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Global warming and financial positioning
Old 04-07-2007, 07:51 AM   #1
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Global warming and financial positioning

Many high-profile global warming skeptics have recently changed their position and believe it exists. Then, the recent UN report has also bolstered the global warming argument. So, if man is inadvertently capable of heating the entire planet, surely it is not beyond his wit to cool it down as well? That being the case, I am going to research and look for companies that will be in a position to profit and succeed from “greening” . Obviously, alternative fuels, emission gases, etc will be areas of focus. I guess the major oil companies will be looking to “green up” as well. Has anyone heard about companies that meet this criteria? Any thoughts??
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Re: Global warming and financial positioning
Old 04-07-2007, 09:46 AM   #2
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Re: Global warming and financial positioning

FWIW, I think the whole topic is nothing but a new way for the world socialists to attack the US and the Western-industrialized world.  Their science is simplistic and their arguments bombastic.  They ignore the whole history of world climate change that has gone through many cycles far more exciting than even the worst predictions.  The one thing they totally ignore is that in the history of climate change when one area becomes less habitable another area becomes more desireable to the human species.  Their predicition seems to be that the whole planet will degenerate into a lifeless dust bowl ravaged by repeated hurricanes.

If anyone was really serious, why isn't China and India included?  China will soon exceed the level of emissions of "greenhouse" gas (ie. CO2) of the US.

Back to your question -- If there was anything "serious" to happen (which I doubt) in how we operate industrially, nuclear power would take off and the oil companies would shrink dramatically.  There is no meaningful way for any oil company to "green up" except by exiting the O&G business.  They have no advantage over anyone else in wind power or biofuels.  These industries are economic losers without subsidies or exeption from the "carbon tax" advocated by the enviro-whacko's (aka - "watermelons").

The "green" statements from oil companies (BP and now Exxon) are primarily political moves to avoid direct protests by the enviro-whackos.  BP tried to gain an advantage by hyping their "green" initiatives but looking at their capital expenditures proved that their total "green" commitment was lost in the overall corporate "rounding error."

Forty years ago after a few years of "global cooling" we were entering into a new ice age caused by --- CO2 emissions.  The solution was the same.  Tax the evil industrialized world for their sins against humanity.  With proper penance, we could then join the new world order of an enlightened socialist state.

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Re: Global warming and financial positioning
Old 04-07-2007, 10:33 AM   #3
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Re: Global warming and financial positioning

I will pass and I consider most to be very speculative investments at best.

If you are still determined on a position, how bout an ETF - PUW or PBW? Not a recommendation to buy, just offering a little direction.

Personally, I think we will invest in all sorts of green-related ideas before we think about cutting our insatiable thirst for fossil fuels.
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Re: Global warming and financial positioning
Old 04-07-2007, 11:28 AM   #4
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Re: Global warming and financial positioning

As much as you/we may believe that there is global warming and that it is caused by people, there is quite a gap between this observation and finding a way to make money based on that. Why:

1) Efficient market: Everything known to you right now is known to others. If there's truly money to be made via some niche thang, the price of it has already been bid up.

2) There's no market yet. IF global warming really is happening (I think it is) and IF it is caused by human actions (less clear, but I think it likely is), it is still a "tragedy of the commons" situation. Nobody "owns" the atmosphere (just as nobody "owns" the ocean), and polluters pay no meaningful individual cost for dumping CO2 into it--it immediately becomes everyone's problem (sometime down the road), not theirs. Conversely, if I (or my company, or my nation) makes a huge sacrifice to reduce CO2 emmssions, we dont get a direct benefit, since the overall atmospheric "stew" reflects the actions of everyone--and my little contribution hardly matters at all. So, unless/until there's a worldwide concerted effort to do something (an effort that has real enforcement and which includes all nations) there's not going to be movement on this. Customers buy products/services because they expect a benefit disproportionately high to the cost they pay. With the present situation, prospective customers of CO2 reduction technology are in the opposite situation-they will beneft disproportionately less than the cost they pay. This can only be changed by introducing an artificial market (carbon credits, etc).

3) There's no clear path to reducing CO2 emmissions. There's not even a consensus that reducing CO2 emmissions is going to be the answer. It may prove less costly/disruptive to actively and deliberately bind up atmospheric carbon than to reduce the amount we put into the atmosphere. Imagine a bioengneered plankton that could remove a lot of carbon during photosynthesis, bind it up to something else in a stable form that would not easily be re-introduced into the carbon cycle, and would die and sink to the bottom of the ocean. This would get the C out of the atmosphere, effectively un-doing the actions we take when we burn fossil fuels (and could introduce other problems, but this is a thought experiment right now). If ths were to become the prefered means of fixing the problem, any investments you make in wind turbines, geothermal, nuclear power, etc might take a hit.

Overall, I prefer to keep my funds more widely invested and not try to predict (ahead of everyone else) the next "big thing." If I want to get invoved in a cause, I'll send a check to a worthy charity or volunteer time.
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Re: Global warming and financial positioning
Old 04-07-2007, 12:03 PM   #5
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Re: Global warming and financial positioning

Keep an eye on activity here:

http://www.thegreengrid.org/
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Re: Global warming and financial positioning
Old 04-07-2007, 12:18 PM   #6
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Re: Global warming and financial positioning

I would guess that we will eventually end up in some kind of cap and trade system for CO2, regardless of what you think of the science or motivations. So some industries will do well and others won't.

Am I the only one who finds the naysayers on global warming oddly resemble the detractors of evolution? Scopes monkey trial part II here we come...
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Re: Global warming and financial positioning
Old 04-07-2007, 12:28 PM   #7
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Re: Global warming and financial positioning

Quote:
Originally Posted by janeeyre
Has anyone heard about companies that meet this criteria? Any thoughts??
I made a pile of momentum money by investing in Evergreen Solar (ESLR) until the rest of the stock market realized that they don't actually manufacture any profits to go along with their innovative solar products. I was saved by the stock's stop-loss sell order.

Take a look at PC Computing's articles on all the computer companies from the 1970s & 1980s. If you'd had a chance to invest in Dell or Microsoft you would've run away screaming to throw your money at those hard-chargin' Commodore, Atari, & Kaypro guys.

Xerox basically invented a new imaging/printing system in the 1960s and made millionaires out of their investors. Then they spent the 1970s & 1980s impoverishing them.

Pick any old industry, trend, or technology and consider how long it's taken for it to actually realize its potential and identify the winning companies. Semiconductors. Consumer electronics. TV & radio. Autos. Steamships. Railroads. It's generally been at least a decade and frequently as long as a generation. Early investors who identify the "clear" winners can get hammered by selecting solid companies like REO Speedwagon.

You might just be better off buying an energy index fund... and maybe the insurance sector.
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Re: Global warming and financial positioning
Old 04-07-2007, 12:35 PM   #8
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Re: Global warming and financial positioning

I am not a big believer that man is the major cause of global warming... and if he IS, that there is much that can be done..

BUT, some of the things that can be done will also HELP in air pollution which to me is a good thing...

Nuclear power should be required... I had read we get 16% of our power from nuclear.. make that 80% and think how much oil, gas and coal we can stop using!!!

Stop grandfathering in the old plants. Down here we have many old plants that spew out tons of air pollution and will not clean up because they are grandfathered.... make ALL plants come up to current levels in 5 years or close down....

Change to florescence (SP??) lights... I have them and they work great... if we all do it, again less electricity... we did our building where I work and the electricity bill dropped $100,000 a year...

Do some REAL car tailpipe emmission laws.... how many of us see the old clunker spewing out a cloud of thick smoke... I usually see one a day, or at least every other day.. don't just give tickets, confiscate the car if they don't get it fixed..

Make cars more fuel efficient... tax the hell out of SUVs EVERY YEAR... here in Texas, trucks and SUVs are more than 50% of the vehicles on the road...

So, where do you invest Solar cells, wind farms, a company that plants trees for the carbon credits they can sell?? I don't think they will make enough money to offset you NOT buying Exxon or some other polluter...
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Re: Global warming and financial positioning
Old 04-07-2007, 12:36 PM   #9
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Re: Global warming and financial positioning

There are small power companies that focus on renewable energy. But buying into the right one at the right time is still a difficult proposition. There are small companies that are building/importing electric or highly efficient autos. But they have been doing this for several years without showing signs of significant growth or profit. Again, picking the right one at the right time is problematic.

I've thought about this in terms of real estate. My Mesa, AZ home value may really plummet at some point when the decade + long southwest drought coupled with record population growth finally leaves us without sufficient water. This is likely to play out in cities all over the southwest and all of us displaced southwesterners are going to have to move somewhere.
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Re: Global warming and financial positioning
Old 04-07-2007, 12:38 PM   #10
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Re: Global warming and financial positioning

I suppose you could look at Green Mountain POwer, since they actually have a real business and make money (and pay dividends). I suspect that natural gas producers will end up smelling like a rose no matter what happens, since it is about the most effecient and cleanest of the fossil fuels.
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Re: Global warming and financial positioning
Old 04-07-2007, 12:43 PM   #11
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Re: Global warming and financial positioning

My feeling is that even if everybody accepts the science, and everybody agrees that we can do something to improve the situation, change will occur *very* slowly.

Make your bets on small incremental changes. For example, I bought Toyota (TM) a few years ago because they had the strongest hybrid engine technology. So far, they've done very well.
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Re: Global warming and financial positioning
Old 04-07-2007, 12:46 PM   #12
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Re: Global warming and financial positioning

Quote:
Originally Posted by brewer12345
Am I the only one who finds the naysayers on global warming oddly resemble the detractors of evolution? Scopes monkey trial part II here we come...
Maybe they resemble the naysayers on evolution (defintiely wrong), maybe they resemble the naysayers on smoking/cancer (definitely wrong) or just maybe they resemble the naysayers on silicone breast implants/autoimmune diseases/other health effects (they were probably right). Science will tell. The folks most likely to be wrong are those basing their opinions on ideology vs science. I think some liberals and some conservatives have chosen to view the evidence from their ideological perspective.
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Re: Global warming and financial positioning
Old 04-07-2007, 12:54 PM   #13
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Re: Global warming and financial positioning

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My feeling is that even if everybody accepts the science, and everybody agrees that we can do something to improve the situation, change will occur *very* slowly.
So far, the "leaders" of the movement (Old Europe) have totally ignored their Kyoto Treaty responsibilities. Once it was obvious that there was no enforcement, Russia signed. Now if the US signs, the rest of the world will expect us to meet the limits even if they are not.

I keep waiting for the "science" but all I see are bits of random data that refuses to include contradictory data. Claims are put forth that are pure hypothesis. I don't think the whole subject has risen to the level of "theory" yet but it's talked about like an established law of nature. Science is no longer the issue. It's a media circus and political correctness tsunami.

Back to the original question of investments -- I'd avoid the whole area because it is a fad. Investing in a fad can be very rewarding but it requires getting out before the inevitable crash.

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Re: Global warming and financial positioning
Old 04-07-2007, 01:01 PM   #14
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Re: Global warming and financial positioning

Recently, the Supreme Court said ... Do something about global warming.

http://www.cnn.com/2007/LAW/04/02/sc....ap/index.html

So, whether or not we believe the courts say do it.

I suspect the emission regulations will become stricter and hybrids more prevalent. I don't think nuclear power will increase like other nations (70% of France's power is nuclear). Americans will never stand for it but maybe wind, solar, E85 will grow.

Does anyone own energy mutual funds that are forward looking to new energy solutions??
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Re: Global warming and financial positioning
Old 04-07-2007, 01:05 PM   #15
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Re: Global warming and financial positioning

Quote:
Originally Posted by 2B
I keep waiting for the "science" but all I see are bits of random data that refuses to include contradictory data. Claims are put forth that are pure hypothesis. I don't think the whole subject has risen to the level of "theory" yet but it's talked about like an established law of nature.
There are limits to what science can do. We can establish that humans are changing the balance of atmospheric gases. But modeling the effects on earth's complex ecosystem is beyond our abilities. Best we can do is establish what gas changes are due to human activities and work to restore those levels to what nature would have done in our absence.

Personally, the idea that the climate changes with atmospheric compositional changes makes a lot of sense to me, but you have to make a leap of faith on precise cause and effect relationships for something this complex.
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Re: Global warming and financial positioning
Old 04-07-2007, 01:17 PM   #16
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Re: Global warming and financial positioning

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Originally Posted by janeeyre
Recently, the Supreme Court said ... Do something about global warming.

http://www.cnn.com/2007/LAW/04/02/sc....ap/index.html

So, whether or not we believe the courts say do it.
All the Supreme Court "said" is that the EPA has the right to regulate CO2 emissions which they had been saying they couldn't unless Congress extended the law. Of course, the great atmospheric scientist John Paul Stevens put some rhetoric into his majority opinion that continues the politicalization of the subject.

Quote:
Originally Posted by wab
There are limits to what science can do. We can establish that humans are changing the balance of atmospheric gases. But modeling the effects on earth's complex ecosystem is beyond our abilities. Best we can do is establish what gas changes are due to human activities and work to restore those levels to what nature would have done in our absence.

Personally, the idea that the climate changes with atmospheric compositional changes makes a lot of sense to me, but you have to make a leap of faith on precise cause and effect relationships for something this complex.
All you've done is reinforced my argument that "science" has been declared irrelevant. The subject is "so serious" we must take action now to avoid the wildly declared disasters circulated by zealots. I know it feels so good to "do something" but it would be nice to study it in an objective manner before we rush to voluntarily slit our economy's throat.
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Re: Global warming and financial positioning
Old 04-07-2007, 01:27 PM   #17
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Re: Global warming and financial positioning

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I know it feels so good to "do something" but it would be nice to study it in an objective manner before we rush to voluntarily slit our economy's throat.
It isn't about objectivity, it's about complexity. For example, we have a ton of scientific thought going into medicine, but we can't cure cancer or even the common cold. We don't even know what foods are good or bad for you. That's because biology is complicated.

Now take those biological systems and put several billion of them into a much larger complex system called "earth," and tell me how we'll objectively determine the climate, food, and health impacts of atmospheric gas changes.

We can only guess. Does that mean we should do nothing? That's open for debate.
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Re: Global warming and financial positioning
Old 04-07-2007, 01:36 PM   #18
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Re: Global warming and financial positioning

Quote:
Originally Posted by wab
Now take those biological systems and put several billion of them into a much larger complex system called "earth," and tell me how we'll objectively determine the climate, food, and health impacts of atmospheric gas changes.

We can only guess. Does that mean we should do nothing? That's open for debate.
I'm in "old Europe" and we find it quite scary to be honest listening to America debate certain things (like global warming). I'm not a climate scientist and I don't claim to be an expert, so I listen to what the experts are telling me - and by experts I mean scientists in this field, who are overwhelmingly (with some detractors) telling us that global warming and manmade climate change is real.

But to answer the original question. Investing in new industries might seem like a good idea, but has not proved a very good investment in the past. Despite what some have said here trying to denigrate Kyoto, the European economies are moving towards meeting their targets and the rest of the world (ex the US) are moving in the same direction. One key mechanism for doing this is carbon trading, and that's an area I've considered a small investment in (but haven't found the right vehicle yet). Another area is Carbon offsetting, a couple of companies do that but no clear leader yet. I could forsee the setting up of a private sector carbon trading exchange in the not so distant future (currently the EU partly manages one), and that I think could have investment potential. But it'll probably end up being an expensive IPO and the small investor will lose out

Other suggestions: Melting ice & snow in Canada - opportunities there? Sea lanes open through Arctic? Water infrastructure companies?

You could also look at it from the other angle - what not to invest in. Insurance companies in certain sectors could see more catastrophe losses, real estate in Florida/Southern US could see big bills and more storms, oil companies operating in the Gulf of Mexico. Countries like India will suffer major population problems. Europe will suffer increased flooding and possible drought in Southern Areas. Much of South America gets its water from snowmelt on the Andes, big problems (glaciers already receeding fast)
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Re: Global warming and financial positioning
Old 04-07-2007, 01:37 PM   #19
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Re: Global warming and financial positioning

Looks like FSLEX is in this area, but it doesn't look too exciting at this time.

Dan
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Re: Global warming and financial positioning
Old 04-07-2007, 01:58 PM   #20
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Re: Global warming and financial positioning

I think successful investing is about understanding human nature. So, let's look for an example that will help predict the outcome of this global warming debate.

How about cigarette smoking? The science is strong: smoking is bad. Smoking did decline. But where were the good investments? Who benefited?

It wasn't chewing gum companies. Tobacco companies still did very well. Healthcare companies still did very well. Never bet against momentum, even when change seems inevitable.

Buy automobile and oil companies when they get beat-up by the bad news.
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