History doesn't repeat itself, but it does rhyme. - Mark Twain.

Going through my weekly ritual of powering through Friday's edition of Investor's Business Daily, I was struck by the section which features 200 or so stocks that are exhibiting the greatest fundamental and relative strength.

Almost every company highlighted was associated with the energy business - either oil, gas, coal, transportation, tools or fertilizers. Having been a diligent consumer of the IBD for 20 years, a bell started to go off reminding me that last time that I recall an industry group had such an overwhelming representation of the leading stocks was in 1999 with the Internet companies. Remember the sock puppet and Pets.com?

It was in that Era that my former colleague Henry Blodget infamously made the call that Amazon (NASDAQ: AMZN, $81.62) would hit $400 and almost before he sat down the stock blew post that target on the way to $480. In an eerily similar echo, oil exploded upward on Goldman (NYSE: GS, $176.41) analyst Arjin Murti's May 6th call that oil would hit $200 a barrel in two years following his May 2005 call that it would go to $100 when it was at (then record) $57.

Like many manias before that, the fundamentals behind the pumping up of the bubble are compelling. Growing energy demands from emerging economies such as China, India and Vietnam, and our own growing demand have driven oil prices from $12.05 in 1998 to $126.62 today. Gas has gone from $1.56 to $11.47; coal from $43 to $150.

For some more specific illustrations, consider Petrobras (NYSE: PBR, $70.50), the Brazilian oil and gas colossus, which has a market cap bigger than Microsoft (NASDAQ: MSFT, $28.32) at $309 billion versus $263 billion, respectively. Exxon Mobile (NYSE: XOM, $88.76) made $40 billion profits in 2007 - if its earnings were revenue it would place it as number 56 on the Fortune 500. Saudi Arabia is gushing $1 billion of free cash a day. The composite of oil and gas companies in IBD have appreciated 1,450% in the past five years on average - this compares to the overall market being up 59%.

The Dot Com bomb which resulted in $8 trillion (with a "T") of capital destroyed wasn't a new phenomenon. Bubbles are as old as time. The 17th century Tulip bubble in Holland resulted from a demand imbalance where it took seven years to produce a tulip bulb and yet interest was so high that one flower sold for the annual salary of a wealthy merchant. Prices ultimately dropped 99%.

The U.S. railroad bubble was created by an overbuilding of tracks that resulted in $2 billion losses in 1892 alone. The Japanese asset price bubble had the Nikkei at 38,957 in December 1989 (it's at 14,339 nineteen years later), and the "value" of the Emperor's Palace in Tokyo worth more than all the real estate in California.

Given the pain people are feeling of the pump, Washington unsurprisingly in an election year wants to get involved. Ideas go from bad - John McCain and Hilary Clinton's proposal of a summer gas tax moratorium to scary - Rep. from California Maxine Waters suggesting government should take over or nationalize the oil companies.

The fact is that the market and its invisible hand, if not tied behind its back, will correct the high cost of energy issues that we feel today (and the environmental issues). At $130 per barrel, it provides significant motivation to accelerate the development and access to alternative energy as well as to open up new options of traditional supply. (Anybody who has been to Alaska shouldn't be too uptight about drilling in part of it - it's beyond vast). Nuclear power, conversion of coal and gas to liquid fuel, wind, solar, water and biomass - all become attractive alternatives.

Moreover, energy consumption is not inelastic - in March, Americans drove 11 billion fewer miles versus the previous year. This should be a boon for e-commerce, online education, web conferences, and a variety of other sectors that become compelling alternatives to throwing money down the gas pump.

I'm not predicting that oil goes back to $12 a barrel or that gas goes back to $1 gallon. I'm not even forecasting that it goes down at all in the near term, it's probably going higher. I do believe, however, that higher prices at the pump and to heat homes will have a material impact on people's behavior and will provide a major catalyst for the acceleration of alternative energy.

Last week, oil prices dropped nearly $5 and not coincidently, stocks moved higher for the week. NASDAQ, which has been the leader as of late, continued to be out front moving up 3.2% for the week. The ThinkGrowth Index, S&P 500, Russell 2000, and Dow were up 2.5%, 1.8%, 3.3% and 1.3%, respectively.

Since March 17th, NASDAQ has surged 15.9% versus the S&P 500 advancing 9.7% in same period. I'm confident that given the stronger relative and absolute growth, compelling valuations and being in the right part of the cycle, growth and technology will outperform for the foreseeable future.