Ten Clean Energy Stocks for 2020: Trades
by Tom Konrad Ph.D., CFA
Four weeks ago, I predicted that the 12% market correction we had seen would turn into a true bear market. Bear markets are often defined as a decline of more than 20% for the major market indexes, but I find it more useful to focus on long term changes in investor sentiment.
What I did not predict was just how severe the effect of the coronovirus shutdown would be on the economy. I thought we would need the combined of the effect of the shutdown and investors re-assessing their risk tolerance to bring us into full...
Climate-Risk Adjusted Returns and the Weasel Coefficient
By Tom Konrad, Ph.D., CFA
An 80% Weasel Coefficient
Some activists, including a friend of mine, recently had a conversation with representatives of TIAA to try to persuade them to divest from fossil fuels. The conversation was mostly cordial, but predictably did not get anywhere.
One of the activists summed up the response from TIAA as “a non-response with a weasel coefficient of at least 80%.” Regarding the weasel coefficient, he also asked,
Can anyone explain to me what "our overarching strategy which targets climate-risk adjusted returns over the long-term” means in plain English?
Well, yes. Yes I can.
Climate Risk Adjusted Returns
When an investment...
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...
Six Simple Steps to Protecting Your Portfolio With Puts
Tom Konrad CFA Storm Sailor (Photo credit: Abaconda) Sailing into a Storm Despite the unresolved European debt crisis and America’s fiscal cliff, stock markets remain buoyant. With politicians bickering, that is mostly due to aggressive action from central banks. Yet despite the Federal Reserve’s third (and largest) round of quantitative easing (QE3) and the European Central Bank‘s unlimited bond buying program, politicians still have the capacity to throw a monkey wrench in the world economy. Worse, doing nothing is all they have to do to mess things up. Doing nothing is what politicians...
Five Hedging Strategies for Stock Pickers
Investors who feel the market is overvalued have two options: move into other asset classes (cash, bonds), or hedge their market exposure. Hedging your exposure does not have to be rocket science, but it does require diligent attention to the market and your portfolio. I recently discussed how it makes sense to be out of the market if you expect that there is a good chance of a large decline, even if that means there is as much of a chance of missing a large upswing as there is a large decline. In my estimation, this is one of...
When Market Calls are Wrong
Tom Konrad, Ph.D., CFA. My recent market call now looks premature. What lessons can we learn? When we make market predictions, we will inevitably be wrong some of the time. I stuck my neck out at the start of June, saying "We're near the peak." I later gave some numbers to allow readers to objectively judge if that call was right or wrong. I said that we should consider it an accurate call if the S&P 500 fell 20% (to 756) before it rose 5% (to 992.) The S&P 500 has not yet come near 756, but it closed...
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...
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...
Green Energy Investing For Beginners, Part IV: Model Portfolio
Tom Konrad, CFA My target sector allocation for Green Energy Sectors: How much to put in Solar, Wind, Geothermal, Biomass, Biofuels, Energy Efficiency, Alternative Transport, and enabling technologies such as Smart Grid and Transmission. In Part I of this series on green energy investing (see also Part II and Part III), I suggested readers "structure your portfolio to reflect the technologies which are actually going to make a difference." This is not the same as investing in a market portfolio, because the market tends to overemphasize the most exciting or familiar (as opposed to the most useful) technologies. This...
Money Managers See Value in Clean Energy Sector, but Hesitate to Call the Bottom
Tom Konrad CFA Three green stock specialists see individual stocks at attractive values, but think it's too soon to call the bottom for the sector as a whole. Last month, I wrote that I'm again finding clean energy stocks that I think are bargains, and listed ten. I was not ready to call a bottom for clean energy, and in fact said I expected the market to get worse before it gets better, so investors should keep some money on the sidelines to wait for more opportunities to emerge. In a little over a month...
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...
Market Call: We’re Near the Peak
Tom Konrad, Ph.D. The current rally from the March 5 bottom has been breathtaking, especially in Clean Energy, with my Clean Energy Tracking Portfolio up 70.5% since it was assembled at the end of February (as of May 1), 11% higher than it was at the three month update last week, and the S&P 500 is up 41% from its March low. Even in a better economic climate, gains of this magnitude would have me running for cover. In the current economic climate, with a gigantic mountain of debt keeping consumers out of the stores, makes me feel this...
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...
Green Energy Investing For Beginners, Part I: Stocks, Mutual Funds, or ETFs
Tom Konrad CFA Investing in green energy can be good for both the climate and your wallet. How good depends on choosing the right investment vehicles (mutual funds, ETFs, or stocks) and sectors to invest in. This will get you started. More and more investors are investing in green energy. According to the Cleantech Group, the Cleantech sector is now the largest sector for venture capital investment. Green Energy is not just for venture capitalists. Small investors have done well in 2009. Since the market bottomed at the start of March, the average green energy mutual fund topped...
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...
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...
