The Dow's taken a 2% hit in the past five days. Now what?

By now you know that only two of the five major Wall Street investment banks are still in existence.

Bear Stearns made its exit a few months back. And this week we saw 94-year old Merrill Lynch (NYSE: MER) got swallowed up by Bank of America (NYSE: BAC) while Lehman's (NYSE: LEH) financial state was so repulsive even the U.S. government wasn't willing to help them out.

Now, Barclay's (NYSE: BCS) says it will buy Lehman's North American investment banking and capital markets operations for a scant $1.75 billion—a full $48.25 billion less than BoA paid for Merrill.

And insurance giant American International Group (NYSE: AIG) has been bailed out by the U.S. government, on your tab, with a loan valued at $85 billion.

But I'm an alternative energy guy. What does all this have to do with me?

More than you know.

More than a Financial Crisis

This sub-prime, adjustable-rate-mortgage-induced financial calamity is bringing negative pressure to nearly all sectors.

On the energy side of things, companies that have done business with Lehman in the past are on the chopping block because of prior convertible bond transactions and stock lending agreements still on the books with the now failed bank.

In a note to investors the other day, Piper Jaffray analyst Jesse Pichel had the following insights:

• We estimate JA Solar (NASDAQ: JASO) would realize ~4% dilution on stock and incur a non-cash write off of $7M for the book value of the capped call, and also write off a $100M investment in a LEH vehicle.

• Evergreen Solar (NASDAQ: ESLR) worse case scenario - lose the $39.5M premium if the capped call transaction with Lehman is not replaced, as well as dilute share count by 30M (~25%) without getting anything in return for the dilution.

• SunPower (NASDAQ: SPWR) worse case scenario - 2.9M (~3%) share dilution.

He added that Yingli Green Energy (NYSE: YGE), Canadian Solar (NASDAQ: CSIQ), and Suntech Power (NYSE: STP) would likely not be affected by Lehman's bankruptcy.

But with three of the five major investment banks packing their bags, and with so many companies involved in alternative energy, it's hard to know who's tied to whom. At this point, literally any company could come out of the closet with bad news.

For that reason, I'd want to be looking at a diversified approach to these rough times.

Alternative Energy ETFs

Since exchange traded funds (ETFs) hold multiple assets, they aren't as susceptible to drastic one-day falls due to bad news or an uncovered connection to a troubled bank. Plus, with the year we've had so far, some of the green and clean energy ETFs and funds are currently trading at a discount.

Now could certainly be a good time to pick some up for the long haul, as these certainly aren't short-term investments, but rather should be used as an anchor for you personal portfolio.

One of the best on the market right now is the Market Vectors Global Alternative Energy ETF (NYSE: GEX), which will not only help you diversify, but will also give you exposure to a number of companies outside the U.S. that would otherwise be difficult or expensive to purchase.

The top ten holdings of that ETF are:

• Fist Solar (NASDAQ: FSLR)

• Gamesa (MCE: GAM)

• Kurita Water

• Q-CELLS (XETRA: QCE)

• Renewable Energy Corporation (OSLO: REC)

• SolarWorld (XETRA: SWV)

• SunPower (NASDAQ: SPWR)

• Suntech Power (NYSE: STP)

• Verbund AG

• Vestas Wind Systems (CPH: VWS)

So you can see this ETF holds a diverse array of companies involved in multiple cleantech sectors. Not only that, but the international companies it holds aren't indebted to the obviously troubled U.S. financial system.

Other alternative energy ETFs include:

• PowerShares WilderHill Clean Energy ETF (AMEX: PBW)

• PowerShares WilderHill Progressive Energy ETF (AMEX: PUW)

• PowerShares Cleantech Portfolio (AMEX: PZD)

• First Trust NASDAQ Clean Edge ETF (NASDAQ: QCLN)

Of course, you should take a look at each one to ensure it's offering a mix of stocks that are appropriate for your needs.

If it's a particular sector you're after, there are a growing number of sector-specific ETFs, including:

• Market Vectors Solar Energy ETF (AMEX: KWT)

• Claymore/MAC Global Solar Energy ETF (NYSE: TAN)

• First Trust Global Wind Energy ETF ((NYSE: FAN)

• PowerShares Global Wind Energy ETF (NASDAQ: PWND)

Keep in mind that these are buy-and-hold plays, which will certainly leverage the energy woes we'll be facing for years. Getting in now will certainly pay off a few years down the road.

Be careful. We're still not out of this financial crisis yet. Stay diversified and international until the dynamic starts to change.

For more guidance on the international green markets, check out Green Chip International.

Call it like you see it,

Nick