Tom Konrad

Green Energy Investing for Beginners, Part II

The role of charitable donations in financial planning is two-fold. First, tax planning as you suggest (although since the tax saving is always smaller than the donation, it still requires some altruism.)
Second, planned donations should also be considered as a liquidity requirement. If you're planning to donate $1000 a year to your church from your savings, you should make sure that your have sufficient liquidity to cover this.

Regarding your first point, no matter how much you protest, your investment action has knock-on effects in the real world. Charity is money set to moral causes, rather than financial ones.

There is a large school of thought (to which you seem to belong) that all profit-maximizing behavior is good (in short, "Greed is Good.") This school of thought is, in essence, logically incompatible with charity (which is probably why you assume that everyone who donates to charity is motivated solely by tax planning.

I happen to disagree that profit maximization is always good, even when it is legal.

Most of what went on that led to the financial crisis was both profit-maximizing, and legal. However, taken as a whole, it caused harm to our economy. Many large financial institutions were legally taking very large risks with what turned out to be taxpayer money. To the extent that they were aware that others would be bearing that risk, their actions were immoral, and now that society recognizes the problems they created, taking such risks with public money for private profit should also be made illegal.

If we invest in companies that are engaging in acts we see as immoral, we are supporting those acts by helping those companies obtain funding. Would you loan money to a man who wanted to use it to buy a gun to kill people?

Since you are a Christian, you must have morals. Why do you insist that your investments should not have morals? What would Jesus invest in?


On Nov 13 03:32 PM Thomas Smicklas wrote:

> Donations are investing? Promoting religious,political or social
> agendas under the banner of investing is an interesting concept.
> I do own a few green technology stocks within my portfolio - but
> they are owned to increase the value of the portfolio, not to be
> confused with donations or ideology strategies which should never
> be touted to investors as such. For the truly rich, CFAs will use
> giving (donating) as a tax strategy - to avoid contributing what
> I believe many view as their fair share of taxes. How noble. That
> is the essence of a substantial part of the CFA curriculum of which
> you speak.
>
> On Nov 13 01:17 PM Tom Konrad wrote:

Green Energy Investing for Beginners, Part II

<img class="authors_reply" src="static.seekingalpha.co...">

On Nov 13 12:42 PM jerrydd wrote:
> Regretfully this author doesn't know much about actual technologies

Jerry,
We disagree about the economics of green technology, and that is part of investing. Disagreements between investors are the source of one investor's ability to beat the market, and also the source of other investors' underperfomrance.

Your assertion that I'm wrong is worthy of consideration by all readers.

In contrast, your assertion that I'm uninformed is rather humorous. Anyone wishing to test this latter assertion should visit my website, AltEnergyStocks.com, and read a few of the hundreds of articles I've written over the last 3+ years.

Green Energy Investing for Beginners, Part II

Thomas,
I suspect that your complaint that is really that you *don't* believe that investing in green energy is the right thing to do, not that it should not be part of an investment allocation strategy. Do you also believe that planned donations to charity (because they are the "right thing to do") should not be considered as part of investing strategy? If so, your attitude conflicts with the approach to asset allocation I studied as part of the Chartered Financial Analyst(R) curriculum.

I see an investment in Green Energy because "it is the right thing to do" as part investment and part donation to charity, and hence believe they should be included in any asset allocation plan where the belief exists.


On Nov 13 11:37 AM Thomas Smicklas wrote:

> "Is it the right thing to do" is not especially astute investment
> advice. Green investing is just another sector that will be subject
> to the vagaries of the market. Even moreso, green investing, being
> a recent managerie of disparate eclectic securities, will be the
> recipient, as are most sectors, of unintended cosequences such as
> protectionist regulations (GE is already complaining about that in
> their Asian market) government subsidies,litigation, and, God forbid,
> if the premise of green technology to save the planet is flawed.
>
>
> There may well be a case made for a double short ETF in this sector
> if profits (the prime reason for investing) are to be made, short
> and long term.
>
> That said, I enjoyed your article and appreciate your view.

Green Energy Investing for Beginners, Part II

Douglas,
These are excellent points, especially for people who have money outside an IRA or other retirement account to invest.

If you do have money outside a retirement account to invest, and own, rather than rent a home, here is the hierarchy for using that money that I'd advocate:

1) Pay off any debt carrying an interest rate over 10% (credit card, etc)
2) High return energy efficiency investments such as attic insulation, caulking, CFLs, changing the filter on you furnace/AC, hot water heater blankets, ...
3) Maybe a garden if you also have the necessary time to invest.
4) Pay off other debt, including your mortgage.
5) Lower return energy efficiency investments, such as upgraded appliances, furnace, water heater, solar hot water, solar PV (IF you are in a state with good incentives.)
6) Green energy stocks or funds.

On Nov 13 10:55 AM Douglas Hvistendahl wrote:

> It is useful to compare possible stock investments with "reality"
> investments. Examples: even an apartment dweller can grow a few plants
> in containers; someone in a small town can have a backyard garden;
> if you own your house, a solar hot water system pays off if well
> designed; etc. These "investments" may not return cash, but are totally
> inflation/deflation proof, and for some of them the primary requirement
> is a bit of labor.
>
> Such comparison reduces my overconfidence. When a little figuring
> shows that increasing garden space by 5% reduces the need to buy
> food by more than our probable return in a stock, even figuring in
> the labor, I go with the garden. Ditto for the others.

Green Energy Investing for Beginners, Part I

Thanks for the complement, but don't get too excited. As I said, "it's impossible to say if my 1 3/4 year track record is skill or luck, but at least the costs are low." or, in other words, "Past performance is no guarantee of future results."

I will try, though. And the costs will stay low.

On Nov 08 08:02 PM DLB40 wrote:

> " My ten green stocks for 2008 lost 55% that year, but this was still
> better than all the ETFs and all but one of the mutual funds in 2008.
> Most of these lost between 60% and 70% of their value in 2008. In
> the first three quarters of 2009, my ten picks returned 41.5%, handily
> beating the green ETF I chose as a benchmark"
>
> Wow I can hardly wait for the new list!!!

Geothermal Companies Receive Cost Sharing Grants

I have not looked into Magma. It was interesting that Magma got a big grant from DOE, but I haven't spent the time looking at the company yet in order to render an opinion.


On Nov 05 07:10 PM The Geoffster wrote:

> What do you think of Magma Energy?

Geothermal Companies Receive Cost Sharing Grants

20/20-
In fact, most of the geothermal industry is like the mining exploration industry: they acquire mineral rights and drill to find hot water. Saying this is not an industry is like saying oil wildcatters are not an industry.
Vertically Ormat actually supplies far more turbines to geothermal projects than UTX (used only by Raser, as far as I know.) Ormat is a vertically integrated geothermal company, from exploration to drilling to turbines to production.

Read my geothermal industry primer to get a better understanding of the companies involved.
www.altenergystocks.co...


On Nov 02 12:33 PM 20-20 Hind sight wrote:

> There is no such thing as a geothermal "industry." At most, they
> apply for licenses and do some engineering. The machinery installed
> are off-the-shelf units from giants like UTX.
>
> For obvious reasons, good geothermal sites are far from electricity
> consumers.
>
> Geothermal is an intriguing concept (who doesn't like free energy?)
> but it will never be a mainstream business for investors to profit
> from. IMHO

Green Energy Experts: Why Do They Buy Solars?

HJ- Will deal with each point in turn.

1) Successful investing requires work. People who don't want to work make dumb investments. There are lots of people who don't want to work.

2) The number of solar cos is a reason to stay away. The industry is too competitive. The number of solar companies is also the *product* of the unfortunate tendency for investors to favor solar. VCs make the same mistake small investors do, and because of the popularity of the sector, it's easier for the company to IPO.

3) Agreed. I've nothing to add.

4) The ETF I listed, PTRP, contains both bicycles and mass transit. I also list a bus stock (New Flyer=Mass Transit). There are more mass transit plays here: www.altenergystocks.co...


On Oct 30 11:32 AM H.J. Huneycutt wrote:

> I largely agree with you --- solar is sexier in investing circles,
> in spite of the fact that it's one of the least promising solutions
> to energy concerns.
>
> I'm not precisely sure why people like solar so much, but here are
> a few thoughts:
>
> (1) Everyone understands solar power on some basic level. In fact,
> most of us have owned solar powered calculators and seen solar in
> action before. Whereas, how many average Joes understand geothermal
> power?
>
> (2) There are a lot more recognizable pure-play solar companies out
> there than companies in other cleantech related industries. It's
> difficult to find pure-play wind providers that are not OTC; but
> you can find dozens of solar companies. The competing solar manufacturers
> seem to have an emotional appeal to investors because there's a "who's
> going to win?" factor and comparability.
>
> (3) Some of the companies operating in the cleantech sphere are basically
> conglomerates. For instance, ABB's a great company, but they are
> like the GE of Europe (without the financial junk). It's a good
> investment, but it's not a fun company to analyze and they have their
> foot in so many different things, it's difficult to follow them all,
> so investors don't really understand them as well.
>
> (4) You mention investing in bicycles and mass transit --- you're
> absolutely right that these are better solutions than supposedly
> "fuel efficient" cars that don't really solve most of our problems.
> But the problem is --- how do you invest in bicycles and mass transit?
> Maybe you know of bicycle manufacturers sold on public markets, but
> I don't --- and I've looked before. Mass transit is difficult to
> invest in as well; most providers are publicly-owned. The only way
> to play it is to buy into manufacturers that make products related
> to mass transit like railcar manufacturers. But I don't think most
> people think that far and "finished products" are much sexier than
> "materials used for the manufacture of ..."
>
>
> I've become increasingly skeptical of the solar sector, but if I
> had to pick companies in that sector, I like LDK Solar (seekingalpha.com/symbo...)
> and Evergreen Solar (seekingalpha.com/symbo...) the most.
> ESLR probably manufacturers the highest quality solar panels and
> I think they have some of the best minds on the engineering side
> working for them. Still, I have my doubts about the sector in general.

Green Energy Experts: Why Do They Buy Solars?

VPratt,
It sounds like your DD is from the "Dating" school of economics. A very important school of economics, but I'm not sure you're applying it correctly. What is sexier: a small account filled with sexy stocks, or a large one filled with boring stocks?

I'm not telling you not to buy a Tesla to cruise and try to pick up chicks in. I'm telling you that you'll make more money and more likely be able to buy that Tesla in 5-10 years if you buy Energy Efficiency stocks than if you buy Solar stocks today.


On Oct 29 05:22 PM vpratt51 wrote:

> I completely get your point. But there are only so many dull areas
> we can tolerate. Solar has the "cool" factor that chicks just dig
> more than ions and lead plates, or worse, carbon sequestering (it
> even sounds nasty). Just tell a lady that her photons knock your
> electrons off, and your on second base. My DD may be from a different
> school of economics.

Green Energy Experts: Why Do They Buy Solars?

Looks like I touched a few raw nerves. I'll take that as confirmation of my belief that people are emotionally attached to their investments in solar stocks.

I'm not saying that solar is not green or that it is always uneconomic... but there are a lot of things that are greener and more economic... why not invest in those instead of solar?

In the end, robdoc is right... in 5-10 years, some of us will be richer, and the rest will be coming up with excuses as to why they are not.

Shale Gas: Promises, Promises, Promises

Thanks for the correction Douglas. As I said in the article, I'm no gas expert, and don't pay attention to it. I admit not to have my Bcf and BTU straight, but the criticisms of yield curves are not mine, they are Dr. Berman's.


On Oct 26 12:51 PM Douglas Korthof wrote:

> "...A $7-$8/Bcf..." s/b per 1000 cu. ft. or 1 million BTU, not billion
> cubic feet. Typo, but one wonders: when slinging numbers like billions
> of cubic feet and proposing differing models of declining yield curves,
> how much is pure B.S.?

Investing in Clean Energy: Asking the Right Questions

VPratt,
Very real anecdotes. My wife likes to call the stock market "legalized gambling" and far too many people treat it that way.

Even worse than stockmarket gambling is the bigger gamble we're all taking with the planet, as you point out so eloquently.


On Oct 23 01:58 PM vpratt51 wrote:

> Tom, I am glad you reach for new perspectives. I enjoyed this one.
> It should prove it's worth over time.
>
> I am probably among the lowliest of all investors. For many years
> now, I have been a clerk in a convenience store, working hard, honestly,
> and trying to grow my retirement funds. A side effect is that I
> have been witness to immense stupidity (and more than a few crimes).
> The most glaring example is in the sale of scratch lottery tickets.
> The people who buy them REFUSE to accept reality and the most basic
> logic. Among the questions and comments:
>
> "Which one wins the most?" (the odds are all the same)
> "My boyfriend buys them all the time and never loses!" (sure, babe)
>
> "You can't win if you don't play." (you can't LOSE if you don't
> play)
> "I won a dollar." (no, you just got your dollar back and lost on
> the other four tickets you bought)
> "I don't know why I keep buying them, I never win. Give me four
> more."
> "That's ten losers in a row. The next one HAS to be a winner."<br/>
>
> The most accurate statement, often coming from the more open minded
> and logical gamblers, is that it is the "stupid people's tax". (give
> me four more).
>
> So it is no surprise that some vested interests in our economy are
> able to count on, and encourage, denial of scientific consensus.
> "Ignore those geeks in the lab coats! Rolllll them dice again!
> Daddy wants a new Hummer."
>
> There are climate models based on long term cycles in which we should
> be entering a cooling trend with glaciers advancing. If those were
> taken into account, it makes global warming twice as alarming.
>
>
> But don't worry. It's just one planet. The next one's GOT to be
> a winner.
>
> End of rant. Thank you for you kind indulgence.
> Paxman

Investing in Clean Energy: Asking the Right Questions

Thanks Alan. I agree that the timing of these decisions is critical. I have been focused on investing in green energy since 2005, and have see the mood of the country swing in our favor in that time. This trend, along with growing political support, has helped green stocks over that period... see this article from the spring:www.altenergystocks.co...

I think the trend will continue, but I could easily be wrong about that.


As for the mindless Climate denial above, this is also an opportunity for a savvy investor... we have to put up with their inane comments, but at least we can profit from their inane investments.


On Oct 23 10:29 AM Alan Young wrote:

> Instead of rehashing the "global warming wars" like every other thread,
> I'd like to focus on the (relatively) fresh point Tom is trying to
> make here: you can get an advantage investing in something that other
> people are valuing incorrectly because of their prejudices. That
> is rather profound, I think.
>
> But there's a big problem with it: time. Eventually, reality will
> sink in. But we've known about these issues for 20, even 40 years.
> That's a long time to keep your money tied up in unpopular causes
> that you know eventually will triumph. Or, as the saying goes, "the
> market can remain irrational longer than most of us can remain solvent."
>
>
> There's a time to trade on conviction, and a time to trade on trend.
> The trick is to know which is which.

Investing in Clean Energy: Asking the Right Questions

Thanks Alan... unfortunately, the problem is Seeking Alpha. The original post on my site (which they work from) shows the poll inline, rather than just a link. Although I do see the questions here when I click the link... I don't know why that does not work for you.


On Oct 23 10:21 AM Alan Young wrote:

> Tom, you might want to edit this to incorporate the poll questions
> before you give the answer. I can't see them, even after clicking
> on the link.

What a Portfolio Approach to Climate Policy Means for Your Stock Portfolio

1) your numbers for wind are about 2.5x too high, perhaps you're getting it confused with solar.
2) Energy efficiency is cheaper than coal.
3) China understands climate change, and they are making a stong push to build out both wind and solar.

4) We should not only consider the (reasonable) cost of combating climate change, but also the gigantic cost of destroyed farmland and disasters which will result from not dealing with climate change when we make our decisions.