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John Thomas graduated with a bachelor’s degree in biochemistry with honors and a minor in mathematics from the University of California at Los Angeles (U.C.L.A.) in 1974. He moved to Tokyo, Japan where he was employed by a medium-sized Japanese securities house. Thomas became fluent in Japanese... More
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The Mad Hedge Fund Trader
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Mad Hedge Fund Trader
  • Position Yourself for the Upcoming Water Crisis 0 comments
    Jul 2, 2009 1:03 PM | about stocks: CGW, PHO, FIW, VE, TTEK, PNR

    If you think that the upcoming energy shortage is going to be bad, it will pale in comparison to the next water crisis, so investment in fresh water infrastructure is going to be a recurring long term investment theme. (See my earlier efforts to get you into the water space at http://www.madhedgefundtrader.com/February_3__2009.html). One theory about the endless wars in the Middle East since 1918 is that they have really been over water rights. Although Earth is often referred to as the water planet, only 2.5% is fresh, and three quarters of that is locked up in ice at the North and South poles. In places like China, with a quarter of the world’s population, up to 90% of the fresh water is already polluted, some irretrievably so. Some 18% of the world population lacks access to potable water, and demand is expected to rise by 40% in the next 20 years. Aquifers in the US, which took nature millennia to create, are approaching exhaustion. While membrane osmosis technologies exist to convert sea water into fresh, they use ten times more energy than current treatment processes, a real problem if you don’t have any, and will easily double the end cost to consumers. While it may take 16 pounds of grain to produce a pound of beef, it takes a staggering 2,416 gallons of water to do the same. The UN says that $11 billion a year is needed for water infrastructure investment, and $15 billion of the US stimulus package will be similarly spent. It says a lot that when I went to the UC Berkeley School of Engineering to research this piece, most of the experts in the field had already been retained by major hedge funds! At the top of the shopping list to participate here should be the Claymore S&P Global Water Index ETF (NYSEARCA:CGW), which has appreciated by 32% since I first brought it up. You can also visit the PowerShares Water Resource Portfolio (NYSEARCA:PHO), the First Trust ISE Water Index Fund (NYSEARCA:FIW), or the individual stocks Veolia Environment (NYSE:VE), Tetra-Tech (NASDAQ:TTEK), and Pentair (NYSE:PNR). Who has the world’s greatest per capita water resources? Siberia, which could become a major exporter to China in the decades to come.
     

    Stocks: CGW, PHO, FIW, VE, TTEK, PNR
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