Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of solar stocks plunged today after Credit Suisse lowered its Chinese solar estimate. Trina Solar (NYSE: TSL), Canadian Solar (NASDAQ:CSIQ), JinkoSolar (NYSE:JKS), and JA Solar (NASDAQ: JASO) all dropped more than 10% during trading in a widespread sell-off.
So what: The big news was three analysts at Credit Suisse lowering China's installation forecast to 11.5 GW from 12 GW. If that doesn't look like a big reduction, that's because it isn't. 11.5 GW would still be the second-largest amount of solar installed by any country -- ever -- followed by 12 GW in China last year. It's also a small dent in more than 50 GW of solar expected to be installed globally this year.
Now what: China's solar industry is growing at such a fast pace that hiccups should be expected, and it's actually delays in permitting that Credit Suisse pointed to as the reason installations won't be lower. This may be true, but it doesn't overshadow the incredibly positive trends in solar in 2014. Installations are up 35% so far this year, and companies are already saying that margins are going to be higher than expected because demand is so strong. Today certainly isn't a reason to sell, especially on a non-consequential forecast from Wall Street.