Smart Grid Investing: How Our Nation’s Future Energy Security Can Boost Your Portfolio Now

by Dave Fessler, Advisory Panelist

The “Smart Grid.”

You may have heard the media toss the term around recently. But ask the next 10 people you meet to tell you something… anything… about it, and I’ll wager that you’ll get deafening silence.

The reason? All of us take electricity – and the system that generates and distributes it – for granted. And despite having spent my entire professional life as an electrical engineer, I’m guilty as charged, too.

So what is the Smart Grid? How will it work? And why is it important to our nation’s future energy security? Read on for details, including two companies working to boost the nation’s power capacity that you can add to your portfolio today…

Why Our Current Systems Are Maxed Out…

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The recent volatility from the Healthcare sector has left many investors weary about where to place their money. General market swings aside, M&A activity and legislative developments have intensified the uncertainty in the sector, but have also lead to many investment opportunities.

M&A has been very exciting and has ramped up heavily in the last few months.  Pfizer[PFE: 14.04, 0.00 (0.00%)] and Wyeth, Roche and Genentech [DNA: 0.00, N/A (N/A)], Merck [MRK: 27.16, 0.00 (0.00%)] and Schering-Plough, Gilead [GILD: 44.37, 0.00 (0.00%)] and CV Therapeutics have all hit the headlines.  Obama’s Healthcare Budget Plan has stirred up heavy trading in recent weeks, putting downward pressure on the Managed Care and Pharmaceuticals sectors, while giving a boost to the Generic Drugmakers. The market has rallied in the past week.  Is your portfolio ready

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The stimulus bill is moving to the Senate, where it might encounter a little more resistance than it did in the house. Republicans are looking to add more tax cuts and business incentives, while the Democrats are feeling the pressure to add more infrastructure-based measures.br /blockquotebr /Republicans are preparing alternative proposals that would shift the emphasis away from spending. One proposal calls for cuts in the two lowest income-tax rates and strengthened aid to distressed homeowners, among other measures.br /br /At the same time, a Democrat-backed amendment being readied would increase infrastructure spending in the bill by between $20 billion and $30 billion, boosting support for mass transit, highways and bridges, and wastewater-treatment plants, among other things. “We’re going to see an increase,” Sen. Charles Schumer (D., N.Y.) predicted on CBS News’s “Face the Nation.”/blockquotebr /br /Here’s the way I see it. Some version of this bill is …

President-elect Barack Obama yesterday (Monday) formally unveiled his economic team, including the nomination of New York Federal Reserve Bank President Timothy F. Geithner as the new administration’s U.S. Treasury secretary. The team’s first challenge will be assembling an economic stimulus package that could be even larger than the $700 billion Troubled Asset Relief Program (TARP) the Bush Administration has deployed.

The nomination of Geithner to succeed current U.S. Treasury Secretary Henry M. Paulson Jr. was leaked over the weekend, and was reported by Money Morning yesterday.

Geithner (pronounced: GITE-ner) obtained a Master of Arts degree in International Economics and East Asian Studies from Johns Hopkins University’s School of Advanced International Studies in 1985. He also has studied Japanese and Chinese and has lived in present-day Zimbabwe, India, Thailand and China.

As

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As I am travelling in Europe at the moment (see “Another town, another train…”), this week’s edition of “Words from the Wise” does not provide the customary review of the financial markets’ movements and economic statistics. Given time constraints, today I will only share with you a number of video clips in lieu of excerpts from news items and quotes from market commentators. Quite a few of the video items include links to related articles for those who prefer the written word.

Firstly, as we are awaiting word on the bail-out plan, a very topical quote from Jim Welsh (Welsh Money Management): “We will be told that the Federal Reserve and

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U.S. stocks dropped for the third straight day yesterday (Wednesday) on worries that increasingly rancorous debates will squelch a proposed $700 billion bailout of the U.S. financial system even as Federal Reserve Chairman Ben S. Bernanke warned Congressional leaders that the credit crisis was already damaging the American economy.

U.S. stocks dropped for the third straight day yesterday (Wednesday) on worries that increasingly rancorous debates will squelch a proposed $700 billion bailout of the U.S. financial system even as Federal Reserve Chairman Ben S. Bernanke warned Congressional leaders that the credit crisis was already damaging the American economy. As part of his most dire commentary about the U.S. economy since he became the central bank chief two years ago, Bernanke said the credit crisis posed "grave threats" to American financial stability and urged Congress to pass U.S. Treasury Secretary Henry M. Paulson’s $700 billion plan to excise devalued - and even worthless - assets from the banking system, Bloomberg News reported. Noting that "economic activity appears to have decelerated broadly," Bernanke told members of the Senate’s Joint Economic Committee that "stabilization of our financial system is an essential ...

U.S. Treasury Secretary Henry Paulson has requested sweeping new powers for the Treasury Department as he seeks $700 billion in government funds to purchase troubled financial assets from firms facing a lack of liquidity or investor confidence. Over the weekend Paulson submitted legislation to Congress that he hopes will see the U.S. economy through the crippling credit crisis. In addition to the requested $700 billion, Paulson has asked that there be no judicial oversight to the plan and that the Treasury Department have sole discretion over which assets should be purchased. “This is not a position where I like to see the taxpayer, but it is far better than the alternative,” Paulson said in an interview on NBC’s “Meet the Press.” It is the government’s position that without this costly and unprecedented intervention, the economy could face a collapse akin to the ...

What a difference a day makes.  While just a day or two ago I was contemplating selling everything and going to cash—perhaps in my mattress—today I got back a bit of my usual bravado and tried a ‘trade’.

The market by the way closed today at 11,019.69, up 410.03, and the Nasdaq was up 100.25 at 2,199.10, and the S&P closed at 1,206.51, up 50.12 on the day.  Wow.  THAT was quite a bounce.

Anyhow, this afternoon as I was watching the market, all of the financials seemed ready to ‘roar’ ahead.  In fact, as this report relates, it was quite a move and it was the financials that provided the engine for the move:
“Sept. 18 (Bloomberg) — U.S. stocks rallied the most in six years on prospects the government will formulate a …

News reports are circulating that a plan is being worked on to put capital into beleaguered financial firms. Senator Charles Schumer was quoted by Bloomberg News as saying a "comprehensive solution" is being discussed.

Details are few, but the government could pump capital into beleaguered firms and/or create an entity to purchase bad debt.

Stocks have started rallying on the news, but until details are provided, it unclear how sustainable the current upward move is. Furthermore, the terms may not be friendly to shareholders in companies such as MBIA (MBI) or Washington Mutual (WM).

(Update: MBIA called to explicitedly state that they are not asking for a bailout.

I specifically mentioned MBIA because the rumored entity could help the company by purchasing the some of the bad debt assets tied to the securities MBIA ensures. Until actual facts are known, the risks of buying financial service stocks remains

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