In Part I of this series, I discussed some of the global trends in freshwater availability and drinkability. It is nothing less than amazing to me that somehow 6 billion people sustain life on the roughly 1% of the earth’s water that is not salt water or brackish water (comprising about 97.5%) or encased in polar and glacial ice (about 1.5%).

An important industry has developed around this fact to treat, clean, and transport this water from its various sources to where people drink it, shower in it, irrigate their fields with it, and use it in literally thousands of manufacturing and agricultural applications. Because of the limited supply, much of this “waste” water is then purified, cleaned, and recycled for use again. But we can only refresh, re-use, and recycle so much.

Welcome to Wall Street, Barack Obama. His victory signaled a change in U.S. political direction, but the biggest election day rally ever – a surge of 4.1% in the S&P 500 Index on Tuesday – was quickly overshadowed by the grim realities of the worsening economic and earnings picture, resulting on Wednesday and Thursday in the S&P 500’s biggest two-day loss (-10.0%) since 1987.

Mr. Obama gave his first press conference as President-elect on Friday afternoon, summarizing a discussion he had had with his economic advisory team. He pledged to confront the US’s economic crisis “head on,” and said he wanted to see “a rescue plan for the middle class” that would include a new fiscal stimulus package. The week closed on a positive note as a late rush of buying on Friday left the stock market indices higher for the day, although they were still in the red for the week.

Six of the biggest publicly traded U.S. ethanol producers have lost more than $8.7bn (£5bn) in market value since the peak of the boom in mid-2006 and the beginning of this month, according to the Financial Times. The newspaper focuses on Aventine Energy (AVR), VeraSun (VSE) and Pacific Ethanol (PEIX), where one of Bill Gates' private investment firms lost millions in 2005.

All of these stocks have seen considerable short covering three to four months. The percentage of AVR's Market Cap out on loan to short investors has decreased from 19% in July, down to 6% now. VeraSun has decreased from 15% in June this year to 6% today, and Pacific Ethanol has dropped down from 16% in July, to 10% today. AVR's graph of its %MCOL is below.

The problem is bound to be exacerbated by global warming, as declining soil moisture levels lead to a depletion of fresh water tables world-wide. Therefore, potential government solutions notwithstanding, investing in water stock appears to be a wise long-term move.

The Lure Of Liquid Assets by Christopher C. Williams

Highlighted companies: Aqua America Inc. (WTR), Pentair Inc. (PNR), Watts Water Technologies Inc. (WTS), Veolia Environnement SA (VE), Companhia de Saneamento Basico do Estado de Sao Paulo (SBS), General Electric Co. (GE), Suez (SZE), ITT Corp. (ITT), American States Water Co. (AWR), United Utilities plc (UU), PowerShares Water Resources ETF (PHO)
Summary: The water sector is on fire: The Stanford Washington Research Group Water Index of 20 U.S. and international stocks has returned 131% in the past five years (vs. 4% in the S&P 500). "Much of the easy money has been made, but investors willing to cast their nets a bit wider can find compelling bargains." Barron's profiles six such companies:

At this point many investors want to look a bit further out into investing into international stocks in the water industry. To satisfy that interest, Claymore launched a UIT called the Global Water Equities Portfolio, Series 3. When combined with the ADRs listed in PHO, it is possible to make a list of non-US companies which are involved in the water industry.