A reader sent this note in response to our recent article about green and renewable investing and the Bullitt Center.
Like Solyndra and other projects, if it is not economically profitable it will be a failure. The biggest expense for any building is property taxes, the utilities are incidental. At $600 a square foot for construction, the rents will not attract any renters. Without parking it will be totally unattractive, except for some Green non-profit. With taxes, space will rent for well over $50 per square foot at a 6% CAP rate. Green is the fool’s gold of the environmentalist.
There is no doubt that the reader has a point. The Bullitt Center may not make a profit. The Bullitt Center may be just about R&D. This is why it is funded by an NGO. But we still have to keep trying to tackle problems like the environment. We still have to use our capital to evolve and to follow what is dear to our hearts.
Here are important reasons to Merri and me why we invest in green.
Our grandchildren, Teeka and Sequoia.
Leo, Fran, mom and me… four generations.
Garren, Cheri, mom and me.
Mom is 90 in June and her generation sacrificed plenty for us boomers. So if I were to lose on an investment that experiments on ways to make our grandchildren’s world a better place… good for me.
However there are plenty of ways to help the environment AND make the world a better place.
First, renewable energy can be profitable. Take Brookfield Renewable Power shares as an example. I first wrote about and invested in these shares August 2010.
Brookfield Renewable Power share chart from www.finance.yahoo.com. (Click on chart to enlarge.)
That’s not a bad return in my opinion.
Since that time the share price has almost doubled and the shares have paid a regular excellent dividend averaging over 5%.
The trend continues as well. A recent Forbes article entitled “Brookfield Renewable Energy Partners Named Top 25 Dividend Stock With 4.58%”
Brookfield Renewable Energy Partners LP (Toronto: BEP-UN) has been named as a Top 25 dividend stock, according to the most recent Canada Stock Channel ”DividendRank” report. The report noted that among the coverage universe, BEP.UN shares displayed both attractive valuation metrics and strong profitability metrics. The report also cited the strong quarterly dividend history at Brookfield Renewable Energy Partners LP, and favorable long-term multi-year growth rates in key fundamental data points.
The report stated, ”Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. That’s what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most ‘interesting’ stocks, meant for investors as a source of ideas that merit further research.”
The annualized dividend paid by Brookfield Renewable Energy Partners LP is $1.38/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 12/27/2012.
See a long-term dividend history chart for BEP.UN, in the article linked below.
I’ll be the first to add that hydro power is not a perfect answer to improving the environment… so one may want to look for other ways.
The green portfolio leveraged with a Japanese yen loan we recommended. In 2007 it rose 260% in a year.
Here is that green portfolio which was a blend of venture and established green shares.
Taking some green risk can improve your overall investment returns with green investing and modern portfolio theory.
The idea of blending green and non green and established green (like Brookfield) with venture green fits nicely into Modern portfolio theory.
Modern portfolio theory balances a portfolio between risk and non risk investments to maximize portfolio expected return and minimize risk.
Here is a traditional MPT stock bond chart showing that the best risk reward ratio for a portfolio is 60% shares and 40% bonds.
Two decades ago when emerging markets were considered, the non traditional high risk portfolio… Modern portfolio theory showed that a 70% major markets and 30% emerging markets balance created the best return with the lowest volatility at that time.
You can combine modern portfolio theory and venture capital management to make renewable energy and green energy improve your profits as you use your investments to do something that you feel is important.
Risk Vs. Reward
The key to successful green investing is to approach this as a venture capitalist and to adhere strictly to value investing concepts. In the case of green ventures the value is determined by risk versus reward.
You might be investing in an untested venture. the reason for doing so is that it will turn into the next big thing.
With mature businesses value is much easier to determine based on dividend, yield, sales, price earnings ratio, cash flow and the history of the share price in its sector and its market.
One of these is available for ventures. Here are some of the factors to look for in new ideas.
Management. First and foremost a venture investment is an investment in the management of the company.
Market. How big is the potential? We can see the downside (zero) and the consequences of it. How big can the idea grow?
Competitive Edge. What does the idea have that cannot be duplicated quickly once it proves itself?
Regulation. Look at the potential regulatory and legal issues are involved.
An important reason to invest in green is because this is fulfilling to you.
When you make a profit investing in your life’s mission, you gain the best possible profit. However recognize that most ventures fail. Venture capitalists invest with the idea that a little returns a lot… so they invest a little in a lot of ventures. The few ventures that bring huge profits make up for the many that lose. Add these ideas to the power of environmental concerns and your portfolio can make the world a better place and create profits that turn others green with envy.
Missions Create Real Value InvestmentsMissions help define value and bring profits that go far beyond the bucks.
Some have used their mission to alter the world.
Jeff Bezos’ belief in missions caused Amazon.com shares to rise like this.
(Click on photo to enlarge)
There is more to this than money though knowing how to use missions to spot value can enhance financial stability and wealth.
In 1994 Jeff Bezos made a cross-country drive from New York to Seattle, creating the Amazon business plan on the way. He left a good paying job and started Amazon.com in his garage.
He had three simple ideas in mind. Beat the tax man… use quirks of the internet and fulfill a mission.
Defying Gravity in Wealth
Having a mission is the most powerful of these ideas… especially in our existing era of rapid change. What is reasonable today… may not be reasonable soon. Take Bezos’s play on tax benefits. Tax advantages can evaporate on the whim of Congress. How about change on the internet? There is no place where change happens faster.
Right now four companies that may not have seemed reasonable just a decade or so dominate the internet… Apple, Facebook, Amazon and Google.
Amazon.com is not even 20 years old. Bezos started Amazon in 1994 in his garage. Then he went billions in the hole.
Today, Bezos is listed as one of the wealthiest people in the world with an estimated net worth of US 22.1 billion. He is ranked by Harvard Business Review as the the best living CEO.
According to Forbes, Amazon’s shares have “defied gravity”, jumping 55% and adding $6.5 billion to Bezos’ net worth.
Yet Amazon could be gone in a flash. The four internet giants: Amazon, Facebook, Apple and Google are competing fiercely. The chart below from a Financial Times article “Battle of the Giants is about this four way competition and shows that Amazon…on paper… is the poorest of them all.
Graph from Financial Times article on the “Battle of these Giants” (see link below).
Amazon has the least cash and lowest profit but I am betting on Amazon because of its mission. More likely in another decade all four internet giants could be gone… or they’ll be also rans beat out by new disruptive technology we cannot even imagine right now.
If Bezos… and Apple and all these giants with their enormous resources are at risk to change… how can we as small investors and micro businesses invest and survive in such a rapidly changing world?
The answer is provided by Bezos.
Bezos built his fortune based around two ahas and one concept… about missions and missionaries.
Bezos’ first aha was to invest in areas of rapid growth. He had learned about the rapid growth of Internet use. The second aha was that rapid Internet growth coincided with a U.S. Supreme Court ruling that online retailers did not have to collect sales taxes in states where they lacked physical presence.
His third and most important belief went beyond taking advantage of short term change. He saw that long term success in investing and business relies on more than business acumen.
The key to lasting success is a mission.
Bezos said: I strongly believe that missionaries make better products. They care more. For a missionary, it’s not just about the business. There has to be a business, and the business has to make sense, but that’s not why you do it. You do it because you have something meaningful that motivates you.
He summed up the key to prosperity and survival in business and investing. Care… invest in… and work at… something that is meaningful to you.
This is why I have updated my report… “Embracing Change – How to Invest in Changing Times”. This report defines a formula for investing during rapid change. You can learn how to spot trends that emerge from change. See how to unveil good value and find investment and business opportunities that can help you earn and fulfill your positive mission.
Money is no longer enough!
“Embracing Change” is about how to profitably embrace change and find a personal and meaningful business investing path.
The report provides a simple, common sense plan to understand the global economy so you spot trends of interest to you for investing and business for profit.
Here is what you learn from “Embracing Change – How to Invest in Changing Times”.
* Currency problems create wealth: The Multi Currrency Sandwich.
The report starts with a look at currencies and how their purchasing parity threatens all wealth. See why some currencies are not at equal risk. Gain ways to find extra value created by a strong (but fundamentally weak) currency with a low interest rate that is tensed with a weak (but fundamentally strong) currency that pays a higher rate of return.
The report begins by reviewing our January 2013 recommendation to borrow Japanese yen at 82 yen per dollar and invest the loan in US dollars and euro. Within three months the yen had fallen to 96 yen per dollar and this multicurrency sandwich had created 21.5% profit in three months.
* Stock, economic and productivity cycles anticipate bull and bear trends in market and the global economy.
“Embracing Change” tracks the Dow back over 100 years to reveal a consistent pattern of bull and bear markets that each last about 17 years. The Dow has been in a sideways bear market since 2000. Comparing the Dow from 2000 to 2013 to the Dow from 1966 to 1982 (the previous bear cycle) shows why we could see another sharp retraction in the Dow now despite having reached recent all time highs.
In 1974 (eight years after the bear began) the Dow collapsed nearly 50% before the great run up that began in the 1980s. In 2008 (eight years after the next bear market began), the Dow collapsed nearly 50%.
The stock market had stormed upwards but a comparison of the Dow Jones from 1960 to 1974 and from 2000 to March 2013 was troubling.
1960 to 1974 Dow Chart from www.stockcharts.com
Notice four peaks representing over bought markets during a 17 year sideways bear market that ran from 1966 to 1982.
2000 to 2013 Dow chart from www.stockcharts.com
Learn what to do if the Dow is ready for one more sideways bear crash in this down cycle.
* How to anticipate new waves of technology.
Spotting innovations is as important as the 17 year cycles.
See a review of some of the top innovations that have entered the market in the past decade. One innovation reviewed in the report is fermionic condensate invented by Deborah S. Jin. This is a superfluid phase formed by fermionic particles at low temperatures.
Fermionic condensate is special because it is a new form of matter, the sixth known after solids, liquids, gases, plasma and a Bose-Einstein condensate.
The way the atoms act suggest there should be a way to turn this matter into a room-temperature solid that is an everyday, usable superconductor. This would allow electricity to be transmitted with no loss and no heat.
Superconductor technology is being fed into the development of magnetically levitated trains. Free of friction these vehicles glide along at high speeds using a fraction of the energy of conventional trains.
Another new technology takes living cells, loads them into a printer, and squirts out a 3D tissue that could develop into a kidney or a heart. This is the first printer for embryonic human stem cells.
A research group at Heriot-Watt University in Edinburgh, Scotland, has created a cell printer that spits out living embryonic stem cells.
The new printing method could be used to make 3D human tissues for testing new drugs, growing organs, or ultimately printing cells directly inside the body for use in regenerative medicine — repairing, replacing and regenerating damaged cells, tissues or organs.
Then the report deals with another major innovation factor which is… “How do we sort out the winning innovations from the bad?”
There are new innovations announced almost daily… some created by huge companies. Take MSN Direct as an example. This technology piggybacked on FM radio signals. Microsoft said this was the next big delivery system for delivering data to portable devices and Bill Gates seemed particularly fond of watches that received the signals. Alas, cell,phones and their networks offered stronger signals, wider coverage, and more flexibility. The MSN Direct data folded years ago.
Another example is TheGlobe.com. This was social networking before Facebook, Twitter, or LinkedIn. TheGlobe started in 1995. Three years later the IPO stock was offered at $9 a share and skyrocketed to $65, the largest first day gain of any IPO in history up to that date. Then online advertising went bust, the stock price plummeted and the TheGlobe.com was laid to rest in 2008.
How to Make a Small Fortune
Even spotting winning innovations does not always convert into profit. The way to make a small fortune is to start with a large fortune and turn every $38 into $26.
That is what happened with the winning innovation… Facebook. Though the innovation has worked well… many investors were wiped out when the stock’s $38 IPO price lost over a quarter of its value in less than a month and went on to lose over half its IPO value in three months. All this time later, the shares are $26 per share well below the IPO launch.
* The report looks at YOU as a guide to trends and the world.
Warren Buffet showed how selecting good shares is a unique personal art that begins with what you like and know. The ups and downs of markets have almost nothing to do with your investing success at all.
Warren Buffet, one of the world’s great investors, confirmed that understanding your mission is a key component of success when he shared tips that are the foundation of how he invests. Here are the core points he shared:
- Do what you like
- Money isn’t everything
- Work only with people you like
- Invest only in what you understand
- Don’t over diversify
- Keep looking for new opportunities
- Look for businesses that are available at a good price
“Embracing Change” looks at how to put invaluable information to work using a PIEC wealth system. PIEC is an acronym for “Personal Income Earning Corridor”. This concept of financial prudence differs greatly from traditional approaches of accumulating wealth.
Traditionally people invest to create income and profit. They invest and work to live and support their lifestyle and aim towards a future of doing something enjoyable without work.
PIEC investors reverse the priorities. Instead of investing for profit, PIEC investors learn how to enjoy investing in a profitable way.
For example, if a PIEC investor loves golf, they’ll focus and invest in some aspect of the golfing trade.
“Embracing Change” shares how PIEC uses the evolutionary cycle of business, the diffusion curve and the golden rule of simplicity.
How do we get to the core of true success? “Embracing Change” shows one example that was the core of Apple’s success… relaxed concentration.
Relaxed concentration helps you spot better trends that are interesting to YOU. In times of rapid change, it is important to think beyond logic. We need Super Thinking.
Super Thinking had a lot to do with Apple and why it has more revenue, more cash and more profit than Amazon, Google and Facebook combined.
Steve Jobs used Super Thinking.
I first started began my exploration of Super Thinking after hearing a quote from Aristotle Onassis. He said that you do not need an astrologer to be a millionaire but to be a billionaire you do. Astrology is a way of thinking beyond logic.
Later, I was a speaker at a Cayman Island investing seminar along with John Templeton. He explained that he did everything to stay on top of trends but then also reviewed everything with a black box…. a form of thinking beyond logic.
Even later while conducting a book signing for my novel “The 65th Octave” I gave a talk about Super Thinking because this is the core of that book. One attendee, began crying. She explained that she had been Warren Buffet’s personal assistant and that she was so sorry because Buffet and Charlie Munger used these principles and encouraged her to use them, but she had ignored them.
My report “Embracing Change” shares the results of my quest to gain greater intelligence by thinking outside the box.
With his passing, it became recognized that Steve Jobs was a mystic with mental access to Super Thinking wisdom.
Jobs’ biographer, Walter Isaacson, confirmed that Jobs had a lifelong passion following basic precepts of Eastern thought, such as the emphasis on experiential prana, wisdom or cognitive understanding that is intuitively experienced through concentration of the mind.
Jobs loved “Autobiography of a Yogi” a book that helps us understand how and why we are more than our physical bodies.
Isaacson writes that on Jobs’ last holiday… just before his transition… that this was the only book he read.
Jobs was integrating brain waves and we show why and how in “Embracing Change – How to Invest in Changing Times”.
Rapid change makes it impossible to logically understand what is going to happen. In this report you learn how to escape the tyranny of reason. If you have 4.5 inches of information flowing through a 4 inch learning pipe, the solution is not to add another inch of information. The answer is to first create a six inch pipe and then an even larger pipe…a never ending expansion of abilities! This is super thinking!
* Getting safety and comfort from diversification and the six point command posture.
Finally after we think we are doing everything correctly, we diversify to protect against what we miss. “Running Risk” contains case studies of where I have diversified and shows:
Where why, when and how to buy gold and precious metals.
Where in the USA you can buy overseas shares.
* How to use ETFs for multi currency safety.
* When and why collectibles make more sense now then before as a diversification.
* The report reviews recent recommendations and our current portfolio of shares.
* The report reviews the shares of ADK Ammunition… shares where conspiracy and opportunity collided.
Look at these investment possibilities:
* Aegion & Hyflux investments in water
Our site featured Aegion on December 6, 2012 and the share immediately rose over 10% in three months.
* Jyske, Skybest & Axel Springer, two plays on a falling euro.
* Unicredit & Jyske shares in the shunned European finance.
* Brookfield Renewable Energy Partners… an ultimate inflation protector.
We first wrote about Brookfield Renewable Energy Partners LP in 2010. The shares have risen over 70% and in January 2013 the company was named as a top 25 dividend stock, according the most recent Canada Stock Channel ”DividendRank” report. The report noted that among the coverage universe, BEP.UN shares displayed both attractive valuation metrics and strong profitability metrics. The report also cited the strong quarterly dividend history at Brookfield Renewable Energy Partners LP, and favorable long-term multi-year growth rates in key fundamental data points.
* Singapore Real Estate Trusts… shares that are not a gamble on gambling but rose because of gambling.
* Why investments in smalltown USA have become big.
* How to move up as the global economy trades down.
This report is not a recommendation of these shares but offers case studies on WHY they were selected at the time we wrote and or invested in them. “Embracing Change” shares ideas on how to be fulfilled in the search for value… and your mission through investing that can make the world a better place.
“Embracing Change” also reviews… the safest places to bank, multi dimensional investments that earn in two ways or more… the profit in natural health, sustainability and agriculture.
“Running Risk – How to Invest in Risky Times” was just brought up to date last week and renamed “Embracing Change’. This report can assist you in gaining fulfillment and profit. However to make sure that this is a satisfying process for you, as with all our products we always offer complete satisfaction of your money back.
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Order “Embracing – How to Invest in Changing Times”. Learn how to create and fulfill your mission through investing. I’ll email this report to you immediately.
Read the report and if not satisfied, let me know within 30 days and we’ll send a full refund… no questions asked.