Posts Tagged ‘cars’

While writing this blog, a barrel of crude oil is currently trading at an all time high: $140.39.  This is bad news for socially responsible funds.  Socially responsible investment (SRI) strategies typically avoid industries that add to Earth’s environmental woes.  The energy industry’s connection to issues like global warming has kept it on the “sin list” since the mid 1980s.  This conviction was easier to stand behind when crude oil was floating around $50. 

I’m not saying alpha and altruism can’t be friends, but it’s going to take an extra amount of creativity to hedge against black gold.  As the energy sector soars, there are a number of green industries that will indirectly benefit.  The first green industry that comes-to-mind is the struggling automotive industry.  With car sales down, automakers are finally willing to invest in alternative technologies to woo consumers.  These investments are being thrown at battery, energy reclamation, and hydrogen technologies.  While things like hydrogen cells and cold fusion may be decades away from the market place, enhanced batteries could make affordable improvements to our MPG within a year. 

Investors blessed with cash and conscience should look into firms that rank well in the 2007 Environmental Performance Automaker Rankings Report.  Honda, at the top of the list, offers investors with a wonderful long-term opportunity.  Their market share continues to rise in both the undeveloped and developed markets. While Honda is pioneering practical alternatives to wean cars off of petroleum, they continue to improve the little things that make an ordinary car greener.  Through improved transmissions, engines, and aerodynamics, Honda is demonstrating a technical and mechanical prowess that surpasses the competition.

Hedging against the energy sector may require looking at societal habits rather than a specific industry.  What I mean by this is that different cultures will be affected and respond differently to changes in energy costs.  For example, North American industry consumes 3 times as much petroleum per capita than Europe.  Any guess on who’s economy will weather-the-storm better?  In general, a portfolio with euro stocks should perform better than their North American counterparts.     

Copyright © 2008 David van der Roest



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