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10/30/12 – Sunshine After the Storm

Written by Brad McMillan, CFA®, CFP® | Oct 30, 2012 2:56:12 PM

I am grateful to be back at work. Grateful, because it means we got through the storm with no damage or even inconvenience. My biggest problems yesterday were shoving the cat off the keyboard and entertaining a four-year-old boy. I am much more fortunate than many others, especially in New York and the Mid-Atlantic states. Here’s hoping that everyone recovers as quickly and with as little aggravation as possible.

The storm yesterday got me thinking about weather, particularly here in Massachusetts. We don’t normally have hurricanes, but we’re not known for our sunshine either, as my California colleagues typically remind me in February. Which brings me to a very interesting conversation I had with some clients a couple of weeks ago.

I speak regularly to client groups for our advisors, and part of my usual discussion is how the U.S. is moving in the right direction as far as energy goes. The drop in energy intensity of GDP growth, where we can now grow GDP with much less additional energy consumption than before; the rise in domestic production of oil and gas, to the point where the U.S. may again be the largest producer in the world soon, ahead of Saudi Arabia; the growing list of economically viable alternative energy strategies—all of these combine to provide a very solid base for the U.S. economy to grow going forward.

So far, so normal. Then came the interesting part: As I talked, I mentioned that a representative from a solar company had been to our house and spoken to my wife and me about installing solar panels, something we are seriously considering for economic reasons (me) and political reasons (her). At that point, several members of the group weighed in with comments about the merits of different options for solar here, and a minor argument broke out over which one makes the most financial sense for the homeowner.

Think about this. Massachusetts is not a sunny state, and a random group of people was not only interested in solar but familiar enough with the various options to debate which makes more money. The world has changed if older homeowners have that deep an interest and knowledge base in something that, until recently, was considered rather far out.

I have written before about how the multitude of energy options is changing how the U.S. is positioned in the world, but never before had it been brought home to me, literally, how much everyone in the country is buying into—again, literally—the whole process.

When the average person is looking to make money on something, that is when the hockey stick part of the growth curve starts. Sounds like we’re just about there.