After 25 years of managing money, it’s actually hard for me to get excited about much when it comes to the markets and investing.I really feel like I’ve seen it all at this point. I’ll quickly cover some of the stuff that makes me yawn and get to the real update which is about our New Power strategy where I actually can feel my blood pressure rising!
Denver Post
First, a quick thanks to Aldo Svaldi of the Denver Post for the article on pending recession today. I do take comfort when my opinion is different than consensus.In fact, I would be terrified if everyone thought recession was coming in late 2019 because then we would all be wrong.
https://www.denverpost.com/2018/12/07/recession-would-hit-colorado-hard/
Just a Bit Left
Bitcoin is now experiencing a fantastic “dirt nap” in the words of the very funny and genius Jared Dillian. I have to say that my bubble call on 12/18/2017 may actually be one of the best of my life.That day proved to be the last and highest day for Bitcoin price which is now trading down -88{1de7caaf0b891e8de3ff5bef940389bb3ad66cfa642e6e11bdb96925e6e15654}. I wrote a snarky piece on that day in which I renamed Bitcoin, Pirate Ninjas, because… well… just to make a point. Check it out
https://allseasonfunds.com/red-sky-report/big-picture-decisions-and-pirate-ninjas
Here’s a chart of Bitcoin with the vertical line marking 12/18/2017. This is what a bubble looks like. I’ve seen a lot of them in my day including Technology and Real Estate.When you see and hear about investment club devoted to any one thing, feel free to dump it- all of it. Yawn.
Today I don’t see too many bubbles. Real estate is not in a bubble as many think. The supply and demand equation is still pretty good actually and we’re just seeing a rising rate related pause. Real Estate funds just made an all time new high this week (our biggest holding outside of bonds). Cannabis looked a bit like it was heading toward bubble status but now it looks like the birth of a new sector with legs. After a 50{1de7caaf0b891e8de3ff5bef940389bb3ad66cfa642e6e11bdb96925e6e15654} whipeout in the last few months, we’re interested and picking up a few things (more below).
What I’m Excited About
New Power is our Impact Investor’s strategy focused on Energy Evolution and Sector Innovators. You can read all about it here: Good stuff for bright green investors who want their money to be invested in positive change.
The strategy has been around since 2003. It has seen wins and a few significant losses, which we’ve learned to contain with structural changes to our focus and methods in January of 2013. Since then the numbers have been pretty attractive with an average annual return over 10{1de7caaf0b891e8de3ff5bef940389bb3ad66cfa642e6e11bdb96925e6e15654} net of all fees, which compares nicely against our benchmark (PBW), the Wilderhill Clean Energy ETF (+4.78{1de7caaf0b891e8de3ff5bef940389bb3ad66cfa642e6e11bdb96925e6e15654} average annual returns). Please see our composite performance disclosure links below.
The exciting development for me is this.
I see an enormous groundswell of activity in several sectors with potentially huge upside. What is happening now across the globe is that clean energy, renewable energy and all associated technologies are being adopted now in mass scale. China, Europe and the rest of the world are gladly taking up the torch of leadership in their efforts to curb carbon emissions and yield all the economic benefits of massive job growth. I see a stretched rubber band in the stock prices of most renewables like solar and wind as most are trading near their lows of the last 12 years thanks to tariffs and talk about the end of renewables. The same goes for the transportation evolution to electric vehicles. China is taking advantage with a ban on internal combustion engine vehicles by 2025. Meanwhile, Scott Pruitt, the head of the EPA (now gone thankfully), and Trump, eased pollution standards and Obama era efficiency rules for auto makers.
http://theconversation.com/why-epas-u-turn-on-auto-efficiency-rules-gives-china-the-upper-hand-93840
The US is taking a bit of a time out, but once Trump is gone, we’ll get back on track.
Battery Storage Going Big
Batteries and energy storage are perhaps the most enabling variable in the adoption of clean energy. For years, batteries have been too small, too inefficient and too expensive. Well now that’s changing and one reason why we’ll keep TSLA on our radar given their commitment to battery technologies and a massive manufacturing facility in Nevada. Costs are coming down dramatically while efficiency and scale are on the rise.Utilities are now in discussions to move aggressively into large scale adoption of renewable energy generation with energy storage facilitating the change from coal and traditional fossil fuel generation. Here’s a great article about Xcel Energy potentially moving to a 100{1de7caaf0b891e8de3ff5bef940389bb3ad66cfa642e6e11bdb96925e6e15654} clean carbon free power generation for those who live in Colorado. This is big!
Today, we are slowly taking investment positions in battery companies including those mining for the necessary metals and materials. They are all very cheap and working to develop lows in price.
New Leadership
You know I’ve been hammering the FAANG stocks recently so I won’t do it again. But for those who might be willing to look forward at the next generation of “Sector Innovators”, there are a lot of exciting things out there.I’ll list the sectors that I find attractive. These are all within the new focus of New Power!
Mobile Payment Systems
Cyber Security
CBD Healthcare Solutions
Robotics and Artificial Intelligence
Software as a Service (SAS)
Telecom Hardware and Networking (5G coming fast)
Shared Economy
Biotech and Healthy Lifestyle Innovators
*Today, we bought New Age Beverage (NBEV), a Denver based, four year old company and new world leader in super healthy and innovative beverages. They are getting into CBD-infused drink solutions and expanding globally. Boring?NBEV is still up 120{1de7caaf0b891e8de3ff5bef940389bb3ad66cfa642e6e11bdb96925e6e15654} YTD after pulling back from it’s high by 46{1de7caaf0b891e8de3ff5bef940389bb3ad66cfa642e6e11bdb96925e6e15654}.
Things that make me yawn:
Amazon – Overextend, shrinking margins, retail
Apple – $1000 mobile phones?Seriously?
Netflix – Chase pack is on them, my kids want to chuck it and use Hulu.
FB – Dead, dead, dead
I still like Microsoft and Google but they are tired too.
So look up to a bright future; there are a ton of dynamic things happening in the financial markets, we just have to be willing to look past yesterday’s winners and wait patiently to buy the next generation of leadership.
Cheers
Sam Jones
