Monday, February 23, 2009

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,


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