Green Investments and the "Tipping Point" of the Mind

Let's face reality.

Green investing is not mainstream... yet.

This proposition - that now is the time to begin a dynamic, purposeful, long-term shift to new energy - is still very much in the balance.

We don't know for sure whether the sea change we need in the mindset of the world's corporate decision makers will take hold.

Of course, anyone with common sense can understand the benefits of moving toward more sustainable businesses involved in solar, recycling, efficiency, clean water, biofuels and the like... and away from crude oil, cigarette makers and the military-industrial establishment.

As long as we use oil at our current rate, we'll be beholden to dictatorships in the Middle East, including Saudi Arabia... which could be worse than Iran when it comes to human rights... and certainly in terms of the number of screaming maniacs it put on the 9/11 planes (actually, I don't believe there was a single Iranian involved, was there?).

Green Investments: An Effort to Change the Way Humans Think

The point here is that this is an effort to change the way human beings think. There's nothing automatic about it. The Dark Ages would have continued forever were it not for advances in technology, art, philosophy and political freedoms.

In a way, we have been in a crude-oil-and-coal-fueled dark age in terms of energy production and consumption patterns, and it is costing us.

Not only with polluted rivers and streams... smog... cancer... and all the rest... but in terms of opportunity costs...

The longer we continue whistling in the dark, the further behind we'll be left by competitors such as China, India and Europe.

Already, Europe is way ahead of the U.S. in terms of developing wind infrastructure.

Already China is pulling ahead of us in terms of solar-panel production, jatropha cultivation and wind production.

The time to begin developing an alternative-energy infrastructure in the U.S. is right now, and the government needs to get behind it full-force... not merely through setting standards, but by pouring money into this nationwide project.

(Just as importantly, we can help our friends and family to understand the urgency of the situation as well.)

Green Energy Could Create 3 Million New Jobs

Another reason to do so: jobs.

As pointed out in a recent article on CNN/Money, some 3 million new jobs could emerge over the next 12 years or so as a direct result of our shift toward green energy such as solar panel production and installation.

http://money.cnn.com/2007/10/04/news/economy/green_jobs/?postversion=2007100509

These are jobs that aren't going to be exported to China and other places either.
Unless, of course, they're already so far ahead of us that it will make no sense to develop these new technologies and products here in the U.S. going forward.

Fact is, it is possible for us to lose the battle against retro energy very slowly, over the course of years or even decades.

In order to avoid this, we need a "tipping point" of the mind whereby all sensible people - including those at the heads of industry and politics - finally agree that a shift in inevitable... and that the only question is: how can we accomplish it quickly enough to make a difference for the next generation?

James

Why We Use Trailing Stops

So we sold LDK Solar from the portfolio, and today it gaps up 5%. I know this is galling, even maddening on some level. But if you're serious about beating the markets, I have only this to say: Finding a strategy that works for you and sticking to it, even when it hurts a little, is absolutely critical.

Normally, I will place a trailing stop of 25% behind the positions we add to our portfolio. That means that we'll sell the stock the morning after it closes 25% or more below its high since being added to the portfolio.

The simplest way to understand it is with this example:

If we buy Stock XYZ at $10 and it closes at $7.50 (25% off its high) the next day, we sell upon the opening bell the following morning.

The reason we do this is simple: Rather than holding on and hoping the stock will rebound, we cut the losers and, as Alexander Green of The Oxford Club says, we let the winners ride.

Hey, it's not like we aren't giving the stock a chance to soar... just as long as it doesn't retrace too dramatically.

If it does, we sell and move that money into another stock poised to take off.

Our System Ensures that We Never, Ever Take a Catastrophic Loss

The beauty here is that you'll never, ever take a major bath on an investment this way. The Trailing Stop discipline makes sense, and I use it with this blog because my purpose isn't just to add stocks to the portfolio and hold onto them randomly until I get some big numbers to crow about.

We're seriously trying to beat the S&P 500 over the long haul... and we're willing to take our losses when we have to in order to accomplish this goal.

Anyway... more on trailing stops at a later time. For now, let's let the portfolio settle in and see if we can lasso another LDK-like return.

Best,

James

Add D1 Oils to Our Portfolio at $4.15

After some intensive research on jatropha, I've decided to add D1 Oils to our Evergreen Portfolio at $4.15 per share.

D1 Oils has the rights to more than 198,000 hectares of jatropha worldwide already, across arid parts of India, Africa and Southeast Asia... and is in the process of planting and acquiring more every day. Its recent joint venture with British Petroleum marked a turning point for the company...

Here's what D1's Chairman had to say recently:

The establishment of D1-BP Fuel Crops Limited [the joint venture] is a transforming event for D1. BP’s decision to join us in this new venture is a significant endorsement of our feedstock strategy. The joint venture will enable us to speed up the development of jatropha for the production of sustainable biodiesel and to deliver commercial volumes of jatropha oil at competitive prices, benefiting both the economies of developing countries that will grow the crop and the rural communities where planting will be based.

D1-BP Fuel Crops will commence operations on 1 October. The new joint venture also represents a turning point for biodiesel globally. Although biodiesel is a young industry, it has rapidly become not only an established part of the global renewable energy landscape, but also a commercial and strategic requirement in the global transport fuel market. BP’s decision, as a major global supplier of transport fuels, to focus on jatropha as the source of sustainable biodiesel is a recognition of the pressing need to base more biofuels on inedible crops that are not subject to the same demand pressures as food oils and that are grown on marginal land.

Indeed, while the company is not yet turning a profit, it's got plenty of cash on the books and appears poised to catch lightning in a bottle, so to speak.

The Most Direct Way to Play the Coming Jatropha Boom

This is the most direct play on jatropha available in the world today. You could look to invest through Brazil's Renova... or perhaps China's CNOOC... or even British Petroleum, D1's partner in Swaziland.

CNOOC is particularly tempting, because of its recent agreement to Panzhihua Municipal Government to cultivate the plant and process jatropha. However, oil is looking toppy right now, and so is China.

I also sense that the general professional trading community and, to some degree, the markets, are becoming a bit more careful about China. And they're flat-out preparing to run from biofuels... so even stepping into this arena right now is a calculated risk.

In addition, CNOOC is a massive oil producer. And I just have a hard time adding a major oil company to this portfolio, although I am not against it entirely.

I'll file a complete report on D1 Oils shortly, which lists on the London Stock Exchange. Till then, let's get on the jatropha bus and see how far it takes us.

Action: Add D1 Oils (DOOIF.PK) to the portfolio at $4.15. We won't use a Trailing Stop on this position because I expect heavy, heavy volatility to precede an eventual momentum burst upward.

Good trading,

James

LDK Stops Out at $53.28... Hands Us 95.88% Gain

LDK Solar finally closed below our $55.46 trailing stop yesterday, at $53.28... which of course was 25% off the previous closing high of $73.95, hit back on September 26.

Again, LDK Solar is dropping from the Evergreen Portfolio effective this morning.

We bought the stock at $27.20. So while we stopped out of the position, we did book a solid 95.88% gain on the position.

Our next investment will be coming soon.

Cheers,

James

Why Big Retailers Are Going Green

According to the recent BDO Seidman Retail Compass Survey, a full 83% of major retailers in the U.S. report instituting some form of "green" practices within their companies.

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20071001005301&newsLang=en

A couple things about this report really stand out to me...

First, 62% of these Top 100 retail companies have reported increasing their green investments over the past two years. That's a pretty solid number. It shows these CEOs are putting their money where their mouths are.

But what I found really fascinating was why they're doing it... why they're going greener.

Surprise Surprise: Corporate America Hasn't Grown a Conscience... Yet!

I'm not sure if they were given the option of saying: "Because I'm interested in keeping a nice planet for myself and my posterity."

But whatever the case may be, only 25% said they were going green for zoning or tax-break-related reasons. About 13% of CEOs said they were greening because they wanted to improve their image with shareholders...

But a whopping 54% of the CEOs polled cited "image among consumers" as their primary reason for instituting sustainable business practices.

That tells me that the sustainability movement is winning the war against ignorance... in the place where it matters most: the marketplace of ideas. That tells me that we can bring about major change in the thinking of the PEOPLE who run America's biggest corporations... not by hitting them over the head and preaching, but by sharing information, sharing the facts.

Al Gore did it with his book and his movie. And it's a great paradigm for enlightening people in general.

After all, everything comes down to the human beings behind the corporations... From the CEOs to the board members... to the management to the entry-level employees. That's why this movement seems so perfectly suited to grass roots efforts.

Sustainability is not a political movement, in my opinion... It's much bigger than that... And more important, too... This is about humanity waking up to a brighter, healther, sustainable future... one person at a time... and not only because we need to in order to survive... which is true... but because we want to...

Best,

James

New Recommendation: PZD

Today we are adding some instant diversification to our portfolio, and hopefully some stability. As the market heads into what appears to be a slightly more benign area, at least for the next few months, this investment could provide some small but steady gains for us.

Not only does it give us direct exposure to a handful of expertly chosen greentech plays, it also is a solid bullish play on this subsector generally. I've had a lot of luck investing in ETFs through the years (my top earner this year is a China ETF that has returned 60%).

This one probably won't soar 60% over the next 52 weeks, but I do expect good returns.

Major Holdings... But a Surprise Punch Inside

The investment is the Powershares Cleantech Portfolio ETF (Symbol: PZD). The top 10 holdings of this ETF are generally massive energy concerns:

Top 10 Holdings of the Cleantech ETF
First Solar Inc. 3.25%
SPX Corp. 3.17%
SunPower Corp. 3.14%
Pall Corp. 3.08%
Nalco Holding Co. 3.07%
Siemens AG 3.04%
Corning Inc. 3.03%
Veolia Environnement (ADS) 2.99%
International Rectifier Corp. 2.99%
Trimble Navigation Ltd. 2.98%

However, 37.87% of the index upon which this fund is based is comprised of small-cap growth stocks. That could be why this ETF has been crushing the S&P 500 since inception, as you can see here.



Would You Rather Turn $10,000 into $10,883... or $22,584?

You can see that a $10,000 investment in the S&P 500 about seven years ago would hardly be profitable today. Meanwhile, our Cleantech ETF has been steadily rising since the implosion of 2002... but at a much faster pace the the S&P 500.

Of course, the point of my blog is to recommend great stocks you can use to beat the markets with companies that pay attention to their impact on this earth... and the people living here. So far we've been able to do that... and I think this ETF will continue to help us.

The other good thing here is: we can buy and sell options on this position, which we'll do on occasion. This means we could explode our earnings on this ETF by a factor of 3 or more!

Action: Add the Powershares Cleantech Portfolio ETF (PZD) to the portfolio at $32.54. No trailing stop on this position at this time.

Good day,

James

Green Investment Highlight: Kookmin Bank

Some of the Fed rate cut ripple effect seems to be lifting Asian banks, along with their U.S. counterparts. Witness this morning's 5% pop in Kookmin Bank (KB), our sustainable play on the Asian financial sector.

Based in South Korea, Kookmin is a relatively safe play on the Asian boom and the consumer banking sector in particular. And we also like it because of its proximity to China and the Chinese markets.

In recent days, our KB recommendation has steadily moved up, and is now handing us 14% gains. But of course, I think the Asian banks, and our green play, have plenty to run still. So keep a close eye on this one... If the world credit situation and the markets continue brightening through the fall and winter, as I expect, KB could easily make more gains by year's end.

Good trading,

James