If history is any guide, recessions tend to last on average between 8 and 16 months. At least that has been the case since 1937. The last quarter our GDP shrunk, though many believe we entered a recession much earlier in the year. If for the sake of argument we were to assume that the U.S. economy entered recession at the end of June, that would make a recession based on historic precedent end somewhere between February and December of 2009. Historically, markets have recovered halfway through a recession; that would translate to a bottom somewhere between now and February. I have no knowledge as to when stocks will no longer be on sale, but this is the time to be bargain hunting, especially in the green space. These prices won’t last forever.
New York Times columnist Thomas Friedman, President (elect) Obama, and many politicians, thought leaders, and business people all seem to agree that the green economy will be the road to renewed prosperity. If that is the case, it certainly is not reflected in the stock prices. Solar stocks are off somewhere in the 60-90% range year-to-date, The WilderShares Clean Energy Index is down over 70%, and such is the picture for virtually the entire clean tech and alternative energy space. If ever the future was not priced into the current stock prices…!
If you want to invest in the sustainable economy, but are hesitant due to the stomach turning markets, stick with some of the larger, more liquid names; green companies that are industry leaders and have scale and cash. To give you an example, in the wind industry that would be Vestas, which makes almost a third of all turbines worldwide and has over $600 million in cash. This company will survive yet is 60% down year-to-date.
One of the reasons I am not subscribing to the gloom of today’s financial news, is the fact that my recent trips to the SRI in the Rockies conference in Whistler, the year’s largest conference on environmentally and socially responsible investing, and the Green Business Conference in San Francisco, followed by the Green Festival (50,000 attendees), all have reinforced my belief that the opportunities in the green space loom large and the people pursuing them are united in purpose and energy. No matter how dark the present or the past may seem, the future is oh so bright.
On December 9th, at 11:30 am, I am hosting a WebEx conference call on the State of the Markets and the Green Economy. This will be an opportunity to address investment concerns and explore opportunities. Please RSVP via email to jschalk@jpsglobalinvest.com, should you be interested and I will send you the dial-in information.
I invite you to contact us, should you want to discuss any of the topics in this newsletter or if you are interested in learning more about how you can participate in sustainable investing. I always look forward to speaking with you.
Jan Schalkwijk, CFA
JPS Global Investments
(619) 269-0329

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