Beating the Market, Part I
Because I'm currently studying for the second (of three) CFA® exam, I'm going to take a break from my usual article analyzing some aspect of alternative energy. This week and next, I'll take a step back and try to answer an existential question: How can I possibly hope to beat the market, when "the market" consists of professional money managers with resources far exceeding my own? Every active investor should ask themselves this question: the answer will either make you a better investor, or save you a lot of time and money if you are humble enough to realize...
Stocks We Love to Hate
Investing in clean energy is both an economic and a moral decision. From an economic perspective, I believe that constrained supplies of fossil fuels (not just Peak Oil, but also Peak Coal and Natural Gas) are leading to a permanent rise in the value of all forms of energy. From a moral perspective, I know that we and the vast majority of our children are limited to this one planet for generations to come, so we should abuse it as little as possible, so, of all the possible forms of energy to invest in, clean energy (Renewable and...
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...
State of the Union Address: Alt Energy Sectors and Stocks to Watch
So it came and went, the much anticipated State of the Union Address. While the pundits will inevitably focus the bulk of their attention and commentary on the Iraq question, there were undoubtedly some very interesting nuggets of alt energy info in that speech. Above all things, one crucial variable has changed from a year ago: Congress is now controlled by the Democrats and already the slew of alt energy and climate change proposals brought forth by various senators leads one to believe that, as far as the federal government is concerned, 07' should see more than just...
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...
Your Portfolio is Hooked on Fossil Fuels
Garvin Jabusch Oil addiction photo via BigStock You are drilling for oil and natural gas, and you probably don’t even know it. What, you say you’ve never been near a drilling rig, and aren’t even sure what one looks like? You’re still drilling, because companies you own are drilling. Many financial advisors and asset managers routinely assume that broadly diversified stock portfolios will have holdings in fossil fuels companies. Even most stock mutual funds that identify themselves as ‘green’ funds contain natural gas and even oil holdings. This...
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 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...
My #1 Rule of Investing
Tom Konrad CFA Rules of Investing Warren Buffett says "The first rule of Investing is don't lose money; the second rule is don't forget rule #1." Jim Hansen at Ravenna Capital Management and publisher of the Master Resource Report about oil and other energy news has a "prime directive" (a la Star Trek) about oil prognostication which is "never predict prices." These rules have to be taken metaphorically, not literally. Buffett's rule is too general to be useful. I take his message to mean that care to avoid losses is more effective than...
The Big Win You Missed
by Tom Konrad, Ph.D., CFA
My friend Jan Schalkwijk, CFA of JPS Global Investments just asked me if I had any thoughts on Kontrol Energy (KNR.CN, KNRLF), a Canadian smart building firm I had never heard of. (I just added it to AltEnergyStocks.com's Energy Efficiency and Smart Grid stock lists.)
The stock had just shot up after the client sold and went on a kayaking trip. It had disclosed a sensor for detecting COVID-19 from the air.
While I didn't have anything to say about the company, I did have some thoughts on dealing with the emotions around missing out. Since it's...
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...
Free Talk: A Permaculture Portfolio
For readers in the Hudson Valley, I will be giving a free talk next Monday night. I will speak about applying permaculture design principles to your investment strategy. While I developed my own strategy over the last two decades without any reference to these design principles, now that I'm familiar with them, I realize that I have been thinking along these lines for a long time. The design principles are remarkably robust and intuitive.
I used to think Permaculture was just about redesigning our food systems, but it's much much more than that.
The talk is sponsored by the Rondout Valley...
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...
Green Energy Investing For Beginners, Part II: How Much To Invest
Tom Konrad, CFA In Green Energy Investing for Beginners, Part I, gave information to guide the choice of green investment vehicles (mutual funds, ETFs, or stocks.) This article is intended to help investors decide how much of their money to put into those vehicles. An informed decision of how much to invest in green energy is at least as important as how you make the investment. The choice between green Exhange Traded Funds (ETFs) and green Mutual funds rests on a difference of about one percent per year, caused by differences in fees. Yet in the first three quarters...
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...
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...
