Investor manias

A few hundred years ago the western world discovered the huge advantages of canals. A single horse pulling a barge could move 10 times more freight than a horse pulling a wagon. Canals were a huge boon to the Industrial Revolution. Coal and other commodities could be moved long distances cheaply and in great volume. Investors saw the advantages and canals were built all over the place, even in areas where they didn't make much economic sense.

Not everywhere was suitable for canals but then trains came along. Here was another way to move materials and people for a reasonable cost. Investors saw the potential and track was laid all over the place. The world went crazy for trains.

We saw investor over investment during the tech boom. A lot of money was thrown at some pretty sketchy ideas. On the bright side, much of the fiber optic infrastructure we rely on today was constructed.

Right now I'm guessing we about to see another investor mania into alternative energy. There are a number of technologies that are ready for prime time that all work together. Solar and wind technology have reached the point where in some markets they compete directly with fossil fuels. Combined with new battery technologies, the rapid development of electric cars and there's real potential.

Savvy investors are coming to the conclusion that fossil fuels are a bad bet. Why build a coal plant and then buy coal when you could build a solar plant and get free power from the sun? Add in the downsides of pollution and diminishing supplies and it gets even worse for fossil fuels.

Some investors are going to make an awful lot of money. Most likely investors will go crazy and overbuild like they did with canals, railroads and fiber optics. That's fine as society in general benefits.

-Sixbears