Economic Review V – Green Goes Down & Up


This series is reviewing ideas gained at the Jyske Bank Global Economic Seminar in Copenhagen where I recently spoke. We learned a lot from many of the contributors and as the lead off speaker, I set a positive tone.

My view was “Do not worry too much about the recent, sudden market drops”.

This was supported by the green portfolio we track for educational purposes.

The performance of this portfolio tickled me pink.

As a reader you may know that I have been advocating green investing for some time. Lots of other managers have made fun of this. They told me I was silly.  So this time I was ready!  While there I talked with a number of managers about green.  They all began by reminding me with the same old tune. “Green is nice but as investment managers we have to look first to profit”.

This time I could say, “Right, profit is important, how is your portfolio doing this year?  My green portfolio is up 155.80% in the last ten months”.

Believe me this seminar has some real, muscle flexing portfolio managers from around the world. They have strong credentials and many awards to prove it.   Yet in the “I’ll show mine, if you’ll show yours” game of investment management, 155.80% is impressive. None of the managers I spoke with had performance even close.

Let me hasten to add that I am well aware that this is unusual…maybe even enormously lucky…but for the moment this helps put a favorable spotlight on environmentally sensitive investing.  We are delighted with this fact and hope this will go far in helping other managers become more aware that we can solve environmental issues and make money at the same time!

The other fact I was able to point out was the fast recovery of green in this August market dip.

What a dip it was!  August 10th, the green portfolio was up 188.87%.  One week later when the markets world wide panicked the green portfolio collapsed to 110.73%. Here is how this portfolio of six shares looked August 17.

Currency Name Invested Amount Value
EUR Seche Environnement 48,000.00 50,166.40
DKK Novozymes B 48,000.00 63,602.13
DKK Vestas Wind Systems 51,000.00 91,608.12
JPY Kurita Water Industr 51,000.00 71,283.34
EUR Q-Cells Ag 51,000.00 91,787.63
SGD Hyflux Ltd 51,000.00 50,313.78
300,000.00 418,761.40
LOAN
JPY 1.88% Interest rate 200,000.00 208,023.84
Portfolio Value 210,737.56

Not much wrong with a 110.73% profit in ten months unless the week before it had a 188.87%.

This portfolio was hit with a double whammy. The share values dropped as investors fled markets. At the same time investors closed yen loans which pushed up the value of the yen. This increased the loan payoff on the portfolio.

The positive note I added at the Copenhagen seminar was correct however. One week later the portfolio had nearly recovered. Here it is August 31.

Currency Name Invested Amount Value
EUR Seche Environnement 48,000.00 48,869.94
DKK Novozymes B 48,000.00 68,626.03
DKK Vestas Wind Systems 51,000.00 109,342.95
JPY Kurita Water Industr 51,000.0 74,993.64
EUR Q-Cells Ag 51,000.00 103,857.79
SGD Hyflux Ltd 51,000.00 55,756.73
300,000.00 461,447.07
LOAN
JPY 1.88% Interest rate 200,000.00 205,644.93
Portfolio Value 255,802.15

The remarkable two week recovery came from the same double whammy. Investors jumped back in the market and shares recovered.   Look at what happened to Vestas and Hyflux in just one week! Plus investors rushed back into yen loans and the Japanese currency once again dropped.

This portfolio shows that having a positive note and looking for value makes incredible sense. Can you guess which shares I am really looking hard at now? Hyflux and Seche. They have been the bigger losers and I want to see if they represent good value now.

Jyske Bank also just posted a buy signal for Vestas shares. Learn more about this from Thomas Fischer at Jyske Bank. He can be reached at fischer@jppb.dk.

Thomas also sent me this note about Jyske minimum accounts.

“ Gary , I wanted to reconfirm our new minimums:

Individual Account US$ 50,000

Individual Account that uses a leverage US$ 100,000

Company/Trust/Foundation US$ 100,000”

The point of this message is that green investments are different than those most investors make.  This is a beginning huge trend. Investing differently can actually make more money!

Tomorrow’s Economic Review VI shows how being different has earned my personal portfolio 35.4% per annum for the last five years!

Until then, try being different. This can be fun and profitable!

Gary

Thomas Fischer from Jyske Bank and I will unveil the 2008 portfolios at the International Business & Investing Made EZ course in North Carolina, September 14-15-16, 2007. We hope to see you there. Details are at http://www.garyascott.com/nccourse/

Or join me and Jyske Bank at our hotel El Meson de las Flores for International Business & Investing Made EZ in Ecuador , November 9-10 and 11. http://www.garyascott.com/catalog/IBEZec/

P.S.  Last month I mentioned that I have been approached by a large publisher to develop some form of cooperation with them for our Multi Currency Educational Service.  The phenomenal appreciation of our model portfolios for nearly two years has attracted a lot of attention.  We had a starting date of August 17 and that their marketing staff has been working on what the new higher annual subscription will be.

As mentioned your current subscription is grandfathered for whatever time you have enrolled.

Plus before the price rise I offered you the ability to extend your subscription at the current, low, annual price before August 17.  I received this message from the publisher.

“Hi Gary I apologize for the delayed response.  I’ve been sick for a couple of days.  Well miss the August 17 deadline. This is not going to mail until September. We need more time to talk editorially about currencies. I’ll follow up with you next week when I’m back in the office. Kind regards.”

This gives you more time to subscribe at the existing $149 price.  Simply go to http://www.garyascott.com/catalog/bldh


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