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Joseph L. Shaefer
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Joseph L. Shaefer is the CEO and Chief Investment Officer of Stanford Wealth Management, LLC, a Registered Investment Advisor. Joe retired as a senior executive at Charles Schwab and Co. to found Stanford Wealth Management, LLC, in 1990. He also spent 36 years in a very different leadership... More
My company:
Stanford Wealth Management LLC
My blog:
The Investor's Edge
My book:
Bringing Home the Gold
  • Climate Change – What Should the United -- and Investors -- DO? (Part II) 0 comments
    Sep 23, 2009 2:44 PM | about stocks: DE, XOM, BP, RDS.B, WPZ, MGG, BWP, OKS, CHK, ECA, IMO, NRP, PVR, JNJ

     

    To illustrate man’s puny contribution to CO2, here is a graph of how much of earth’s atmospheric CO2 humans can affect…

      

     

     Paleoclimatologists study sedimentary rock to try to determine CO2 levels for the past 500 million years.  This may be less than perfect, but it’s considerably more rigorous than listening to non-climatologists and non-scientists screeching about what-ifs…

     

     

     

     

    Finally, please note these extrapolations conducted by paleoclimatologists from actual ice core samples.  The results go back 400,000 years:

     

     


    Like investing, I doubt anyone can predict the future of the world’s climate at any given point in time.
     

    Like investing, however, the past may offer clues to future performance.

     

    Like investing, climate seems to offer proof of cyclical, not linear, patterns.  Temperatures move up a couple degrees from the mean, they move down a couple degrees from the mean.  And they seem to do so based upon forces so much more powerful than mankind – one could note they are planetary and universal in nature.

     

    With that in mind, we could invest in land that is 20 feet above current sea levels, as some have recommended.  Or we could invest in cap and trade, as some have recommended.  Or we could short fossil fuel companies like coal, oil and natural gas, as others have recommended.

     

    Or we could apply a dollop of common sense and calm to the current shrillness.  We could review the facts of the last 500 million years (via sedimentary rock), the last 400,000 years (via ice core samples), or our own short history on this earth showing variations in climate that span a couple of decades.  And we could, based upon that empirical evidence, toss in a pinch of geopolitical insight that food, energy and health care are basic Maslovian needs that the part of the world that doesn’t get to dilly-dally in junk science cannot overlook.

     

    Maslow’s hierarchy suggests that human beings’ basic physiological needs come first and it is only after these basic needs have been met that we have the luxury of moving on to safety needs and social needs, and only then to progress to preoccupation with esteem and self-actualization. 

    Basic physiological needs include breathing, food, water, sleep, sex and shelter.  Much of this world, being asked to “do their part” to “prevent global warming” would sneer, laugh or cry if you asked them to embrace this. 

    Getting enough to eat is their need – and there are investment implications here.

    After these needs are met come personal security, health and well-being, and, dare they even think about it, financial security need – and there are investment implications here.

    Next are social needs, a sense of belonging and acceptance.  This can come from family, clan, tribe, work groups, religion, sports, etc. – and there are investment implications here!

    All these come before esteem, self-actualization and, if I may add a less-attractive offshoot to Maslow in this area, self-indulgence, ego, narcissism and self-righteousness.

     

    So even if “global warming” were man-caused – and the empirical evidence does not support that opinion – will anyone outside Western Europe, Canada and the US actually do anything about it?  My answer is no.  It is nowhere near the top of their list.  If the US, Canada and Western Europe bankrupt themselves to lower our “carbon footprint” by 25%, what will the rest of the world do?  Send the same amounts of carbon up their smokestacks as they do today.

     

    When I say “bankrupt,” I don’t use the term loosely or lightly.  A recent United Nations study estimated that one of the solutions proposed for AGW, Al  Gore's, would cost $553 trillion over the next century.

     

    Food, shelter, energy and health care will override all.  So that’s where I would invest.

     

    To feed the world, grains, crops, livestock, fertilizer, and efficient irrigation all top my list.  Deere (DE), Israel Chemicals (OTCPK:ISCHF), Yara Intl (OTCPK:YARIY), Nestle (OTCPK:NSRGY) and Lindsay Mfg (LNN) are among my favorites.

     

    For energy, I choose natural gas first, nuclear next, and solar, wind, biomass, oil and coal – every single one of them.  In the developing world, coal and natural gas are most abundant and cheapest and will therefore be the first choice of most users.  While these have been well-covered in previous articles I will mention just a few representative issues: Exxon Mobil (XOM), BP, Conoco Phillips (COP), Royal Dutch Shell (RDS.B), Williams Partners (WPZ), Magellan Holdings  (MGG), Boardwalk (BWP), OneOK (OKS), Chesapeake (CHK), EnCana (ECA), Imperial Oil (IMO), Natural Resource Partners (NRP), Penn Virginia (PVR), and Cameco (CCJ.)

     

    In health care, the revolution in the West has come from ethical drugs, non-invasive technology, prevention and early interventions.  That’s the way to invest.  I like the biggies here: Roche (OTCQX:RHHBY), Johnson & Johnson (JNJ), Merck (MRK) and Pfizer (PFE) come to mind.

     

    Avoiding overpopulation, illiteracy, disease, and hunger never go out of fashion.  Global cooling did.  I imagine global warming will, as well.


    Full Disclosure: Long DE, ISCHF, YARIY, XOM, BP, RDS.B, WPZ, MGG, BWP, OKS, CHK, ECA, IMO, NRP, PVR, JNJ and PFE.

    The Fine Print: As Registered Investment Advisors, we see it as our responsibility to advise the following: We do not know your personal financial situation, so the information contained in this communiqué represents the opinions of the staff of Stanford Wealth Management, and should not be construed as personalized investment advice.

    Also, past performance is no guarantee of future results, rather an obvious statement if you review the records of many alleged gurus, but important nonetheless – especially so you are not over-impressed by the fact that our Investors Edge ® Growth and Value Portfolio has beaten the S&P 500 for 10 years running. What if this is the year we under-perform it?

    It should not be assumed that investing in any securities we are investing in will always be profitable. We take our research seriously, we do our best to get it right, and we “eat our own cooking,” but we could be wrong, hence our full disclosure as to whether we own or are buying the investments we write about.

    Themes: Agriculture, Energy, Health Care Stocks: DE, XOM, BP, RDS.B, WPZ, MGG, BWP, OKS, CHK, ECA, IMO, NRP, PVR, JNJ
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