.

My original call on Yingli — which we had covered since its IPO back in the Taipan days — was motivated by expectations that Obama will win the election, unleashing a tidal flow of speculative money into “politically correct” investments. A flow triggered by the expectations of a Federal gravy train of subsidies that could make up for the economic shortcomings of solar energy.

That money may still be coming. But overall, I believe recent fascination with solar is a Prosperity Phenomenon. It’s the equivalent of a Levenger catalog (”Tools for Serious Readers”) or an Eagle Scout project marking storm drains in prosperous suburban neighborhoods with “Don’t Dump” stencils. (I did that last Saturday!)

Large-scale adoption of solar technology by consumers represents a huge investment. And currently, it doesn’t look like there will be excess play money lying around anywhere… or credit being extended.

Plus, there’s talk of a huge solar over-supply by 2010.

My recommendation: Solar technology is the new bio-ethanol. Sell while you still get money for your shares.

Source: The Death of Solar? Yet Another Bubble Has Popped!