Climate Change ‘stock trading’

From Motif Investing (h/t to John Coleman)

Climate change has become more than a hot topic. With carbon dioxide levels at all-time highs and temperatures on the rise, concerns over global warming1 are increasingly leading to government action and policy changes. President Obama announced a ‘Climate Action Plan’ to cut 3 billion tons of carbon pollution by 2025, with an increased emphasis towards clean and efficient energy.2

This can help put the spotlight on the companies that are focused on the mitigation and adaption to challenges brought by climate change, in turn presenting an expanding investment opportunity. We’ve already seen global investments in climate change-linked reform grow 33% to $66.2 billion, between the first and second quarter of 2014.3 This includes companies involved in reducing carbon emissions, increasing energy efficiency, improving water and waste management capabilities and agricultural productivity. How’s that for win-win: the planet cools off, while this sector looks to heat up.

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The Index has 25 stocks, spanning energy, agriculture, waste management and green tech like solar and wind. So far, there’s been only a 0.2% ROI since inception and the S&P 500 is outperforming it.

More here: https://www.motifinvesting.com/motifs/climate-change#/overview

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31 thoughts on “Climate Change ‘stock trading’

  1. With carbon dioxide levels at all-time highs and temperatures on the rise

    Temperatures are “on the rise”? Really?

    CO2 levels are at “all time” highs? Really?

    Incidentally, I have absolutely NO investments in anything that calls itself “green” or has any “green” motivations. Oil industry, tech. That’s it.

  2. Given that for the past 500Ma CO2 levels averaged around 2500ppmv I find the claim that CO2 levels are rising alarmist in the extreme. 450Ma ago levels were around 8000ppmv. They would have been much higher but the severe ice age then running ensured lots of CO2 was dissolved in the oceans.

    Temperatures have remained level for the past 17+years.

    Investment opportunities seem to be a good way to hoodwink the population.

  3. In the aftermath of the subprime housing crisis, a banker who foresaw the crash, and timed his market move perfectly, had t-shirts printed for all his staff saying “I’m short your house”.

    This boast means the banker not only sold all his subprime assets, he sold a whole bunch of subprime assets he didn’t yet own (hence “short”) – then balanced the transaction by picking up the assets he shorted, the day after the crash, for a fraction of the profit he made selling them before the crash.

    I guess its time to change the words on the T-shirt :-).

  4. CodeTech says July 29, 2014 at 3:02 am Incidentally, I have absolutely NO investments in anything that calls itself “green”

    I feel the same way but, unfortunately, virtually all companies doing business with the government now call themselves “green”. Any any employee who speaks out against that position becomes a target and risks dismissal. I know one such company in particular where every one of their engineers knows CAGW is a hoax but none will say so publicly. The company puts on a great facade in an effort to appear “politically correct” as viewed from many angles so as to not risk their competition running to the press or government official claiming that the company is not green or it doesn’t hire female and “minority” engineers or it doesn’t “give to the community” or even that it doesn’t have an energy efficient building, etc.

    It’s the same disease experienced in the USSR, what people said was rarely ever what they believed or knew to be true. Lying became the norm in the USSR and the worst of it was in the USSR military chain of command. It became a stream of lies and no one could be certain what the truth actually was anymore, even the top command could no longer rest 100% assured that they actually knew what Soviet military readiness really was. I recall the old Soviet joke about suitcase sized nuclear bombs. None actually ever existed but top command always received a “correct” count that 30 were in storage and ready for use. Because they were supposed to exist and therefore expected to exist – they “existed”.

    Gorbachev figured out that sunlight is the best disinfectant and the call for “glasnost” became an important moment in world history when elite Soviet commie party members were forced to admit they had not only built a socialist house of cards, it was built on a foundation of lies.

    We need the same thing to defeat the CAGW hoax, it is time for a… “CLIMATE GLASNOST”.

  5. Mike M, I totally see where you’re going there… when I say I have no “green” investments I mean none of the “green” mutual funds, no solar, wind or other frappery, nothing that is based entirely on “renewables” or “sustainability”. This is mostly because, even though I was a kid I was around in the 70s and remember how HARD that all crashed back then. It will crash again, as soon as a critical mass is reached of people who realize they’ve been fleeced and duped.

    And the same lack of self-awareness that the Soviet Union experienced is why the entire world, including Saddam, believed Saddam had WMDs. I know a lot of people like to pretend it was only Dubya that didn’t know the truth, but those people are mostly just lying.

  6. Eric Worrall says: July 29, 2014 at 4:07 am ” In the aftermath of the subprime housing crisis…”

    And then… after the bailout .. I ran around with this bumper sticker for a while:

  7. That index will be great, it shows me what companies not to invest in, and who to short during the upcoming mini ice age… What’s not to like.

    Mind you I still like rare earth miners, mostly because many are sitting on nice reserves of thorium, and I can see a point in strong magnets and efficient electric motors and (fossil fuel powered) alternators, why waste energy if you dont have to. But wasting that tech on useless wind power… just dumb.

  8. This, of course, is part of the “Big Climate” and their on-going efforts to swindle people out of their money using false and/or misleading information. Nothing new here…

  9. One should only trade Green stuff if one has insider connections to the government; or has a way to trace politician’s dealings – who will position themselves before cutting or increasing subsidies.

  10. My first thought. True blue watermelons would never buy an index that includes Monsanto, though they benefit from the company every time they eat grain. Which they do a lot of. At least the veggie versions of watermelons.

    On closer inspection. It looks like this index was stuffed with ringers, companies whose stock are high value and high earning, to shore up the flaccid teat sucking subsidized climate change pseudo-companies. However, not to worry. Monsanto is in a lot of other indexes that are worthy of consideration. As for this index, I think buying a shovel of horse manure would be a better deal.

  11. Pamela Gray: “True blue” and “watermelons” in the same sentence brings such chaos to my mind that I feel the need an adult beverage. It’s too early and you are contributing to my nascent addiction!

    And I used to like watermelons! Till just now.
    ;-)

  12. Bobl, individual companies have little choice in which index they will be included in. And consumers have little choice in which ones they would like to see in an ethical index unless they are in a position to create such an index themselves. Even the best ethical indexes have a storied history. Enron used to be in an ethical index. Be careful what you pay for. The pretty picture presented by a company may indeed be just a painting.

  13. R. Shaerer, am I missing something or did you not correctly read the document?
    The monthly average CO2 was
    398.58 ppm in June 2013
    401.14 ppm in June 2014
    So, where is the falling?

  14. There’s a sucker born every minute. Thus such ideologically motivated investing will always attract stupid money. I love capitalism.

  15. Just to be clear, we should all realize that this index, and the financial prospects for these companies, has *nothing* to do with whether or not there is “global warming”, and also has nothing to do with whether or not any of them can do anything about it.

    This index is simply a measure of the amount that governments world-wide are pouring into the Green Scheme. The more money that is poured in, the more these will rise. Whether or not that has any real world effects is immaterial to the issue, since the issue is crony capitalism at its finest.

    When you’re in a crooked gambling house, sometimes the only way to win is to bet on the dealer.

  16. Welcome to the age of behavioral economics, Anybody trying to invest using supply-side or Keynesian economics will be at a severe disadvantage. Under classical economics we should not have record high bond prices (low rates) while equity indexes hit all time highs.
    Just read the FED’s statements after each rate setting meeting, Under behavioral economics interest rates are not set by the inflation index (CPI) but by inflation expectations.
    Traditional economics posited a world in which consumers are rational information processors who make optimal decisions to maximize their well-being. Behavioral economics challenges this paradigm on every point: People lack access to, interest in and the ability to understand all potentially relevant information. We make simplified, “satisficing” decisions; things people value are highly subjective and do not align with the economic concepts of utility, and people are absolutely lousy at assessing cost/benefit tradeoffs. Our rationality is, at best, bounded by an array of constraints, while our decisions are largely dominated by the 90 percent of the brain submerged in emotions.

    Peter Pan is the patron saint of Behavioral Economics.
    “Dreams do come true, if only we wish hard enough. You can have anything in life if you will sacrifice everything else for it.”
    J. M. Barrie, Peter Pan

  17. This is a good investment fund if you invest based upon government policy and not the market. As long as the government is force-feeding the evils of climate change and carbon pollution down or throats, people are going to try to make money from it.

    And what we’ve seen is well-moneyed groups, individuals and multi-national corporations pushing the government to create those polices in order to profit from the mandates. And once the money starts flowing, these same players will do everything to keep it flowing.

  18. “0.2% ROI since inception…” But it’s a green ROI so it feels like 2%.

  19. Should be a great opportunity here for some one to start a “we love the carbon economy” fund with an eye to profiting from all those companies whose shares are undervalued because the green investors refuse to touch them.

  20. Jean M. – look at the monthly readings – red line on the chart. CO2 is falling as the terrestrial system absorbs and plants consume CO2, thereby increasing biomass, i.e. life. It will fall below 400 ppm by the end of summer. As plants and animals die and decompose, along with changing seasons, CO2 will increase and exceed 400 ppm again.

  21. Jean Meeus says: July 29, 2014 at 7:22 am “R. Shaerer, am I missing something … ”

    Yes you are missing something, CO2 is falling… “right now”.

    And I believe R. Shaerer’s extended point is that the amount of human emitted CO2 is completely irrelevant to the biosphere’s capacity to suck it out of the atmosphere every 6 months as well as pump it back up every 6 months.

    If fossil fuel did not exist, (i.e humans never added any tiny ‘extra’ amount of CO2 to the atmosphere), there is no way to prove or disprove that CO2 concentration would not measurably be the same as it is now.

    The variability of CO2 in fossilized leaves is far greater rate than anything reflected in the ice core record. http://geocraft.com/WVFossils/stomata.html

  22. Not impressed. hitting a few tabs on his site reveals – 7/29/2009 to 7/28/2014 down 3.1%.
    P/E ratios of his stocks range from 15.6 to 54.2 and the 15.6 is First Solar with a 3 year trend at down 45.6% over 3 years.

    Then Bloomberg reports – “The appeal of cleantech has dimmed as efforts to curb greenhouse gas emissions have faltered: Venture capital and private equity investments fell 34 percent last year, to $5.8 billion, according to Bloomberg New Energy Finance.”

    Needs a Keep Out sign somewhere.

  23. what chance Risky Business’s Bloomberg/Steyer/Poulson might have had some input into this report?

    29 July: Bloomberg: Mark Drajem: White House Says Delay Will Raise Climate Cost
    As the Obama administration defends its efforts to curb carbon emissions this week, it’s taking a new tack: arguing that it is smart economic planning.
    A White House report released today says the cost of fighting climate change will increase 40 percent for every decade of inaction…
    While the EPA says its carbon rules will be a net benefit to the U.S. economy and result in lower electricity prices, the U.S. Chamber of Commerce and other business groups are warning that it could cause a jump in energy prices and damage to the tepid U.S. economic recovery…

    http://www.bloomberg.com/news/2014-07-29/white-house-says-delay-will-raise-climate-cost.html

  24. 29 July: Reuters: Power producer Drax earnings fall 15 pct on carbon tax
    British power producer Drax Group Plc reported a 15 percent fall in first-half earnings, hurt by increasing cost of UK carbon tax…

    http://www.reuters.com/article/2014/07/29/drax-group-results-idUSL4N0Q41IY20140729

    39 July: Bloomberg: Coal Miners Clash With Ski Operators Over EPA’s Coal Rule
    By Jennifer Oldham and Mark Drajem
    Singing, Chanting
    In Washington, dozens of activists carrying American flags and miniature windmills sang, chanted and posed for photographs outside of the EPA headquarters.
    The Climate Reality Project offered free Ben & Jerry’s ice cream scoops to those who followed a simple process: file a comment to the White House supporting the rule, sign a petition for the plan and tweet that support to the world…

    http://www.bloomberg.com/news/2014-07-29/coal-miners-clash-with-ski-operators-over-epa-s-coal-rule.html

  25. Years ago, tried Green investing. “Free Wind” “Efficiency of Recycling” and all that stuff. It’s all fluff, the windmills and the solar panels, requiring heavy subsidies. I lost money.
    So I invested in Big Oil when it was unfashionable, listening all the while to all the Left Green commentators saying the industry is on it’s last legs. And so I made money.

  26. in canada we pay quite a bit of attention to the cdn-us exchange rate. whenever a movement is likely there are tons of editorials in the financial pages of the newspapers by experts claiming that the dollar is very likely to move in the opposite direction to what actually happens. the suckers follow the market hype – the smart money bets against it.

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