The Rude Awakening
Edinburgh, Scotland
Wednesday, May 16, 2007
------------------------- - Global warming…yes, it's that time again,
- How you can best invest when water flows uphill,
- A couple of new ETFs to keep an eye on, ten boring stocks and a whole lot more…
------------------------- Joel Bowman, reporting from Edinburgh, Scotland… I heard a fascinating comment the other day. While relaying details of her recent trip back home to the U.S. to her friends, a young student made the following observation: "There was hardly any snow on the ground. You can totally see the effects of global warming." An innocent enough comment, to be sure. The fascinating thing was, at least to me, that this young student couldn't have been more than twenty-one or twenty-two years of age. How on earth, I thought to myself, could she possibly notice the effects of global warming? Her recent trip was warmer than what? The two or three other trips she has made home since leaving to study abroad? It would seem she has come up a few millennia shy of garnering a scientific database with enough depth to conduct any real climatic comparisons. The scary thing is, this kind of subjective science exists not only in the domain of the student world. Just have a listen the next time you are in the line at your supermarket. If there were ever a subject that your everyman could profess unrivaled expertise on, it would have to be the weather. "No rain on Tuesday…must be that global warming," they will say. "Boy, sure is hot out today," will invariably be followed by, "Haven't you heard? It's global warming…it's accelerated just this week." From my perch here in Edinburgh, I observe that it is raining outside. It was raining yesterday and, most likely, it will rain tomorrow. Is this precipitation more or less that the average rainfall since the beginning of time? At a glance, I cannot tell. Then again, I am only twenty-six. Most scientists seem to agree that the earth is going through a warming phase. The key arguments, it seems, are over both the cause of this warming and whether humans are in a position to influence it one way or another. These two points of contention are largely dependent on one and other. For example: if, as some people vehemently declare, it is carbon emissions that are to blame for our warming, we may find ourselves in a position to greatly affect our own output. Most purveyors of the carbon-cause hypothesis forget to include the fact that humans account for only about 3.0-3.5% of all carbon emissions, depending on where you get your figures. That's not to say that we shouldn't work to reduce pollution levels either. (Just because your doctor tells you that your liver is in great shape does not mean he is giving you carte blanche to imbibe a bottle of vodka every night.) It does mean that we should approach the problem of pollution with a clear definition of our goal…to reduce pollution, not to cool the earth back down. On the other hand, if global warming were caused, as some assert, by minute fluctuations in the irradiance of the sun, it would appear we just have to accept that there are some things in the universe we cannot change. There are plenty of other theories, too. Some say climate change is cyclical. Others are convinced that the whole notion of global warming is a farce designed to frighten taxpayers into dolling out more money for carbon taxes and carbon credits. Then there are the apocalyptic types, those who assure us that mankind is on an uninterrupted downward trajectory ending nowhere but the fiery pits of damnation anyway, so why even bother? From this rainy post on Scotland, I'm no closer to the answers than anyone else. All I know is that it is likely to rain here tomorrow and that Chris Mayer has today's column for you below. Enjoy… ---------------------------- Putting the "Green" in Greenland
By Chris Mayer "I'm going to talk about global warming in a way you've never head of before - I'm going to talk about evidence." So began Dennis Avery at a recent investment conference. Avery is co-author, along with Fred Singer, of a fascinating new book titled Unstoppable Global Warming: Every 1,500 Years. The authors debunk the idea that the Earth is warming primarily because of manmade carbon dioxide emissions - which the authors say represent only 3.5% of all carbon dioxide released into the air. Instead, they present compelling evidence, based on the work of thousands of qualified research scientists, of a long-term cycle of global climate change. They write: "The public has remained virtually unaware that the 1,500-year cycle offers the only explanation for the modern warming that is supported by physical evidence." Consider the Vikings' dramatic experience with this cycle… Near the end of the 10th century, the Vikings sailed west from Iceland in their now-iconic longships. They soon bumped into a huge new uninhabited island. Its cool waters held plentiful codfish and seals. Green grass covered its shores. The Vikings named it Greenland. The Vikings soon settled there. They raised sheep and cattle. Grew vegetables. Traded sealskins and rope made from walrus hide to get timber and other things they needed. The colony thrived. By 1100, more than 3,000 people called Greenland home. They had 12 churches. Even had their own bishop. The Vikings, though they could not have known it, were beneficiaries of the Medieval Warming. For 400 years, the temperatures in Northern Europe were 2 degrees warmer than before. Unfortunately for the Vikings, the Little Ice Age soon followed this period of warming - and lasted for 500 years. As the Little Ice Age unfolded, ice formed a crust around Greenland's shores. Supply ships soon struggled to make their way to Greenland's coast. Winters grew longer. Summers grew shorter. Storms became more violent. The Vikings could no longer farm as they once did. In desperation, they ate their last milk cows. Inuit people came across the ice from the north. Struggles ensued over a smaller number of seals. In 1410, the last supply ship broke through the ice. Soon thereafter, the settlers perished. Denmark recolonized Greenland in 1721 - more than 300 years later - after the Little Ice Age loosened its grip on the island. The Viking experience shows how the temperature of the planet ebbed and flowed over the course of hundreds of years. In addition to the Vikings, we have evidence from other early civilizations. The Romans recorded a warming period between 200 B.C. and A.D. 600. They grew grapes in Great Britain and Northern Europe. Evidence mounts from many sources. Ice cores give us climate histories going back 900,000 years. Seabed sediments, stalagmites, tree rings, fossilized pollen - all point to a roughly 1,500-year cycle of warming and cooling stretching back nearly a million years. "The Earth continually warms and cools," the authors note. "The cycle is undeniable, ancient, often abrupt and global.It is unstoppable." What causes it? Small changes in the irradiance of the sun. Boiled down to its barest essentials, a weaker sun creates a cooler Earth. A more active and stronger sun warms the planet. In short, solar variations drive the Earth's surface temperatures. Scientists found a 95% correlation between sunspot numbers and global temperatures. That means that the two move in tandem nearly all of the time. This is a far better predictor than carbon dioxide emissions, which do not explain long periods in which carbon dioxide levels rose while the planet cooled, nor do they explain long stretches when the planet warmed as carbon dioxide levels fell. There are many more flaws in the popular greenhouse theory, detailed in the book. But the bottom line is that the theory does a poor job of explaining the temperature variations of the Earth's history. In any event, the Earth has been warming slowly since about 1850. It will have an impact on human civilization. That impact is not as frightening as global warming advocates such as Al Gore want you to believe. In fact, human history tells us that the warming periods were prosperous times.Warmer climates in Canada and Russia will aid food production. The higher levels of carbon dioxide will stimulate plant growth and increase crop and forest yields. Longer growing seasons, fewer frosts, more rainfall - all of this will be good for agriculture. There will be fewer storms in warm weather. A warmer planet means the temperature gap between the poles and the equator is smaller - lending less power to winds, waves and currents. The fiercest storms occurred during periods of cooling, when those temperature gaps were large. During the Little Ice Age, from 1701-1850, the Caribbean experienced three times as many hurricanes as from 1950 to today. This evidence comes from numerous sources, including the meticulous records of the British navy - because of Britain's large sugar plantations in the region, its navy was also active in the area. Colder climates actually kill far more people than warmer climes, the authors show. Yet, not all the effects of warming are good. For example, Avery said that as the tropical rain belts moved north, Canada and Siberia would get wetter, while the Southern U.S. would get drier. Some places would experience more flooding, others more drought. One final thought: The authors point out the real fear should be the next ice age, which is inevitable. Then, places including Ohio and Indiana (forget Canada) would be covered with ice sheets a mile thick. California and the Great Plains would suffer century-long droughts. The good news? As Avery and Singer note, "It may still be thousands of years away…" So what investment insight that we can infer from Avery and Singer? Just this: Almost everyone agrees that the Earth is warming a bit and that global weather patterns are becoming more volatile. The debate rages only over the "Why?" So if the Earth is actually warming and droughts are becoming more common, certain resources, like water, should become more precious throughout the world. But that's just one possible idea. If you've got any others, please share them with your fellow Rude readers by emailing your thoughts to aussiejoel@the-rude-awakening.com. --- Chris Mayer's Capital & Crisis Report --- Ride "Ho-Hum" to HOME RUN as you discover… The 10 Most Boring Stocks That Could Ever Triple Your Money …or MORE Spank the S&P by up to 2,800% with CAVEAT Investing: the key to finding mega-profitable market "sleepers" that can help YOU build a fortune…in months, instead of decades! For the full report, read on here: Chris Mayer's Capital & Crisis Report --------------------------------------------- Did You Notice? - Waterworld
By Eric J. Fry Whether one believes in global warming or global cooling or global nothing, the businesses that focus on energy diversification or global resource management should become increasingly prosperous. Innovative capitalists, for example, will seek ways to power the world's electricity infrastructure with energy sources other than fossil fuels. Other innovative capitalists will seek ways to purify and transport the world's strained water supplies. Already, many businesses that reside within the broad category of "sustainable resources" have been delivering sustained profits for investors. "Cleantech" stocks of various stripes have been rallying for months. Recognizing this trend, Van Eck Associates and Claymore Securities have launched a couple of brand new ETFs. (We are not recommending these securities, merely mentioning them for the benefit of those readers who wish to know about "cleantech" investment vehicles). The Van Eck product, dubbed the "Market Vectors Global Alternative Energy ETF" (NYSE: GEX) invests in a basket of alternative energy stocks worldwide. Unlike previous ETF offerings in this sector, GEX emphasizes foreign stocks. Its nine largest positions are foreign companies, representing more than half the portfolio. 
Likewise, the new ETF from Claymore Securities also emphasizes foreign stocks. This ETF, called the "Claymore S&P Global Water ETF" (AMEX: CGW) holds a larger percentage of foreign water companies than ETFs like the "Powershares Global Water Portfolio (AMEX:PHO)." But as the nearby chart illustrates, water stocks of all types have been flowing uphill for a good, long while. Water investors, therefore, would do well to remember that water stocks can also flow downhill…at least for a while. Joel's Note: You may remember a while back Eric and Chris coauthored a report on the best ways you can invest in the global water trend. The companies in the report have all tended heavily to the upside, but that doesn't mean the action is over…far from it actually. The report, titled Blue Gold, has been updated with an eye to future investing in the water sector. To learn more about this exciting opportunity you can find the new and updated report right here: Blue Gold: Investing in the Global Water Trend | 
