Investment implications of Climate Change

[sptrawler]

On the other hand, vanadium seems to be surging.

https://stockhead.com.au/resources/vanadium-prices-are-surging-again-whos-set-to-benefit/

Good pick up, vanadium is another of those minerals that became uneconomical to mine, so they were put on care and maintenance from memory. No doubt the LME stockpile is suffering.

 

[SirRumpole]

New home building techniques create bushfire resistant homes.

https://www.abc.net.au/news/2019-09...ushfire-risk-rated-home-cheap-to-run/11517878

 

[So_Cynical]

New opportunities will spring from places that the masses are not considering, water is a big one and not just the water but the infrastructure around it and access to it.

 

[basilio]

It is interesting to explore the range of potential investment opportunities that could/should arise from dealing with CC issues.

I suppose my caution would be in whether we had a sufficiently robust economic/financial/social system to take advantage of these opportunities. In an ideal future one could identify and invest in those opportunities in the belief that the basic society infrastructure was sound enough to ensure a return on investment. In my view the risks of widespread failures with insurance companies unviable, scores of seaside cities under extreme stress, many countries facing extreme heat conditions, fires, loss of food production undermines the potential of "making a buck". Mere survival will be a feat in itself.

Just my

 

[basilio]

For what it's worth I came across a review of a Fairphone 3 . Long story short an ethically produced mobile phone that is totally repairable and upgrade able.

But it costs a whack more than its competitors.

Fairphone 3 review: the most ethical and repairable phone you can buy
4 / 5 stars 4 out of 5 stars.
Dutch firm asks £200 above the norm for a smartphone that might help change the industry
https://www.theguardian.com/technology/2019/sep/18/fairphone-3-review-ethical-phone

 

[SirRumpole]

For what it's worth I came across a review of a Fairphone 3 . Long story short an ethically produced mobile phone that is totally repairable and upgrade able.

But it costs a whack more than its competitors.

Fairphone 3 review: the most ethical and repairable phone you can buy
4 / 5 stars 4 out of 5 stars.
Dutch firm asks £200 above the norm for a smartphone that might help change the industry
https://www.theguardian.com/technology/2019/sep/18/fairphone-3-review-ethical-phone

I really doubt if people are going to pay 200 pounds more for something that is such a dog performance wise, even if it is "ethical".

They should be able to do better than that. I think it's a bit of a rip off really.

 

[So_Cynical]

For what it's worth I came across a review of a Fairphone 3 . Long story short an ethically produced mobile phone that is totally repairable and upgrade able...But it costs a whack more than its competitors.

On the subject of wastage, my washing machine died the other week and after shopping for a new one thought thats it's really weird how there are so many manufacturers
and different models, it's a super un-economic way to get the washing done, a shocking waste to build a 100 different washers that all do the same thing, and why such a
limited life span for washers? its an electric motor and a tub basically, very simple and serviceable and yet they are near totally a throw away item..its nuts in a finite world.

 

[Jack Aubrey]

For those of an apocalyptic mindset, an accessible cache of gold and silver and a trade-able skill set would be your most valuable assets. I reckon people like my brother, a feral with many practical skills, will be better prepared than me with a uni education and decades experience as a government policy wonk. Maybe a plot of arable land, some big solar-rechargeable batteries and electric tools etc.

In the lead-up to the apocalypse (or a milder adaptation phase preceeded sunlit uplands) shares in gold miners, infrastructure companies, "new foods" and the minerals/equipment needed for a de-carbonised and decentralised energy system would have the more immediate payoffs (if the financial system doesn't collapse. I'd also advocate (and be politically active) at the local and State government level to try to avoid them becoming insurers of last resort for those who are not taking action themselves. I personally see the preparedness of governments to provide unlimited "disaster relief" and to bail-out or subsidise companies with stranded assets to be one of the scariest aspects of a (possibly) deteriorating climate.

Just thoughts.

 

[SirRumpole]

I personally see the preparedness of governments to provide unlimited "disaster relief" and to bail-out or subsidise companies with stranded assets to be one of the scariest aspects of a (possibly) deteriorating climate.

Yes, look at the drought relief package (even though some say drought is unrelated to climate change) it is still is being done. I can see insurance companies needing to be baled out at some stage.

 

[Jack Aubrey]

Indeed. As/if particular places become uninsurable (as did happen in New Orleans) the impacts reverberate through the economy and political pressure mounts for the government to underwrite rebuilding. And some areas of Australia have barely been out of drought since the Millennium Drought - surviving only on drought relief for seven years in ten. I'm not against genuine publicly-funded "structural adjustment", but these sorts of payments and subsidies don't actually result in changes to behaviour or investment patterns that may be more future-proof (they actually reinforce existing behaviours).

I think local governments face a very difficult dilemma in this space. If they don't act to limit their liability (eg. by using higher flood levels in their planning) they run a risk of being held responsible for homes being impacted by flooding or erosion. If they do act and there are impacts on existing/projected land values, they'll face litigation and electoral impacts. I had lunch recently with a elderly relative who is a vehement climate denier/skeptic and he has taken his local council to task for trying to rezone his waterfront home as "flood prone". They relented, but that only means the risk is kicked down the road (and probably magnified) if a new owner does get flooded. In the end, of course, it is rate/taxpayers who bear this risk and if, even mild climate scenarios play out, the costs will be crippling.

 

[Smurf1976]

Perhaps the most obvious investment theme relating to this issue is as a broad market and economic cycle timing signal.

A look at any mainstream news source will reveal that this is a very high profile issue at present.

Looking back, previous occasions when this became a very high profile issue were late last decade and at the end of the 1980's. Both were followed by global economic upsets of significance.

My thinking there is that it's an indicator but not a cause. It's much like the construction of very tall buildings and so on, it tends to peak at the end of the economic cycle but it isn't the cause of that ending.

 

[sptrawler]

On the subject of wastage, my washing machine died the other week and after shopping for a new one thought thats it's really weird how there are so many manufacturers
and different models, it's a super un-economic way to get the washing done, a shocking waste to build a 100 different washers that all do the same thing, and why such a
limited life span for washers? its an electric motor and a tub basically, very simple and serviceable and yet they are near totally a throw away item..its nuts in a finite world.

On the same theme, when I was a young bloke, just about every Country town had a T.V repair shop. They have gone the way of the dinosaur, as you say it is a throw away society.
Also with the relative drop in the cost of both the t.v's and washers, as a percentage of income, people tend to have less trouble finding the money to replace them.
Add to that the increase in labour costs to fix things, and everything ends up on the verge collection.

 

[SirRumpole]

On the same theme, when I was a young bloke, just about every Country town had a T.V repair shop. They have gone the way of the dinosaur, as you say it is a throw away society.
Also with the relative drop in the cost of both the t.v's and washers, as a percentage of income, people tend to have less trouble finding the money to replace them.
Add to that the increase in labour costs to fix things, and everything ends up on the verge collection.

But you have to balance that out with how long goods last these days. TV repairmen were needed because vacuum tubes used to fail regularly, these days tv sets last for 15 years or more without problems, but when they do go there are much better models out there so the old ones get ditched.

Swings and roundabouts...

 

[qldfrog]

Complexity increases, few people want to even look at the belly of a dead tv, last 2 led tvs i had were brought from the tip
Open look at blown up component(usually the power module) ebay for 50c to 1$,wait 10 days reassemble
Yes these are only 300 or 400$ at jb but for 1 or 2h work at most, tax free and guilt free
And doing more for the planet than spamming crap about GW on a forum
Not bad time investment, same for mower, washing machine,etc etc
But do people nowadays have even a clue on how things they use every day work?

 

[qldfrog]

So if people were more educated, we could maybe gave less brainless consumption..but on the other end our gdp would fall and it would be harder to brainwash people so no government will go there

 

[Jack Aubrey]

I think qldfrog has some bankable skills for the climate apocalypse. Maybe you should consider an IPO.

My father-in-law (deceased 20 years) had a philosophy of always buying the best, simplest and most durable products and using them until they were unrepairable. I think he owned a maximum of four cars in his lifetime and one he bought new in 1960 is still going (although it now requires "classic car" rego to be driven legally and mechanics drool over it whenever it gets out for a run). He was, by the way, a very wealthy man by most standards.

 

[sptrawler]

But you have to balance that out with how long goods last these days. TV repairmen were needed because vacuum tubes used to fail regularly, these days tv sets last for 15 years or more without problems, but when they do go there are much better models out there so the old ones get ditched.

Swings and roundabouts...

Yes I mentioned that in another post, I was trying to keep the theme to the throw out ideology.
But as you say, the fact things do last so long these days adds to the problem, in the end things last that long nowadays that people either want to upgrade or just get bored with the product, unlike 30years ago when things broke or wore out.
That IMO is causing a lot of the problems economically today, people can stop buying because things are so reliable, they can just decide to stick with them.
In the 1970-80's red motor Holdens etc required a rebuild and new rings at 160,000klm, these days even the most basic 4cyl car will do well over 200,000k's due to the improvements in metal technology and as you say the t.v's just don't break down.
Apple are having trouble moving there new phones because people are happy enough with their old iphone 6 and so it goes with most things. Instead of buying a massive surround sound system with speaker towers, people are using small blue tooth speakers, as a music center, radio etc.
So discretionary spending on these old style big ticket items has gone, also even the cheapest laptop is sufficient for web surfing email etc, therefore unless someone has a specific requirement, why upgrade to a bling speed $2,000 computer? Most aren't IMO.
These are some of the reasons helicopter money isn't working, most people have everything they need, so the money will pay down debt or go towards a holiday etc.
Apologies for drifting off topic, but it is interesting times, we live in. The only obvious outcome to me, is a drop in living standards, to drive demand. Or a drop in living standards, because of a lack of demand.
It is a very good time to be investing IMO.
Just my opinion

 

[jfufgiugfx]

Interesting thread. I was thinking that the extreme Aussie drought must break sooner or later. Nothing lasts forever, so a good bet could be pastoral companies or companies that have significant drought affected land holdings. 2020 could be the year.

 

[sptrawler]

Interesting thread. I was thinking that the extreme Aussie drought must break sooner or later. Nothing lasts forever, so a good bet could be pastoral companies or companies that have significant drought affected land holdings. 2020 could be the year.

You are spot on, there has been a lot of activity in the rural sector by China as well as others, in recent years.
The most recent being Ruralco, which was bought out by Nutrien the Canadian fertiliser company, this year.

https://www.afr.com/companies/agric...en-light-for-ruralco-takeover-20190822-p52jlm

 

[Smurf1976]

Interesting thread. I was thinking that the extreme Aussie drought must break sooner or later. Nothing lasts forever, so a good bet could be pastoral companies or companies that have significant drought affected land holdings. 2020 could be the year.

A good point yes.

Those who are only looking at short term performance of companies, especially those who are just looking at numbers and don't know what the company even does, will likely have steered well clear of these stocks at present which may create an opportunity.