Smart grid technology appears to be the hottest area for investment capital and media attention, and was reportedly the subject of the only over-capacity session at the FORTUNE conference.

Efficiency projects are likewise popping up, like wildflowers in spring.

As an energy analyst keenly interested in renewable energy and sustainability, I have never been more encouraged about the progress being made in both the business and political spheres. These announcements are particularly impressive in light of the fact that the world is still suffering from a serious credit crunch.

But as an individual investor, the outlook is somewhat less rosy.

It’s (Still) All About the Financials

As I worked over some charts this week, looking for profitable investments in a market that remains chaotic, I had a stunning realization: Every chart had basically the same line!

Consider this six-month chart of ETFs for the real estate, financial, oil, Dow Jones industrial, and retail sectors:

While some sectors have clearly performed better than others, it’s basically the same line in every sector, plus or minus 20%. Year-to-date, the correlation is even clearer.

Within the energy sector, the correlation is stronger still, with coal, oil, natural gas, solar, wind, and geothermal stocks all moving together in a tight-knit group.

Try it yourself. Plot a few of your favorite sectors together and play with the time frames. I think you’ll find largely the same patterns since the market meltdown began last summer. Only traditional hedges like gold, tobacco and food plays run counter to the overall market trends.

That told me one thing: The markets are still all about the financials, which in turn have been all about real estate.

That was a sobering thought, because I don’t believe the market rally of the last six weeks for a minute. It was led by the financials, and frankly they have cooked the books.

I have nearly lost track of all the ways that the Fed, Treasury, and SEC have attempted to stave off the inevitable realization that the banks are insolvent. TARP. TALF. PPIP. (Collectively, they mean “printing of trillions of dollars out of thin air.”) Refusing to disclose who received those trillions. Suspending mark-to-market. Taking the banks’ word at the result of their self-administered “stress tests,” and then forbidding them to share those results with the public until May. And so on.

Only in a game that has been rigged and re-rigged repeatedly could the banks pull off the hallucination that they were profitable in Q1, especially to the point of claiming record quarterly profits! But that’s exactly what they did, and the market followed their rally.

Let me be unequivocal about this: What we have witnessed in these vain attempts to sustain a fundamentally unsustainable financial system is a sham, an insult to our intelligence, and the biggest heist in history.

When this flood of taxpayer money recedes, the truth will be known, just as graveyard corpses float up to the surface after a New Orleans flood.

I don’t know when that will happen; after all, that is the entire point of these games, isn’t it? To give the big money just enough time to get away clean before the house of cards falls on the taxpayers’ heads?

But I have little doubt that eventually, it will. It could happen in three weeks, when the stress test results are made public. Perhaps it could happen this summer, when scuttlebutt has it that a number of damning insiders will blow their whistles. Perhaps we will have to wait until China starts dumping dollars. I just can’t say.

When it does though, the market will undergo another bone-shuddering meltdown, and everything will fall again—potentially marking the true bottom of the recession.

The lesson here is clear: traditional fundamental analysis is useless. It’s been useless since real estate started dragging down the financials and took the whole market with them nine months ago. Even technical analysis is useless for long-term investors (although it remains the bread and butter of day traders). So you can stop looking at the financial statements and evaluating sectors and drawing lines on your charts.

Until the financial mess is finally washed up and hung out to dry, you can throw a dart at a dartboard to pick your long term investments, and get roughly the same returns.

Energy investments are, unfortunately, no exception. Renewable energy simply can’t continue to attract the large amounts of capital needed to sustain unprecedented growth until the banks are straightened out. Fossil fuel producers can’t keep drilling and mining into progressively marginal deposits until the prices of their commodities recover, which can’t happen until the economy recovers (for signs of the recovery, watch Asia).

So by all means, get your reusable shopping bag, swear off bottled water forever, turn off anything that isn’t in use, install a solar system, and plant your vegetable garden. With my sincere blessing.

Just don’t let a rigged market make a chump out of you.

Until next time,

Chris