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...
The Problem With Proxy Ballots
Vote With Money Instead by Garvin Jabusch Many people assume that engagement with public companies through proxy voting and resolution filing is the best if not only way to see positive environmental, social, and governance outcomes from your investments. For me, this approach misses a fundamental point of market-based solutions: you make in investments in the most compelling ideas that reflect what you think is likely to grow, where you think the economy is headed, and yes, outcomes you support. That means using investments to favor firms that are already making innovative sustainable contributions to the global economy...
What I’m Selling (and will be Buying) in the Market Turmoil
The market is in turmoil, and it seems like everyone I talk to wants my take on what's happening this week. So here's my take: I really don't know if the various bailouts and decisions not to bail out made by Paulson et al will turn out to be good decisions or not. I do know that the mess we're in is due to hard decisions which have been put off for years at the highest levels, and I do know that the American taxpayer is going to be feeling the pain for a generation, if not...
Why Do Green Energy Experts Buy Solar Stocks?
Tom Konrad CFA Green energy experts accept that solar panels are one of the least cost effective ways to reduce your carbon footprint. Nevertheless, many buy solar stocks. They should rethink their investment strategies. I recently spoke on "Stock Selection in the Era of Peak Oil and Climate Change" at the ASPO 2009 International Peak Oil Conference. Whenever green energy enthusiasts find out that I analyze green energy stocks professionally, they react in one of two ways. Many want to know my top stock pick in general (New Flyer Industries NFI-UN.TO/NFYIF.PK) or in their favorite sector (see below.) ...
Green Energy Investing For Beginners, Part III: Before You Invest
Tom Konrad, CFA Before you consider green stock market investments, invest in yourself. A reader of my article on asset allocation for green energy investors brought up an important point: we may have green opportunities in our own lives, such as improving the energy efficiency of our homes, which will return much safer and higher returns than green stocks, especially when the market as a whole is as overvalued as I currently believe it is. Homeowners typically have a large number of high-return energy efficiency investments they can make. Since energy efficiency reduces energy use, it both produces returns...
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...
Permaculture Design and Stock Market Investing
by Tom Konrad Ph.D., CFA
Passive Investing And Modern Agriculture: Parallels
Today's stock market is a dynamic and scary place.
Once choosing stocks to invest in based on the fundamental value of the companies they represent (called fundamental or value investing) was the dominant paradigm for investors. No longer. In 2017, JP Morgan estimated that only 10 percent of trading came from fundamental investors. The vast majority of trading now comes from computer based algorithmic trading, and passive investors following pre-defined rules, such as index investors. According to Morningstar, nearly 45 percent of all stocks are owned by passive investors. These should...
How Free Commissions Change The Game For Small Investors
Why Free Commissions are a Game-Changer For Small Investors
by Tom Konrad, Ph.D. CFA
Last month, Charles Schwab (SCHW), E-Trade (ETFC), and Ameritrade (AMTD) all dropped their commissions for online stock trades to $0. They also dropped commissions on options contract to $0.65 per contract.
The change opens up cost-effective individual stock investing to even the smallest investor, and also allows many more investors to use option strategies. For those wondering if there is a catch, and how these brokers will make money with $0 commissions, see here. The short version is that they make money on your cash deposits, and from...
Calling for a Marshall Plan, not a Manhattan Project
Electricity too cheap to meter. For many renewable energy advocates, that is the holy grail… new technology which will not only solve the problem of carbon emissions, but be so transformative that we no longer have to worry about turning off the lights when we leave the room. We could argue for days about the viability of any such technology, be it cold fusion, hydrogen, or photovoltaic nanodots. I personally have strong opinions about the likelihood of any technology to produce energy so cheaply that it would not make sense to use some mechanism...
The Catholic Church Shouldn’t be Investing in Abortion Clinics
Tom Konrad CFA Jesus Saves, but where does he invest? Photo via Bigstock. This article is not about the Church, or abortion. As far as I know, the former does not invest in the latter. This article is about investing, and morality. Since 350.org began its campaign to get endowments and pensions to divest from fossil fuels, I've heard two basic criticisms of the movement from my colleagues in the investment management profession. Endowments selling their fossil fuel investments won't stop us from using fossil...
Cleantech Investing For EcoGeeks
by Tom Konrad. This story is cross-posted on EcoGeek.org As lovers of green gadgets, EcoGeeks probably know as much about what's new in clean technology (a.k.a Cleantech) as anyone on the web. So if you're an EcoGeek thinking about investing in companies which make the technology you know and love, you will probably take comfort in the old adage that you should invest in what you know. An EcoGeek investing in clean technology companies will have an advantage understanding how a company makes money, and what is a needed innovation with a large market, and what is simply a...
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...
Are ESG Funds All That Different?
by Jan Schalkwijk, CFA
ESG investing is all the rage these days. That is, investing that includes the non-traditional environmental, social, and governance factors in the investment process. Its appeal to the broader investment industry is twofold:
1) The writing is on the wall: as wealth is passed down to younger generations who in the aggregate care more about values alignment, the asset management industry does not want to lose the assets and the fees they generate.
2) Thematic investing is popular and ESG is one of the hottest themes. Wall Street is not going to miss out. Much like crypto...
SALT: Buying the Balitc Dry Dips
by Tom Konrad, Ph.D. CFA
The Baltic Dry Index (BDI) is a shipping and trade index created by the London-based Baltic Exchange. It measures changes in the cost of transporting various raw materials, such as coal and steel.
Since the BDI is a measure of the income which firms that own dry bulk cargo ships can earn, changes in the BDI tend to drive changes in the stock prices of such companies.
Stock Price Correlation
Until recently, one such company was Scorpio Bulkers (SALT), one of my Ten Clean Energy Stocks for 2021 picks. The chart below shows the last 5 years, with...
Short Demand for Cree High and Rising
I got a call from my broker this morning asking me if I'd be willing to loan out my shares of Cree, Inc. (NASD:CREE) to a short seller. Since the only cost to me is that I will not be able to vote my shares, and I will earn 2.5% per annum on the value, I said "yes." Normally, brokerages get the shares they lend out to shorts from margin accounts with a margin balance. Since I never carry a balance (although I do have a margin account in order to trade options) they must ask my permission...
Voting and GameStop
Only a couple weeks ago, I quoted the market aphorism, “In the short-run, the market is a voting machine, but in the long-run, it is a weighing machine.”
It comes to mind again now that Robinhood types are short squeezing hedge funds with GameStop (GME) and other nostalgia stocks.
It's another example that any strategy that relies on valuation affecting prices in the short run (like stonks betting that GME would go down because it lacks a viable business) is incredibly risky. It's also incredibly risky to bet that any trend driven by popularity will last. Eventually, there are going...
