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Tuesday, January 3, 2012

LDK Solar (LDK) Crushed to End Year

As with the rest of the solar sector, shares of LDK Solar (NYSE:LDK) took a beating during 2011, and ended the year getting crushed on the last trading day, plunging $0.30, or 6.68 percent, closing at $4.19.

LDK traded in a range of $2.55 to $14.97 over 2011.

The solar story is none other than a lack of demand, and the resultant plunge in prices and margins by companies providing polysilicon and modules.

Major demand from Germany, Italy, and Spain plummeted in 2011, and there's little reason to believe that will change in 2012.

Solar is an example of crony capitalism, forced upon most nations by lawmakers who see it as a way to buy votes. The reality is few individuals care one way or the other about the source of energy, as long as they get it.

Obama's disastrous debacle concerning Solyndra is a good case study of that, wasting over $500 million in taxpayers dollars, and getting absolutely nothing in return.

Some attempt to make it look like there is a growing demand in America, but that is a pseudo demand, as it's being forced on us by the government, not from the market. That is always a potential disaster.

If it weren't for governments propping up solar companies, there would be no solar industry, as they aren't able to stand on their own, and the final product is ridiculously unpredictable and unreliable as the sun it requires to operate. Can anyone say "rolling blackouts?"

Having said all this, the next phase of the industry, even with governments backing the sector, is for a consolidation to take place.

The problem for investors is there is no way they can no what politicians will do when an industry is dependent on their votes to survive. That makes solar a terrible investment at this time, and will continue to be until real demand, if ever, comes from the people considering the power source as a viable alternative.

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