Woulda, Coulda, Shoulda
With the market's rapid rebound from March lows and the Nasdaq Composite stock index closing higher than it was at the end of last year, many of us are probably asking ourselves:
Did I miss my chance to buy at the lows?
or:
Will I ever make up for my losses?
These questions point to dangerous emotions for stock market investors. Fear of missing out often leads to investment mistakes. This is why investment advisors always tell their clients that they are better off not looking at their portfolios in a downturn.
A big loss makes some people want to sell everything, for fear...
The Short Side of Clean Energy
Green Energy Investing For Experts, Part I Tom Konrad, CFA You don't have to be long Renewable Energy stocks to have a green portfolio. Shorting, selling calls, or buying puts on companies and industries which are heavily dependent on dirty and finite fossil fuels not only makes a portfolio greener, it can protect against the effects of a permanent global decline caused by peak oil. Nate Hagens presented this slide at the 2009 International Peak Oil Conference: It shows his conception of the different schools of thought among those of us who understand peak oil. Those represented in...
Shorting The Least Green Companies
Newsweek recently released its 2009 Green Rankings for America's 500 largest corporations. Investors would do well to examine the bottom of the list, as well as the top. Tom Konrad, Ph.D., CFA I'm getting more and more company in worrying about a market peak. If you, like me, are Interested in green investing, and hedging your exposure to a market decline, you should probably also be interested in turning Newsweek's Green Rankings upside-down, and use some decidedly un-green companies as a hedge against the market risk of your greener portfolio. If you believe that...
Correction, or Bear Market?
by Tom Konrad, Ph.D., CFA
On February 21st, I was helping an investment advisor I consult with pick stocks for a new client's portfolio. He lamented that there were not enough stocks at good valuations. This is one of the hardest parts of being an investment advisor: a client expects the advisor to build a portfolio of stocks which should do well, but sometimes, especially in late stage bull markets, most stocks are overvalued. I reminded him, "The Constitution does not guarantee anyone the right to good stock picks." He agreed, but he still had to tell his client that...
A Year Later: Market Up, Clean Energy Down
Tom Konrad, CFA When I called the peak a year ago, it was too soon for the broad market, but not for clean energy stocks. I think both have room to fall, but clean energy may bottom first. Almost a year ago at the start of June, I wrote saying "we're near the peak" of the stock market. I was too early, and admitted it in August. But I also said that it was a bad time to be in the market: the risks of a decline far outweighed the potential gains of remaining in an...
Better, or Beta?
Tom Konrad, Ph.D., CFA My Quick Clean Energy Tracking Portfolio has produced unexpected out-performance. Is it because of high beta (β) in a rising market? I recently asked why two portfolios which I had designed to track green energy mutual funds ended up out-performing them by a wide margin. This is the first of a short series of articles looking into possible causes. Could the portfolios be outperforming because the stocks they contain rise more when the market rises (and fall more when the market falls) than do the mutual funds they were designed to track? In...
Green Energy Investing for Experts, Index and Wrap-Up
Tom Konrad, CFA My Green Energy Investing for Experts series looked at ways shorting could both protect your portfolio against market decline, and make it greener by shorting decidedly non-green companies. This is an index of the entries, plus one more industry for you to consider. Green Energy Investing for Experts, Part I made the case that shorting stocks that are particularly vulnerable to peak oil or climate change is a good way to hedge a portfolio of green stocks against a market decline while making the whole portfolio greener. Green Energy Investing for Experts, Part II looked at...
How Weather Risk Transfer Can Help Wind & Solar Development
by Daryl Roberts
The Need To Accelerate Renewables Adoption
Renewables are growing rapidly as a percentage of new electric generation, but are still being assimilated too slowly and still constitute too small of a fraction of total generation, to be able to transition quickly enough to scale into a low carbon economy in time to mitigate climate change.
The issue of providing public support, with subsidies and other reallocation methods, is a politically charged subject. High carbon advocates, for example American Petroleum Institute, argues that support for renewables distorts the market. On the other hand, it has been argued, for example by...
When to Sell: Five Rules of Thumb
A common complaint about investment writers is that we are always willing to tell you the next stock to buy, but we don't always get around to telling you when to sell. I'm as guilty of this as most: generally, I write about the stocks I'm interested in... which are the ones I'm buying, not selling. And, although I write the occasional negative article (Petrosun Drilling most recently, but also US Sustainable Energy and Global Resource Corporation), these were more stocks to avoid, rather than stocks which had seen their run. This is unlikely to change. For a start,...
What Good Is Shareholder Advocacy?
By Marc Gunther. Last week, ExxonMobil added Susan Avery, a physicist, atmospheric scientist and former president of the Woods Hole Oceanographic Institutions, to its board of directors. Shareholder advocates, led by the Interfaith Center on Corporate Responsibility (ICCR), which has been organizing shareholder campaigns at ExxonMobil for nearly two decades yes, two decades welcomed the appointment. Tim Smith, the director of environmental, social and governance (ESG) shareowner engagement at Walden Asset Management, said in a news release: “This action by the board is encouraging for shareowners and we want to commend Exxon for this prudent and...
Asking the Right Questions: Why Invest in Clean Energy?
Tom Konrad, Ph.D., CFA Often, knowing more about a company is less useful than knowing just a few of the right things. Knowing the right questions to ask can help investors wade through a sea of mostly irrelevant information. Take a moment to answer the following poll: Suppose you want to know if fictional solar Company MySolar will outperform other solar stocks. Which fact would be most useful in your decision?(poll) The key to this question was the stated goal of "outperforming other solar stocks." An investor who is only hoping to achieve returns equal...
An Elephant Hunter Explains Inflection Point Investing
John Petersen In "An Elephant Hunter Explains Market Dynamics" I discussed the two basic types of public companies; earnings-driven companies that are “bought” in top-tier weighing machine markets and event-driven companies that are “sold” in lower-tier voting machine markets. Today I'll get a bit more granular and show how "sold" companies usually fall into one of two discrete sub-classes that have a major impact on their stock market valuations. As a starting point, I'll ignore the China-based companies that are listed in the US because their quirky metrics would only confuse the analysis. Then I'll break...
Buying Foreign Stocks: To ADR or Not To ADR
by Tom Konrad, Ph.D., CFA
Since my 10 Clean Energy Stocks for 2021 list contains 5 foreign stocks this year, a reader asked about the relative merits of buying a foreign stock compared to a US ADR. Here is a summary of the relative merits (for US investors) of buying a foreign stock directly compared to buying the American Depository Receipt (ADR).
First, let’s look at the tickers for the five foreign stocks in the list. There are four types of ticker in the list this year:
The stock on its home exchange in the local currency. These have the form...
The Trump Trade
by Garvin Jabusch The first two weeks under the Trump administration have been a shock to the system. With the change in administration, how will you approach your stock portfolio(s)? For starters, your fundamentals should remain unchanged. For me, that means looking for great companies in expanding markets that are enabling long-term economic growth, and reducing systemic risks. Of course, this also means buying these stocks at low valuations. Benjamin Graham and Warren Buffett were right about ‘wonderful companies at fair prices.’ That is never going to change. With that said, let’s look at what has changed and...
Trading Options and Foreign Stocks: When Low Trading Volume Is Not Illiquid
Tom Konrad, Ph.D., CFA
As usual, I am putting together my Ten Clean Energy Stocks for 2020 model portfolio for publication on January 1st or 2nd next year. As I wrote in November, expensive valuations for the US clean energy income stocks I specialize in mean that the 2020 model portfolio will contain more than the usual number of foreign stocks, and I am also planning on including a little hedging with options.
Why option strategies are now affordable
I have never included options in the model portfolio before because the commission structure did not make it cost effective for small investors...
Down and Out in 2011: Headlines from Possible Futures
Tom Konrad, CFA If you don't know what could go wrong in 2010, it could still hurt your portfolio. In Nassim Taleb's Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, he describes an exercise at one of his early jobs. In order to become aware of risks they otherwise might have overlooked, they were to assume that they would lose all the money under their management in the coming year, and they work backwards to figure out how that might have happened. This struck me as an excellent idea, which investors...
