One More on Ecology

The past couple of weeks have dealt on topics that are front and center in the current news cycle with the one commonality being that barring significant personal convictions there is no mainstream investing approach to capitalize on these trends. This isn’t to imply there won’t be or that some investors in these spaces aren’t at the bleeding edge. It’s just the current risk reward potential is skewed more towards the speculative side.

I’m not immune to a degree of speculation so long as I can see a viable (personal opinion) business model and a path towards profit while – at the very least – making at least an incremental improvement to a problem facing society. One such conundrum hit my inbox this week in the form of a Greenpeace (Netherlands) video on plastic waste. I will first stipulate that there is a real (and growing) problem with plastic waste. I will further stipulate that one of the Greenpeace success stories has been to raise public awareness. But their pitfall, in my opinion, has been their dogged determination to play the all or nothing game. Their inability to claim a partial win to use as a steppingstone on the path towards proactive engagement in accomplishing even greater things can just as easily backfire.

  • Solid waste management plans have a typical hierarchy of:
    1. Reduce
    2. Reuse
    3. Recycle
    4. Waste minimization and WTE
    5. Landfilling

The fourth item is one that I identified last year as a viable investment candidate, particularly the WTE space. With incineration, the biggest drawbacks have been air quality (dioxin release) and ash disposal. While further advances in anaerobic digestion hold promise, Covanta (for one) is commercializing today’s technology to at least make one step forward in improving the quality of life.

So, no my approach is not a wholesale change agent, but more like W. Edward Deming’s theory of small incremental changes. Next week we return to the markets with end of quarter results and my inability to sidestep yet another dividend cut 😦

Feb 2018 Update

The theme for the month was volatility.  A couple of ETNs cratered as a result of the high volatility causing investors to lose significantly when using these levered products.   “We sincerely apologize for causing significant difficulties to investors,” Nomura said.  Credit Suisse stated “investors who held shares of XIV had bet against at volatility at their own risk.  It worked well for a long time until it didn’t, which is generally what happens in markets”.   Caveat emptor.

During the month, the S&P index dipped into correction territory before rallying to close the month down 3.89%.  My portfolio sympathized with the index closing down 5.53%.  I never hit correction so my peak drop was less but I also failed to recover as quickly.  Probably an area to perform a root cause analysis on at some point.  Following back-to-back monthly losses against the S&P, I’m down 3.44%  to start the year. Continue reading

Volatility Returns!

With the wild ride in the markets this week, I perused some of the community’s blogs to gauge the reaction.  While not meeting scientific norms regarding sample size, I was surprised by the lack of reference to the pullback in 66% of them – including ones with posts as recent as yesterday.  Perhaps it’s a lack of funds to take advantage or the deer in the headlights syndrome.  One blog, Fully Franked Finance, had a timely piece a few days prior which stated the importance of a ‘shopping list’ – as many others also encourage.  I too, engage in a strategy which emulates  the ‘shopping list’ strategy.  So, what were my moves so far this month?

Continue reading