ETF Expert

An American legend in the oil industry believes we can’t wait a minute longer to get off our foreign oil dependency. And he has a plan.

In essence, it’s a two-pronged approach. First, replace/retrofit/create cars and trucks to run on natural gas. Second, use American "wind tech" superiority as our dominant alternative energy resource for the future.

Pickens is one of the 100 wealthiest men in the world. And he’s going to become even wealthier if we "purchase" the Pickens Plan hook, sinker and line.

But if a thrice billionaire gets wealthier… do we really care? Many facts are indeed the facts.

For instance, we are 70% dependent on foreign oil. And it’s a matter of national security to stop the transfer of our wealth to those of oil producing nations. (Not to mention a matter of maintaining the lifestyles that we’ve pursued.)

Second, natural gas is the easiest, quickest and fastest way to wean ourselves off foreign oil. It does not mean that we shouldn’t drill…. it just means that "nat" gas (abundant domestically) is one of the cleanest, most fuel efficient, most cost efficient way to reduce pain at the so-called pump.

Third, energy independence is arguably the most critical issue for the United States. Politicians talk in generalities about things like health care, education, the war abroad, homeland security, mortgages, housing and the economy. And yes… ALL of the issues are pertinent.

If we can dispense with the empty promises long enough, we might actually recognize that "energy independence" is possibly "the priority." We won’t be in a position to address health care, education or homeland security if we do not change America’s energy infrastructure.

Okay… so let me get off my soapbox here. I don’t necessarily agree with Pickens on the specifics of the plan. And I think investors have to think globally such that… they don’t ignore the incredible potential for nuclear energy.

Nevertheless, investors do have several opportunities to invest in the companies that specialize in wind and operate in the natural gas segment. Here are 3:

1. First Trust ISE Global Wind Energy ETF (FAN). Many of the companies are truly global, which does intrigue me. There are some 52 companies with a reasonably attractive price-to-sales ratio of 2.3. The median market cap of 1.5 billion makes FAN a mid-cap growth investment. With volume in the 350,000 range, this investment is  more than "hot air." (The P/E ratio may be on the high side at roughly 25.)

2. Powershares Global Wind Energy Portfolio (PWND). The volume is a bit lighter here, which may make for a less desirable entry and/or exit point. There are 32 companies across the growth spectrum — large, medium and small. And the expense ratio of 0.75% seems rather steep. Yet a long=-term believer in global companies that manufacture, develop, distribute, install and use energy derived from wind sources would certainly succeed with PWND if wind energy became a mainstay.

3. First Trust ISE-Revere Natural Gas ETF (FCG). This fund tracks an equal-weighted index consisting of companies that derive a substantial portion of their revenue from the exploration and production of natural gas. it’s up roughly 28% in 2008 thus far. The P/E has steadily risen from 13 a few months ago to 17 today. Nevertheless, for those who see natural gas in a Pickens-like manner, that would hardly stop you. The 30 companies in the index being track include names like Chesapeake (CHK), Comstock (CRK) and Petroquest (PQ).

(Would you like more "alt energy" ideas. Click here.)

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.