With the market’s rapid rebound from March lows and the Nasdaq Composite stock index closing higher than it was at the end of last year, many of us are probably asking ourselves:

Did I miss my chance to buy at the lows? 

or:

Will I ever make up for my losses?

These questions point to dangerous emotions for stock market investors.  Fear of missing out often leads to investment mistakes.  This is why investment advisors always tell their clients that they are better off not looking at their portfolios in a downturn.

A big loss makes some people want to sell everything, for fear of losing more.  Others make increasingly risky bets in order to try to win back what they have lost. Both tactics are likely to be wrong-headed for the simple reason that they are motivated by information that has nothing to do with the market’s future trend: namely, an investor’s personal experience.  As Kai Ryssdal puts it, “The market doesn’t care if you live or die.”

What the market cares about is companies’ future prospects, and investors’ future willingness to buy stocks.  Your personal past investing experience is irrelevant, except as a pointer to other investors’ past experience, and the mistakes they might be likely to make.  How much money you have to invest matters, but how much you had at the start of the year is irrelevant.

Almost all of us have losses since the start of the year, and we all wish those losses were smaller.  Since we’re not emotionless Vulcans, we need tricks to ensure that our very real emotions don’t cloud our judgement.

Here are a few of mine:

A little at a time: When making any investment decision, I don’t go all in.  When I first think a stock is a good buy, I buy a little.  If the stock shoots up immediately, I at least have some… it’s much easier to deal with the regret that I should have bought more than if I had considered buying and not bought any at all.  My April 10th call on Ebay (EBAY) is a prime example.   If the stock goes down, I can buy more at a better price, assuming my opinion about the stock has not been changed by events.  I do the same with selling, slowly lowering my allocation to a stock as it rises.

I didn’t go all in on Ebay in April, and of course I would be happier if I had, considering it is up over 35 percent in a month.  But if Ebay had continued to fall, I would have had the opportunity to buy more at an even better price… by taking things a little at a time, I guaranteed that my moves would not be perfect, but also that I had something to be happy about.

Know the whys for your decisions. If I research a stock and decide not to buy, or choose not to research a stock at all, I am very clear with myself as to why. I never buy stocks that I consider to be the flavor of the moment, or stocks that are not environmentally responsible enough for my taste.  Batteries are driving demand for lithium and cobalt, which is potentially good news for many mining companies. But I don’t invest in the sector because it usually entails significant environmental damage, even when it is done with care.  Mining may be necessary to bring about the clean energy transition, but necessity does not mean it has to be part of my portfolio.  And I’m OK with that.  If I hear about a lithium mining stock, and I later find out that it just increased five-fold, I have no regret that I did not buy.  If I had bought, I would have had to compromise my principles, and I would have spent valuable research time looking in to a company that I had mixed feelings about owning.  Better to spend that same research time (and potential capital) on companies which do not require that I make moral compromises.

Blogging also helps with this.  It gives me a written record of the reasons behind both my successes and failures.  Being able to go back and review those mistakes in black and white is a valuable tool to help learn from them.

Change your framing. If I find myself obsessing on recent losses or gains, it can helpful to look at the same numbers with a wide frame.  Last month, I wrote about how looking at returns since the start of 2019 or year over year was helpful to keep the losses so far this year in perspective.  Looking at the last month’s gain, or even focusing on individual stocks can help alleviate the feeling that everything always goes badly.

The same is true for success.  If everything seems to be going your way, it can be helpful to remind yourself of past losses, or the one stock in your portfolio that is down.  Investors are only as good as our next decision, and if we let our emotions tell us that we will always win or always lose no matter what we do, we will stop making good decisions.

Today’s market

How does this apply to today’s market, where many of us likely feel as if we missed an opportunity to buy at the March lows, and may be worrying that we’ll never “make back” our recent losses?

First of all, if you feel you didn’t buy enough at the bottom, you were already following the “a little at a time” rule above.  You also didn’t miss out on the opportunity altogether.  The stock market was a very scary place in late March. Change your perspective and congratulate yourself on having the courage to buy anything at all in the face of that fear.

For my own part, I cautiously added three cash covered puts to the 10 Clean Energy Stocks model portfolio, Ebay (EBAY), Hannon Armstrong (HASI) and Covanta (CVA).  Although all three are showing gains, the model portfolio is now significantly trailing its benchmarks.  If only I’d been less conservative and used the same money to buy the same stocks rather than sell cash covered puts, it would have done much to bridge the gap.

“If only” is a dangerous game for a stock market investor.  The market doesn’t care if I live or die, and EBAY at $41 is a much less attractive stock than it was at $30 a month ago.  Better to turn my attention to looking for the next bargain, than to worry about not buying enough of the last one.

The market as a whole is up much more than I ever expected a month ago.  This is in large part due to the extraordinary measures the Federal Reserve has taken to step in as a buyer of last resort in credit markets where it did not even venture during the depths of the 2008 financial crisis.

Seasoned investors say to “never fight the Fed.”  This means that when the Federal Reserve is working to support the stock market, it is a very risky move to bet that the market will fall.

The stock market has spent the last month demonstrating that it is not the economy. While the economic situation is more dire than it has ever been since the Great Depression, the market seems to be saying that the fortunes of listed stocks (especially the largest Nasdaq stocks like Apple (AAPL), Alphabet (GOOG) and Amazon (AMZN)) are bright.

That’s probably true for the Internet stocks that help us socially distance.  But the prospects for the rest of the economy are far less certain.

Given the lack of adequate safety precautions and testing, the parts of the country that are now opening up will soon be seeing rapid increases in conronavirus cases, and people travelling between states will make it even more difficult for the states that are being more cautious to open up when they are ready to do so.

Until we have a vaccine or a very effective treatment for the coronavirus, the US economy is going to be limping along as social distancing adds costs to all economic activity, and periodic outbreaks cause new stay at home orders.  Meanwhile, most people with savings will find them seriously depleted, and an increasingly small slice of the population will have the money to do any form of discretionary spending.  State and local governments will find themselves running up against balanced budget requirements and start laying off staff into a job market with the highest unemployment rate seen since the Great Depression.

While stock market investors should not be fighting the Fed, the economy is certainly doing so.  The Fed will do everything it can (and it has shown that it can do a lot) to prevent the economy from collapsing, but will it create new economic activity to replace the jobs that have disappeared?  I doubt it.

I expect that we are in the beginning of a multi-year recession.  “Depression” is a term that does not have an agreed upon definition among economists, but many colloquial definitions will apply to the current downturn.

The Fed has the ability to print money and prop up the entire stock market even through a depression.  I doubt that it will choose to do so.  Although many of the stocks you would like to buy will never go back to their March lows, others will not ignore economic reality forever.   They will fall.

When they do, we will again have buying opportunities.  Buy some when you think you see an opportunity.

If your stock bounces back up, you will regret not having bought more, but that regret is not as bad as going all-in on a stock that just keeps falling and falling.

Disclosure: Long HASI, EBAY, CVA.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

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The Envision Solar (EVSI) was reviewed in depth in a previous article last September in the context of its avoidance of high demand charges for electric vehicle DC fast chargers.

Envision Solar has completed its Nasdaq listing as reported in the news release on the Nasdaq site & Accesswire.   The company issued 2,000,000 shares and expects to receive gross proceeds of $12.0 million before deducting offering expenses.

Prior to the new listing, average pricing for the stock on the OTC market was disclosed to be $.23/share. Applying the 1:50 reverse split, the post-split equivalent stock value would have been $11.50. However, the offering price is $6/share, a 52.8% reduction in value for existing shareholders. Trading opened at $5.50, and it has continued to drift down to $5.20. Price charts on sites like Yahoo, GoogleFinance, WSJ or SeekingAlpha renormalize the new price back in time, showing a long term downtrend, and a drop after the split, rather than a pop from $.23 to $5.50.

Up-listing from the OTC exchange where it was trading at $.16/share, up to the larger exchange with a share price that is not a penny stock will make the stock more accessible to investors and may increase its liquidity. But in order to see a push up in its valuation, it will need to continue to grow and attract investor interest. Although EnvisionSolar has experienced a 336% increase in revenue year-over-year, with several high profile contracts signed with Johnson&Johnson (JNJ), NY City and Google (GOOG), its 2018 net loss was $3,598,780, which works out to a loss of $0.69/share with the post-listing, post-reverse split share count of 5.2 million shares.  Most other financial ratios are also negative, and there is no analyst coverage yet, so it will likely remain a relatively high-risk equity for some time going forward, but the healthy cash balance from its listing at least gives it some runway before it has to raise money again.

Its target market are users that are remote from utility power supplies, or applications involving emergency responses that need temporary supply that can be delivered and removed quickly. The company’s outlines its goals & history in a recently issued report:  EVSI Corporate Presentation Q1 2019.

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There is a clutch of self-driving cars and cars with autonomous driving features on the market today.  Drivers just cannot seem to get enough of them.  Apparently, the idea of zooming down the highway with little to no responsibility holds considerable appeal.  Then again, maybe it is the novelty of the idea that will eventually give way to the next fad.

In August 2018, Cox Automotive revealed the results of a survey that found fewer Americans are embracing self-driving technology than previously thought.  A surprising 49% of respondents said they would NEVER own a fully-autonomous car.  This is up from 30% naysayers two years ago. Views on the safety potential in self-driving cars have shifted as well.  The Cox survey found that 45% of the respondents in the recent survey believe the roads will be safer with self-driving cars.  The confidence level was 63% two years ago.

Why have automotive manufacturers put so much time, effort and capital into a technology that is losing favor with consumers at such a fast pace? According to the Brookings Institute by the end of third quarter 2017, over $80 billion had been invested in technology to deliver cars with various levels of driving autonomy.  CB Insights reports another $4.2 billion was invested in the first nine months of 2018.

Automotive manufacturers are certainly not responding to a clamor for autonomous driving from consumers.  Interest in self-driving cars really came first from the U.S. military where automatic vehicle deployment could help keep soldiers safer.  Over half of casualties in combat zones involve military personnel making critical deliveries of fuel, food and supplies.  Car makers grabbed onto the idea because production of self-driving cars could help them overcome the short comings of highly cyclical sales pattern associated with its present production lines.

Unlike the cars we know today that are the equipment of an individual driver, autonomous driving cars could be operated collectively.  Certainly individuals could still own or lease a car, but likely the technology could give rise to various service models for transportation and delivery. Consequently, the buying decision could shed its cyclic nature, giving automotive manufacturers hope for consistent revenue throughout the year.

Automotive manufacturers are certainly willing to dictate to consumers what they want, not because the product is a good for consumers but because the product has great advantage for the producer  –  consistent quarterly earnings that drive stock prices!  All of a sudden the $80 billion investment seems like a bargain.

History has recorded ambitious manufacturers as winners and we expect a repeat.  Autonomous driving cars could be a compelling investment opportunity.  The early entrants to the competition have been the most popular so far:  Tesla (TSLA:  Nasdaq), Alphabet (GOOG:  Nasdaq), Audi AG (NSU:  DE), and Toyota (TM:  NYSE) to name just four.

In the next post we explore a few less obvious options.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries. Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 12/18/18 as “Manufacturers Going All Out for Self-driving Car Tech.” 

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Garvin Jabusch

You probably know that index funds have become all the rage in investing over the past several years, as investors flock to their low fees and reject the gospel of active management. But you probably don’t know that investing in a broad-based index fund not only ignores rapid changes in the energy economy but also makes the investor complicit in climate change denial. And just as climate denial ignores the inherent risks of fossil fuels to environment, economy, and society, “set it and forget it” index investing ignores the inherent risks of fossil fuels and related stocks to your portfolio.

If you own an S&P 500 Index fund, you own 65 fossil fuels–related companies. That’s 12.14 percent of the index, or about $12 of every $100 you deposit, going directly into fossil fuels (according to fossilfreefunds.org, which confirms my Bloomberg terminal’s information). This includes producers such as ExxonMobil and Anadarko Petroleum; oil and gas services companies including Halliburton, Schlumberger and BakerHughes; and several fossil fuels–fired utilities like Sempra Energy and FirstEnergy Corp. To boot, you are investing in many of fossil fuels’ project-funding banks (Bank of America, JPMorgan Chase, and Citigroup, the so-called “bankers of extreme oil and gas”), and demand drivers (internal combustion engine manufacturers, coal and gas turbine makers, many of whom, such as Ford, are actively resisting improving mileage standard requirements).

Current conventional wisdom holds that the best and most sensible way to invest in stocks is to buy a broad-market index fund with the lowest fee you can find, and then forget it. More than that, we are conditioned to judge every fund by its performance’s adherence to an index; even non-index funds are routinely judged by how closely they mirror the returns of a major benchmark. The terms “risk profile” and “risk adjusted returns” of a fund usually mean nothing more than a measure of how much (less or more) a fund’s performance varied from a benchmark index. But I would argue that, given the massive risks embedded in the present holdings of indices like the S&P 500, these benchmarks have outlived their usefulness as measures of investment risk, and now present far more portfolio danger than we are led to believe. In short, our yardstick for measuring risk is broken.

How broken? Consider this: In owning that basket of S&P 500 stocks, you are making an active bet that economic growth will be perpetuated by fossil fuel-derived power. This bet is now visibly, clearly not the way forward. As British environmental economist Nicholas Stern recently said, “Strong investment in sustainable infrastructurethat’s the growth story of the future. This will set off innovation, discovery, much more creative ways of doing things. This is the story of growth, which is the only one available because any attempt at high-carbon growth would self-destruct” [emphasis mine]. For its part, and more pointedly, the investment bank division at Morgan Stanley in 2016 advised clients that long-term investment in fossil fuels may be a bad financial decision, writing: “Investors cannot assume economic growth will continue to rely heavily on an energy sector powered predominantly by fossil fuels.”

What both Stern and Morgan Stanley understand is that the world has changed and our approaches to investment need to change with it.

I won’t belabor a case that’s already been convincingly made (see here, here, and here), but it has become clear that the age of fossil fuels is beginning to end:

• Costs of renewable technologies continue to plummet while fossil fuels remain volatile commodities
• Consumers, businesses, and investors are shifting
• Policies instituted by national governments (led thus far by China and Germany) and local governments (the U.S. state of California, and others)

The decline of fossil fuels will impact investments as much as it will impact any aspect of the economy. The S&P 500 as it’s now constituted is too packed with fossil fuels and other sources of systemic risk to represent any kind of credible reference for calculating safety of returns or expecting to earn them. In terms of the outcomes it promotes, S&P 500 is functionally the same as climate denial. It is time for a new standard.

How do we realize this new standard? We need to recognize that avoiding indexing isn’t just about putting your money where carbon isn’t; it’s now about putting your money where the future is. Think, as an investor, about the outcomes of economic and technological innovation, combined with awareness of the risks of climate change. Where is investment money flowing in response to rapid changes in both? I believe some of the answers include renewable energies, water, sustainable farming practices, efficient transportation, connected cities and grids, AI and machine learning, robotics, biotech, and new approaches to real estateto name a few.

It is in seeing the world for what it has become, rather than what it was, that investors and markets will allocate capital to manage risks and profit from new opportunities. All of which leads in the opposite direction from fossil fuels.

Enough with the old indices. We should be buying what’s next instead.

This piece was originally published by worth.com at http://www.worth.com/index-funds-are-climate-change-denial/

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, LLC. He is co-manager of the Shelton Green Alpha Fund (NEXTX), of the Green Alpha ® Next Economy Index, and of the Sierra Club Green Alpha Portfolio. He also authors the Sierra Club’s green economics blog, “Green Alpha’s Next Economy.”

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by Shawn Kravetz, Esplanade Capital

What happened to solar industry fundamentals in 2016?

• Global demand shattered records growing ~40% to ~80 GW
• The U.S. grew ~75% to ~14 GW with solar accounting for 40-50% of new generation capacity in 2016 (vs. close to 0% in 2004 when Esplanade started investing in solar.)
• China installed 34 GW, a massive but volatile figure with record H1 installations giving way to an air pocket in the third quarter followed by a fourth quarter rebound

• Solar now competes against natural gas, coal, and other wholesale electricity sources not just in the US but throughout the world
• Bloomberg New Energy Finance estimates that utility scale solar produceselectricity at ~$45/MWh with no fuel price risk versus coal at $50-$90/MWh
• Major global corporations such as Apple, Google, Amazon, and Wynn Resorts are shifting almost entirely to renewable sources to power their energy-intensive businesses

Why did solar indices get halved in light of record demand?

• The extension of the US solar investment tax credit late in 2015 ignited a sharp but short-livedDecember rally thereby starting 2016 at elevated levels
• In April 2016, former industry darling SunEdison filed for bankruptcy casting a cloud over the sector including buyers of solar project assets
• In June 2016, Tesla bid to acquire sister-company SolarCity in what many, including Esplanade, believed a bailout of another financially stressed former industry bellwether
• Record demand catalyzed outsized midstream capacity expansions ensuring oversupply and supply chain price collapse in H2 16 as Chinese demand waned
• Trump’s victory further torpedoed the sector at the end of 2016 as his campaign pronouncements against renewable energy injected further uncertainty into investors sentiment
• Various policy and macroeconomic factors – most notably rising interest rates – also nipped at benchmark performance as well

What do we foresee in 2017 (big picture)?

• Our intelligence suggests that Trump very likely ignores renewables (at least at theoutset) and certainly has not aired any plans to dismantle an industry that employs more than coal
• While Trump presents medium-term risks to the status quo, we do not expect any meaningful changes in the near-term
• In fact, the new administration has already publicly confirmed their preference to maintain current federal renewable policies
• Globally, we expect front-end loaded demand in 2017 with perhaps the first annual decline in Esplanade’s history due to:
• Chinese demand potentially exceeding record H1 2016 levels but likely to collapse after the June 30, 2017 subsidy step-down
• US demand likely declining as utility scale procurement cycle resets after record 2016 installations
• India emerging as the newest mega-market but only partially offsetting China and US headwinds
• Japan’s gradual decline mitigated by emerging market growth
• Like demand, we expect value chain pricing to remain relatively stable (and possibly up) in H1 2017 but face pressure in H2 as China demand wanes
• Continued escalation in interest rates could factor slightly on 2017, but we estimate that current rates neither create nor destroy demand given that most solar debt is benchmarked to LIBOR not Treasuries
• LIBOR has already increased 100-150 basis points since January 2014 while solar installations continued to break records in 2014-16 despite higher borrowing costs.

Shawn Kravetz is President and Chief Investment Officer of Esplanade Capital LLC, an investment management company he founded in 1999.  The firm manages private investment partnerships including Esplanade Capital Electron Partners LP, launched in 2009, which intends to be the world’s premier private investment fund dedicated to public securities in solar energy and those sectors impacted by its emergence.. 

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Doug Young

Bottom line: Strong response to Tesla’s latest EV in China and a major new solar plant plan from SolarReserve reflect Beijing’s strong promotion of new energy, which is also creating big waste by attracting unqualified companies to the sector.

A series of new reports is showing how Beijing’s strong support for new energy technologies is benefiting both domestic and foreign companies, as China tries to become a global leader in this emerging area. But the reports also spotlight the dangers that come with such aggressive support, which often leads to abuse of subsidies and other preferential policies that can lead to big waste and market distortions.

One of the reports centers on US new energy car superstar Tesla (Nasdaq: TSLA), and quotes an executive saying that China has become the second largest market for its newest and first relatively affordable electric vehicle (EV). The second report comes from the solar energy sector, and has US solar plant developer SolarReserve LLC in a major new partnership to build more than $2 billion worth of solar farms in China.

While both of those developments look positive, and reflect big government incentives on offer, the third news item highlights the darker side of Beijing’s largess. That story comes from leading financial news magazine Caixin, whose investigative report shows how many of China’s smaller automakers have become addicted to grants and other subsidies for new energy car development and rely on such money for their profits.

Let’s begin with the Tesla story, which comes as the company tries to gain some traction in China after a poor start 2 years ago. Following positive reviews and strong initial orders for its new Model 3, costing just $35,000, Tesla’s Asia chief Ren Yuxiang is saying in an interview that China has become the second largest market for pre-orders for the new car, presumably after only the US. (English article; Chinese article)

Ren didn’t give any figures, but Tesla previously said it had received 400,000 pre-orders for the Model 3, which won’t be available in China until sometime next year. One Chinese media report also points out that Tesla has said it is exploring setting up a manufacturing plant in China, and that local reports have indicated that plant would be in the city of Suzhou not far from Shanghai.

New Solar Power Plants

Next there’s the solar plant news, which comes in a report that says SolarReserve and local partner coal producer Shenhua (HKEx: 1088) will jointly spend up to 15 billion yuan ($2.3 billion) to develop solar farms in China. (English article) Projects developed by the pair could have up to 1,000 megawatts of capacity, which is quite a large amount.

We’ve seen many similar initiatives to build solar power plants in China in response to Beijing incentives and directives, but this is one of the largest I can recall involving a foreign company. That’s significant because many Chinese builders have little experience in the sector, and may be taking their action more to please the central government than to earn actual profits. By comparison, this new partnership should be far more commercially focused, giving it better chances of success.

Finally there’s the Caixin investigative report, which saw a reporter review many companies’ latest financial statements and uncover how reliant some smaller automakers have become on Beijing incentives to develop new energy cars. (Chinese article) The report points out that many of the companies would be loss-making if they didn’t have the government support.

I’ve never heard of any of the companies named in the report, which reflects the fact that China’s auto industry is highly fragmented with dozens of small players that would never survive in a more mature market. Many of these companies probably should have closed or merged by now due to stiff competition. But they have discovered that Beijing’s largess can prolong their lives for a few more years, as they develop new energy cars that will probably never make it to market.

Doug Young has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies. He currently lives in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

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by Mark Tan

The country is currently experiencing a shift toward more sustainable living. In addition to the wide array of whole food markets and hybrid cars available to today’s consumer, many people also want their investments working for the greater good. Although these investments have been around for more than a decade, the past few years have seen substantial growth in the areas of charitable investments, sustainable 401ks, and green bonds. No matter your passion, your financial portfolio can make a difference in the world, while still generating profit for you.

Charitable Investing 101

Charitable investments, also known as impact or sustainable investments, are those made in companies, organizations or funds with the intent to generate a measurable, beneficial impact on society. Rather than yielding exclusively financial returns, they seek to boost a positive social agenda, an environmental or medical cause, or back socially responsible companies.

Now Trending

The landscape of charitable investments has been growing steadily for the past few years. According to a recent study conducted by the Morgan Stanley Institute for Sustainable Investing, the total volume of these investments has nearly doubled over the past two years, growing from $3.5 trillion in 2012 to nearly $6.6 trillion in 2014.

The same study found that more than 70 percent of investors are interested in finding more charitable options and expect to see growth in the area over the next five years.

Financial Institutions. Some of the nation’s largest banking institutions have moved toward investing more assets in charitable causes. In 2013 when Morgan Stanley formed the Institute for Sustainable Investing, it did so with the goal of having $10 billion in client assets invested for social and environmental causes within the first five years. Chief Executive Audrey Choi said, “We fundamentally believe that considering the sustainability and impact of your investments is a business opportunity for us and our clients. We also think it’s a fundamentally strong value proposition to integrate thinking about large global issues in your investing decisions.”

Bank of America’s head of Global Wealth and Retirement Solutions Andy Sieg agrees, saying, “We think impact investing is an idea whose time has come in mainstream wealth management.”

Corporations. Many businesses are also beginning to see the benefits of focusing on sustainability and providing ethical investment options. Smart investing, good publicity, and a positive reputation will eventually lead to profit, but companies are also seeing improvement off the books.  A charitable giving program can improve employee engagement and company morale. When employees are pleased with their corporate culture it drives them to perform better.

Higher levels of employee engagement, coupled with more responsible and forward-thinking practices have led many of the nation’s largest corporations to work toward improving climate change, adopting sustainable production and operation practices, and addressing poor conditions within their organizations as well as in developing countries.

Some companies have taken responsible financing one step further from simply running their businesses and choosing their investments more responsibly, and begun helping their employees invest responsibly as well. The industry is beginning to see a trend in companies choosing their employee 401k programs based on sustainability ratings. These plans rate the sustainability of its participants’ holdings to ensure each dollar invested is done so ethically.

Millennials. While the nation’s banking institutions and business are shifting their priorities and providing the capital behind the charitable investing trend, the real driving force behind the growth is the millennial generation. While young adults may not be contributing large sums to charities each year, studies show that the majority of the generation has made donations, solicited donations and/or volunteered, and even more have the intention to do so in the future.

Bradford Bernstein, Senior Vice President of Wealth Management with UBS in Philadelphia thinks that experienced investors could actually learn something from the younger generation. “Millennials are the biggest force behind this trend of socially responsible investing,” he said. “[They] are interested in making a difference, and they choose to invest and buy from companies that are making a social statement.” It is this generation that will be running the banks and businesses in a few years. When their drive to make a difference meets the ability to put the capital behind it, the market with undoubtedly see even more exponential growth in this area.

Profit Concerns

Despite overwhelming growth and the desire to make a difference, there are still financial considerations to be made when choosing investments. Charitable investing is about finding the balance between investments and maximizing the social benefits of those investments. A portfolio built entirely on emotional and moral decisions is not likely to yield the same returns as one that focuses solely on appreciation and growth.

The common misconception is that charitable investments do not perform as well as others. It may be true that the returns may be lower than in some more traditional investments. However, the drive and passion behind the causes being funded by these investments can lead to greater returns.

The Forum for Sustainable and Responsible investment conducted a study in 2012 that found that at the time, one out of every nine dollars under professional management in the country was invested according to sustainable strategies. The report found that charitable investing grew 486 percent between 1995 and the date of the study, while other assets under professional management only grew 376 percent during that time period. The responsible investments saw greater growth in response to social changes in the country, government backing, and through a desire and a need to affect high-profile issues, such as climate change.

As is always the case when building a financial portfolio, certain types of investments may be more risky than others.  Choosing stocks based on the organization’s social responsibility, for example, may not be as productive as buying based on appreciation. Because of their limitations, stocks focused specifically on making a difference often are not very growth-oriented.

Identifying Responsible Investments

Mutual Funds. If you are ready to start making your money work for more than just returns, socially responsible or faith-based mutual funds are a great starting point. It can be difficult to identify sustainable and ethical companies. There may be a false perception that a certain company would not do anything immoral, but mutual fund managers generally have done their due diligence. These funds are often designed to favor companies that meet certain criteria, cover companies with high social, environmental and governance standards and actively avoid companies with unsustainable business practices.  

Green Bonds. For those investors who want to balance their portfolio to include more stable investments, green bonds can round out a portfolio while encouraging environmental sustainability. Green bonds are typically issued by federally qualified organizations for the development and maintenance of brownfield sites
– areas of land that are underutilized or underdeveloped. Other green bonds aim to raise funds to support lending for projects that seek climate change or renewable energy.

Due Diligence. When investigating companies be wary of those that use good deeds to conceal bad behavior. Instead focus on companies where environmental and social concerns rank high among the corporation’s priorities, like Google (GOOG).

In such companies the executives often make substantial contributions to the company-backed causes and truly live their values.

Identify companies that provide sustainable and helpful goods or services. These companies conserve energy, operate efficiently, and design products and services using recycled materials that save the user money and make their lives better. Companies such as Nike and Johnson Controls (JCI) fit this description.

Closely monitored working conditions, strong safety and health standards, and high employee satisfaction are also good indicators of a responsibly-run organization. Employee satisfaction and engagement ratings do not lie and can help identify those organizations with an ethical mission statement, such as Apple.

Last, but not at all least, seek out investments in businesses with a long-standing reputation for product sustainability, transparency, and leadership. Panera, for example, prides itself on its history of fair animal treatment, using local produce, and adding no artificial ingredients to its healthy menu items. Strong leadership with strong ethical beliefs can ensure that your money will be put toward a good cause.

Getting Started

The first step toward building a sustainable investment portfolio is to decide how to blend your finances and life views.

For example, some investors may view Coca-Cola as an organization that mass produces sugary, unhealthy drinks to the American public, while others may see a global clean-water and efficiency program.

Define what causes and cultures are important to you and begin investigating companies that share your vision, but that does so while keeping an eye on growth. Experts suggest starting slowly, and finding a guide.

About the Author
Guided by his strong faith and charitable instinct, Mark Tan is committed to helping others live happy, virtuous lives.
At Thrivent Financial, Mark assesses his clients’ unique situations and creates financial plans customized to their needs. He empowers his clients to make informed decisions to stay on track and reach their goals. His sophisticated approach to financial planning helps clients assess multiple financial goals and concerns.  As part of a team of professionals that share his commitment to service, Mark has the opportunity to work one-on-one with clients and also access additional resources and knowledge from of members of his team when needed. Contact Mark at mark@mark-tan.com. To view or download the entire eBook, visit http://www.mark-tan.com/.

The post Charitable Investments: How to Grow Your Portfolio While Making a Difference appeared first on Alternative Energy Stocks.

By Jeff Siegel

You probably wouldn’t recognize him if you saw him on the street.

Heck, you probably don’t even know his name.

But Ali Al-Naimi is one of the most powerful men in the world.

As the Saudi oil minister and chairman of Saudi Aramco, Al-Naimi is not particularly popular with U.S. oil producers, especially after telling the media he didn’t care if oil prices crashed to $20 because it was not in the interest of OPEC producers to cut production  regardless of price.

Still, he remains the most influential oilman on the planet. Listed as one of Forbes’ 50 most powerful people in the world, Ali Al-Naimi may not feel the love in Texas, but his influence is unquestionable.

So last week, when he made the following statement, the gatekeepers of the global energy economy blinked…

In Saudi Arabia, we recognize that eventually, one of these days, we’re not going to need fossil fuels. I don’t know when – 2040, 2050 or thereafter. So we have embarked on a program to develop solar energy. Hopefully, one of these days, instead of exporting fossil fuels, we will be exporting gigawatts of electric power.

Al-Naimi also added:

I believe solar will be even more economic than fossil fuels.

And he calls himself an oilman!

One of these days…

Sarcasm aside, Al-Naimi is right.

One of these days, we’re not going to need fossil fuels.

We’re not going to need gasoline or diesel to fuel our vehicles because in the future, our vehicles will not be reliant upon outdated internal combustion technology.

We’re not going to need coal or natural gas to juice up our grid because those resources will simply be too expensive and environmentally burdensome to rely upon.

But let me assure you, dear reader, that this “one of these days” scenario is pretty far off.

Although I’m without a doubt one of the biggest advocates for transitioning our energy economy to one that is primarily built on cleaner energy, moving from a fossil fuel-dominated world to a renewable energy-dominated world will take more than 25 to 35 years.

Renewable Energy is the Future

Don’t get me wrong; this transition is well underway. And those making the important investments in renewable energy today will be the dominant energy providers of tomorrow.

Don’t think for a second that companies like Tesla (NASDAQ: TSLA), Google (NASDAQ: GOOG), and Apple (NASDAQ: AAPL) are embracing cleaner energy because they’re run by a bunch of tree-huggers.

Renewable energy IS the future, and embracing it in its earliest stages is little more than a very smart investment decision.

By the end of this decade, solar will be competitive with all forms of fossil fuel power generation in nearly every city, town, and neighborhood on the planet. In some places, it’s already there.

New developments in energy storage are not 50 years away they’re here today. In another 10 to 15 years, innovations like Tesla’s Powerwall will be ubiquitous.

Electric cars  not even representing 1% of all the cars on the road today  will conquer 20% of the entire new car market in less than 15 years.

By 2030, we’ll be moving people and freight at speeds in excess of 500 miles per hour using hyperloop technology. Centuries-old rail systems will find new homes in museums, and short-range air travel will become almost non-existent.

But here’s the thing…

Even with all of these wonderful and exciting innovations that will move us forward as a global society, it’s highly unlikely that all of the world’s energy needs in 2050 will be met without the inclusion of fossil fuels.

That being said, the demand for fossil fuels is definitely going to decrease dramatically, and in a relatively short amount of time.

Your Grandkids Will Thank You

By 2030, 30% of the U.S. will be powered by renewables. And that’s a conservative estimate.

By 2040, we’ll be at 45%, and by 2050, we’ll be well above 70%.

As far as transportation is concerned, I suspect that by 2050, they won’t even be building internal combustion passenger vehicles anymore. Economically, environmentally, and socially, they just won’t make sense.

Electric cars and high-speed travel (powered almost exclusively by renewable energy) will be the norm, new drivers won’t even know how to put gas into a gas tank, and guys like Elon Musk and Jigar Shah will be in the history books as the most influential inventors and entrepreneurs of the 21st century.

As for you…

Well, if you approach investing as a long-term, sustainable avenue for wealth creation, do yourself a favor and commit at the very least a small portion of your portfolio to renewable energy. You’ll be happy you did, and your grandkids will thank you not just for the fat inheritance, but for the clean air and water, too!

To a new way of life and a new generation of wealth…

Jeff Siegel is Editor of Energy and Capital, where this article was first published.

The post Saudis Confirm Switch from Oil to Solar appeared first on Alternative Energy Stocks.

By Jeff Siegel

Audi wants to save internal combustion from its ultimate demise.

This makes about as much sense as saving the typewriter.

Despite the fact that such a demise is likely many decades away anyway, the quest to “save the internal combustion engine” will ultimately result in a complete waste of time, effort and money.

But that’s not stopping Audi.

Apparently, the German auto maker has been busy developing e-diesel, which is a transportation fuel that only requires two raw materials: water and carbon dioxide.

On the surface, this may sound promising. Especially after reading what Reiner Mangold, Head of Sustainable Production said regarding this new development …

In developing Audi e-diesel we are promoting another fuel based on CO2 that will allow long-distance mobility with virtually no impact on the climate.

An Exercise in Complacency

While I don’t doubt Mangold’s “eco” intentions, the undeniable fact is that the internal combustion engine is still an antiquated technology.

Sure, the thought of a transportation fuel that doesn’t rely on oil sounds great. But the process of internal combustion itself is inferior to electric mobility.

Let us not forget that electric cars have fewer parts in comparison to internal combustion vehicles. Less “things” can break and require costly repairs. As well, there are no oil changes or regular engine maintenance required with electric cars. For the most part, it’s just a battery and an electric motor. Pretty simple, really.

Of course, what I find most odd is that the process of making e-diesel seems to be much more complex, cumbersome, and costly compared to what it takes to produce electrons and use those electrons to “fuel” an electric car.

Take a look at this diagram that Audi produced to illustrate the production process …

How does that make sense when this is the future of “filling up” …

This is where Google (NASDAQ: GOOG) employees “fuel” their electric cars.  It should also be noted that this parking lot is powered by solar panels installed on the top of the carports.

Now in terms of efficiency, reliability, and design, this Tesla (NASDAQ: TSLA) electric motor …

Is far superior to this Audi engine …

Audi should spend more time embracing the future instead of trying to hold on to it.

The truth is, we don’t need better, cleaner fuels to power out internal combustion vehicles. We need to stop acting like we can’t live without internal combustion. To accept such a thing is little more than an exercise in complacency and defeatism – neither of which enables pathways to prosperity.

Jeff Siegel is Editor of Energy and Capital, where this article was first published.

The post Electric Cars Will Bury Internal Combustion appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

Last week Toyota Motor Corporation (TM:  NYSE) announced its intention to share its patented fuel cell technology with other automotive manufacturers.    Engineers from competing auto manufacturers can get a look at Toyota’s fuel cell designs up through 2020.  Toyota has taken a page from Tesla Motors (TSLA:  Nasdaq), which made its electric vehicle battery designs available to the public last year. 

Since the car business is intensely competitive, automotive manufacturers are typically quite circumspect about their innovations.  However, producers of cars powered by alternative energy sources are faced with a unique problem  –  the need to develop scale in the power supply chain.  By encouraging battery and fuel cell adoption by other car manufacturers as well as innovation in power supplies, Tesla and Toyota hope to foster an expansion of the power distribution network.  Readily available power supplies should give consumers greater confidence to adopt the new cars. 

Toyota is prepared to share over 5,000 patents with other automakers without royalty arrangements.  The patents cover fuel cells composed of membrane electrode assemblies positioned between separators.  These fuel cells are ‘stacked’ one against another to achieve the desired voltage.  Toyota’s patents cover the membrane composition, separator materials, and the stacking methods among other materials, designs and processes.  The company has also developed a unique boost converter to increase the voltage and thereby reduce the number of required fuel cells.  A drive battery, motor/generator combination and power control unit complete the system.  Toyota has also patented the three-layer design of its hydrogen tanks used to store the required hydrogen on the vehicle.  There should be a great deal to learn from pouring over the patents.

Tesla has had mixed results from its technology sharing.  So far it does not appear that any automotive manufacturer has adopted Tesla’s battery-powered drive train designs.   After only one year it might be a bit too early to suggest Tesla’s policy is a failure.  Perhaps Toyota’s gesture will not be any better received.   Honda, Hyundai and Volkswagen already have fuel cell designs.  Still, it would be beneficial if innovators in battery charging or battery swap schemes used the designs to plan an entrance to the market.     

Toyota recently introduced the Mirai passenger car at automotive trade shows as one of the first commercial vehicles in history to be powered by hydrogen fuel cells.    Reportedly the first production run for the car is only around 10,000 cars.  Most of these first units are expected to be put on the market at dealerships in California where there are at least some sources for hydrogen fuel.  To move to larger, more economic production runs, Toyota needs entrepreneurs to see the bigger picture and invest in hydrogen filling stations or at make such services available to petrol stations already in place.

Tesla Motors was apparently been the inspiration for Toyota’s magnanimous gift of fuel cell information to the public.  Surprisingly, Tesla’s celebrity CEO Elon Musk has been dismissive of fuel cell technology, referring to ‘fool’ cells.  This is not the first time Toyota has been the butt of jokes about its cars.  Two decades ago there were many naysayers when Toyota introduced the Prius as the first gas-electric hybrid passenger car.  Toyota is now selling two dozen different hybrid passenger car models and sold about 6.1 million hybrid cars in 2013.

It is doubtful Toyota would open the kimono so wide if its engineers were not highly confident in their fuel cell innovation.  Likely this confidence is supported by their experience with hybrid car technologies.  I believe the appearance of the Mirai in our midst will have the same catalytic impact on consumer choice and business strategies as did the Prius.  Cars driving down the road with hydrogen fuel cells could earn this technology much respect, Elon Musk’s comments notwithstanding.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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