Algal Biofuels: An Engine of Growth
Algal Biofuels: An Engine of Growth
When studying market trends and emerging global markets, an investor needs to take a look at all the numbers surrounding the industry.
When analyzing the algal biofuel market, a crucial component for formulating your success is to calculate the industry CAGR (Compound Average Growth Rate). A study done by Biofuel Digest, an emerging markets online consulting service, has projected a CAGR of 12%+ until the year 2017 for the overall algal biofuel market. They also forecasted an annual revenue stream of $105.4 billion by 2018.
The calculations below will show you year-by-year growth of $10,000 invested today in an algal biofuel investment fund with a projected CAGR of 12% until 2017:
1) 10,000*.12 = 1,200 (10,000 + 1,200 = $11,200)
2) 11,200*.12= 1,344 (11,200 + 1,344 = $12,544)
3) 12,544*.12= 1,505.28 (12,544 + 1,505.28 = $14,049.28)
4) 14,049.28*.12=1,685.91 (14,049.28 + 1,685.91 = $15,735.19)
5) 15,735.19*.12= 1,888.22 (15,735.19 + 1,888.22 = $17,623.41)
6) 17,623.41*.12=2,114.81 (17,623.41 + 2,114.81 = $19,738.22)
7) 19,738.22*.12= 2,368.59 (19,738.22 + 2,368.59 = $22,106.81)
This 12% CAGR turns into over 100% return on your investment over a 7-year time span, which is an amazing return for any investor. This rate of growth would most likely be realized if you invested $10,000 in an algal fuel index or mutual fund. This would spread your $10,000 into various algal biofuel companies, minimizing your down-side risk to particular failing biofuel companies and offering a steady rate of return when competing companies experience growth.
This method of investment would highly benefit an established working professional with real world responsibilities: wife, children, house payments, car payments, etc. For a single, no-strings-attached professional looking to take a risk, I would suggest pinpointing one or two algal biofuel companies and investing in those. Let’s say you have $10,000, and you believe with all your heart the industry will succeed. Here’s the plan: take your age—let’s say you’re 21—subtract 21 from 100 and you’re left with 79. At age 21, you usually have very few bills and very little responsibility, other thAn surviving day-to-day. Due to those circumstances, your investment strategy can be categorized in the high-risk department of the investment world. 79% of your $10,000 should be invested in the company/companies of your choice, and the remaining 21% can be put into low risk/low reward investment funds. The same rule of thumb pertains to investors of all ages: subtract your age by 100 and adjust your percentage of risk accordingly.
Picking the right company, though, is only half the battle. Advanced mental preparation has to be practiced. Your investment philosophy should be to buy, hold, and never sell. Volatile swings occur in small-cap stocks along with large-cap stocks. This being said, a weak-minded investor is vulnerable to these chaotic swings, which can promote illogical thinking. An investor who isn’t mentally prepared for such volatility will make decisions based on fear, instead of long-term logic. Such a person will buy an individual stock at market price, experience market turmoil three weeks later, and sell on a 20% downswing. Seeing 20 % of the investment vanish, this investor will ask: “What did I do wrong?” The answer is: “You sold it!” The only time you truly loose money in an investment is when you decide to sell for a loss.
Here are some tips for an investor who believes in his or her own intuition and research methods. Train your mind through repetition and meditation. Train your brain to understand that this investment has been made to create future wealth in the long term, not the short term. Train your brain to realize that short-term satisfaction resulting from quick profits will lead to lost wealth in the long run. Reiterate all the negative effects that would result from selling your investment prematurely. Meditate and focus on repetition; tell yourself, “I trust my intuition and will not go against my own superior knowledge regarding this investment. I will never sell this investment. If I stay strong and am truly in it for the long haul, I will be handsomely rewarded. If I go against my intuition I will loose money in the short term and loose all possibility of long-term growth, thus creating long-term regret.” Always trust your intuition; believe in your ability to see the future, and let it guide you to wealth.
With recession looming and trillions of dollars being created by the Federal Reserve printing press, new, emerging markets like the algal biofuel industry will have the ability to flourish, offering strong-minded investors the opportunity to buy, hold, and own extremely undervalued companies through all stages of their market-growth cycle. Imagine investing in Microsoft when the company was just a baby—wow! The time is now to invest in the algal biofuel market.