Making A Profit From Climate Change

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by Jim Speiser, Special to the Roundup

As a full-time investor and trader, I’ve learned to be agnostic about ideology. Not that I don’t have one, on the contrary, I’m passionate about my opinions.

But when it comes to markets, you’re dealing with everyone’s opinions. Markets move with greed, fear and changing events. And there’s the rub. Things are always changing — kind of like the weather. Just when you’re getting used to a nice sunny streak, it turns unbearably hot. And when it cools down, it rains ... and rains. Trying to get a handle on the markets is like trying to get a handle on the weather.

As an investor I face the ravages of inflation, recessions, bank crises, real estate and stock market crashes, and geopolitical events. Yet through all of these crises, I’ve learned how to live and profit through the worst of these events. But is it possible to profit from what has been an obvious change in the weather from relatively mild seasons to the severe weather events we’ve been living through lately?

Just as it is possible to protect ourselves against things like inflation, bank runs, and market crashes, I submit it’s possible to protect ourselves, at least financially, against things like drought, famine, earthquakes, hurricanes and the like.

I’m not suggesting we can avoid the terrible effects of these events, just as we can’t avoid the effects of things like the financial crisis we just lived through, or a real estate collapse, or a really bad recession. But we can alleviate the pain to a degree.

If you lose your house to a hurricane, at least you know that good insurance will make you whole again. And if you have invested wisely, you could see your life savings increase rather than decrease.

As a trader of stocks, I thrive on change. For that reason “climate change” fits right into my way of investing.

I’m a defensive investor. I reduce the risks of loss and increase my chances of making money through foresight. Warren Buffett does the same thing. He only invests in what he knows and can rely on to make him a decent profit over the long term. His investments and portfolio are built to stand any kind of weather.

Buffett may be a great place to start in building a portfolio of protection, since the cornerstone of his Berkshire Hathaway empire is insurance companies. Buffett knows, owns and trusts insurance companies, and if the unexpected ever happens to cause great environmental damage he knows that more and more Americans will run to acquire insurance. In today’s world of increasing severe weather events, his stock continues to rise. It should be a mainstay in any defensive portfolio.

Caterpillar and Deere, two companies that supply heavy equipment, provide everything needed to repair infrastructure damages due to severe weather. They also provide the equipment to mining companies to mine commodities like copper, zinc and aluminum that go into repairing the infrastructure — the roads, bridges and buildings we all need and use. In addition, these two companies provide agricultural equipment. Monsanto is another blue chip company in the agriculture business and should be considered in such a portfolio.

Concerning drought, you can invest in ETFs that own entire industries or sectors to deal with shortages, such as DBA, an agriculture ETF. And if you are interested in clean energy, there’s an abundance of investment opportunities, including:

• PowerShares WilderHill Progressive Energy Portfolio (ARCA:PUW)

• PowerShares Water Resources Portfolio (ARCA:PHO)

• PowerShares Global Clean Energy Portfolio (ARCA:PBD)

• PowerShares Global Water Portfolio (ARCA:PIO)

• PowerShares CleanTech Portfolio (ARCA:PZD)

• Market Vectors Global Alternative Energy ETF (ARCA:GEX)

• Market Vectors Environmental Services Index (ARCA:EVX)

• Market Vectors Nuclear Energy ETF (ARCA:NLR)

• First Trust ISE Water Index Fund (ARCA:FIW)

• First Trust Nasdaq Clean Edge Green Energy Index Fund (Nasdaq:QCLN)

• Claymore S&P Global Water Index ETF (ARCA:CGW)

And let’s not forget the ultimate protection against catastrophe: gold. Gold will protect you against commodity inflation if food or gas prices soar. It will rise in value in times of chaos. And gold can be used as money if banks close and ATMs run out of cash. Unlike investments in corporate stocks, gold should be held physically in your possession in small denominated coins. Silver coins should supplement gold holdings.

There’s no way to know which weather events will affect us or when, but it’s certain that they will. Investing in those companies that will have to clean up after such events is a sure way to profit from climate change. And owning scarce resources and commodities in various forms is an insurance policy above and beyond the everyday casualty insurance everyone needs to protect themselves against the ravages of nature.

Jim Speiser is a retired talent agency executive who has turned his attention to climate change. He has lived in Payson with his wife Mary since 2004.

Comments

don evans 5 months, 2 weeks ago

Strange this gentleman advises to invest in the unproven green company's. All based on the phony crisis of climate change. You know, like the one's the Obama administration invested multi millions of your tax payer dollars in to. And they all went bust and failed. And if the economic, social, or weather collapse does arrive here, do you really think carrying around some gold and silver coins will purchase what you need from the hordes of lawless anarchists? I would invest in long term storage sustainable food products, along with firearms and ammo to protect them. And those items will be of the highest value to all. You can't eat metal coins or solar panels. In my opinion, the stock market is one big Ponzi scheme for the wealthy insiders and the dupes who give them their money.

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jim speiser 5 months ago

Thank you for your thoughts, Don.

A couple of small quibbles. First, the crisis is not phony...unless you have facts and data that convincingly contradict the 10,000 or so climate scientists, the 8000 or so peer-reviewed papers, the dozens of national science organizations, most casualty insurers, all of the large reinsurers, and your Department of Defense, in which case, have at it!

Second, in spite of Solyndra, the loan guarantee program that supported it was actually a resounding success. "Since the program was enhanced through the stimulus package, it has supported the world’s largest wind farm, the first commercial cellulosic ethanol plant, some of the largest solar PV plants in the world, and the country’s largest concentrating solar power project — nearly 40 projects in all that helped keep 60,000 people employed during the economic downturn." It is therefore false that they "all went bust." Quite the opposite in fact.

And now, a couple of points of agreement: By all means, store up food and provisions, and consider investing in firearms and lessons (if necessary) to protect those provisions. Just be aware that this is going to hit in phases. We are beginning the first phase, where realization is dawning that we have a genuine problem. That will drive certain stocks higher, as people become interested in hedging against climate change. The second phase will entail partial collapse of the economy, the infrastructure, and society in general. There will be some chaos, but it will not be clear if the upset is permanent or not. During this phase, yes, gold and silver will be very exchangeable...until it becomes clear that the weather is not going to "clear up". That will begin the third phase, when it is "every man for himself," and the best-provisioned and best-armed will be the longest-lived.

I wish you the best of luck.

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