Wednesday, February 25, 2009

Obama Speech and Green Investments

Last night, Obama made another marvelous speech to Congress. And he used the opportunity to drive home his priorities for renewing the U.S. economy.

At the very top of the list: renewable energy.

This is more than symbolic. Obama is, unlike so many congressmen who pay lip service to sustainable energy, actually driving resources there to the tune of more than $107 billion.

What's more, he's talking about a cap-and-trade scheme here in America that would be somewhat modeled, presumably, on similar programs being conducted under the Kyoto Protocols.

To that end, he's pledging $15 billion a year toward sustainable energy projects. Here's part of what he said last night:

"The budget I submit will invest in the three areas that are absolutely critical to our economic future: energy, health care, and education.

It begins with energy... Thanks to our recovery plan, we will double this nation’s supply of renewable energy in the next three years. We have also made the largest investment in basic research funding in American history — an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.

"We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country. And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.

"But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America."

Obama is not a tippy-toe kind of guy, that's for sure.

He doesn't seem interested in bartering piecemeal with the opposition for a concession here and there. He's defining the playing field, and his vision does not feature an option whereby the same old policies and talking will suffice.

He seems bent on revolutionizing our infrastructure for real - which is every bit as ambitious as Kennedy's pledge to land on the moon... but a whole lot more practical and necessary.

It will also, in our opinion, prove to be a lot more profitable. And that's exactly where we plan to strike first, when our new recommendation comes your way within the next week or so.

Good day,


Tuesday, February 24, 2009

Obama's Green Investment Push Gains Global Support

In a recent post we talked about the Obama administration's plan to inject $100 billion-plus into the green energy sector here in the U.S.

But we failed to mention that he's not alone in the world.

Governments in Asia and Europe are shifting their infrastructure focus toward greener, more efficient technology too.

In fact, these three regions - the U.S., Europe and Asia - have now committed more than $200 billion to funding green energy initiatives, according to a new report by Deutsche-Bank.

As Reuters reported, DB's head of climate change investment research Mark Fulton sees this trend as bullish for green energy companies in general:

"The activity shows that governments are very serious about continuing to tackle issues around renewable energy and climate change," he said during a teleconference just as DB released its latest analysis yesterday.

"We believe this trend ... will provide crucial support to climate change industries during the current global economic downturn, helping to offset the impact of weaker debt markets over time."

European Union nations have already committed some $60 billion to green energy and infrustructure companies. And these are exactly the areas where we'll be looking to build some of our core portfolio in the coming days.

In fact, we may start with a California company that's already tied into that state's smart-grid project pipeline.

The shares have taken a beating over the past year, as you can imagine. But it's in the sweet spot right now, and possible poised for a rally on the back of Cali's green infrastructure buildout.

That company is called SunPower Corporation. Here's the info from Yahoo! Finanace:

We're not officially recommending the company yet, but it's on our watch list.

I'm thinking this time around, we're going to start putting together some kind of strategic portfolio, complete with some asset allocation, to ride out this economic storm.

More to come,


Warren Buffett's Green China Play

According to a report featured in the excellent blog (, Warren Buffett just pumped about $230 million into a Chinese car-battery company listed on the Hong Kong Stock Exchange.

The company, BYD Company Limited, also trades over the counter (OTC: BYDDF) so you may be able to buy it through your broker. Volume here is pretty light, at about 15,000 shares a day, although with a $1 billion-plus market capitalization, this is no nanocap.

Buffett's Mid-American Energy Holdings Company plans to buy 225 million shares (no word as to the price, although the stock is trading around $1.90 on the bulletin board).

MarketWatch has a good story on this, too:

The company makes high-tech lithium-ion batteries and other technologies with the main application being electric cars. Being in the Chinese market (the fastest-expanding auto market in the world) could be what gives this company the edge over its U.S.-based competitors.

We'll put BYDDF on our watch list. But I would not recommend jumping into the OTC shares. Yes, they might triple in value over the next six months. But they might go to zero, too. If anything, we'd recommend the Honk Kong shares, which you should be able to buy through your broker as well.

Good day,


Monday, February 23, 2009

Obama's Green Economy - The $100 Billion Prize

There's something about a crisis that forces people to reexamine things, drop old prejudices and finally seek new solutions.

Because, frankly, the old solutions just don't work the way they used to.

That's certainly the case with the current economic crisis and the promise of green investing to help lead the world into a new era of sustainable economic growth.

Green is going mainstream, and there's a heightened sense of urgency. Obama's new $800 billion (give or take) stimulus program has alotted at least $100 billion toward green energy grids... solar and wind power... clean coal and other technologies. That's 1/8th of the package - an absolute knock-out percentage by any stretch.

Clearly, Obama's putting his money where his mouth was on the campaign trail, and that's a good thing.

I would love nothing more than to see mainstream investment minds, writers, bloggers and journalists actively embracing green as a result... rather than playing with it like a cat plays with a mouse, waiting for it to die some inevitable death. As if green were a fad. As if it were the Chia pet of investing.

In fact, since the money is going to flow there, it seems the mainstream is adjusting to the new reality, and starting to - gasp - embrace it!

Bloomberg's John Wasik wrote in anticipation of the stimulous going through:

If Congress is serious about battling climate change, it will mean putting more than 10 million cleaner and carbon-neutral vehicles on the road and retrofitting buildings, factories, offices and homes.

Green buildings not only save energy and reduce carbon emissions, but can create employment. In Germany, just insulating 200,000 apartments led to 25,000 new jobs.

As infrastructure and transportation are rebuilt and "greened," it will demand more new steel, concrete, plastics, electronics, clean power and earthmoving vehicles.

Corporate Earnings

Another benefit may turn up in your personal portfolio. A green economy lifts almost every industry as bottom lines improve because less energy and resources are consumed. Communities from Silicon Valley to the Mahoning Valley can all prosper from this boom. Companies such as General Electric Co., Duke Energy Corp., Caterpillar Inc., Siemens AG and Hitachi Ltd. will benefit from big infrastructure and energy spending.
Yes, Big John. Welcome to the green side.

Of course, our argument here all along is that green = efficiency. How in the world could any self-respecting capitalist not love the idea of increasing efficiency to promote long-term economic growth... while creating millions of new jobs now?

More to come.


We're diving back into the markets... but why?

Well, it's been over a year since we concluded our 12-month experiment.

And the results were conclusive: You can indeed beat the S&P 500 with only green investments. I'll be providing detailed data from that experiment in an upcoming post.

Meanwhile, with the world apparently falling apart at the seems, it's time to dive back into the markets... but with a few caveats.

You can call them my rules of green investing in the New Obama Era:

1) BE PREPARED TO LOSE SOME: Only use money you can afford to lose when investing in new stock speculations.

2) DISCOVER THE GOVERNMENT ANGLE: Follow the money. And the money is coming from Congress right now. Invest only after answering this question: How might the government's spending policies affect (or not affect) any potential investment in the green space. Pay very close attention to the New Economy (or the new "O-conomy" as my friend Larry calls it). It's being constructed largely without influence from Wall Street, and with heavy government direction. And it could be very beneficial to green technologies and the green culture in general.

3) PROTECT YOUR DOWNSIDE SYSTEMATICALLY: As we construct our new core portfolio, we'll be looking to an investment horizon of at least one year, although we'll use our regular trailing stops to protect our gains and minimize our losses along the way.

The last year has been amazingly damaging to portfolios around the world. I've watched it up close and personal from inside the financial industry, and it has been uglier than anything I've seen in this lifetime.

In fact, I haven't met a single old-timer who has been able to say: ah, this is nothing. Back in so-and-so we had to... etc. Nope. Even they old guys are stunned and humbled.

Humility, however, is the beginning of all investment success, as my friend and colleague Alexander Green of the Oxford Club has written.

So with a dose of humility, we're about to start putting together a new green portfolio right in the midst of the most horrible markets we've ever seen. Because guess what - when the recovery comes, and the New Economic landscape becomes more clear, I am confident that green technologies will be more prominent - and profitable - than ever.

More to come,