How to Profit From Climate Change

Whether you believe global warming is an act of God or an act of humans as a proxy for God, the important thing is that we can profit from it. Here’s how:

The Arctic is Melting!

The Northwest Passage will become traversable for supertankers. Expect to see lower shipping and freight costs for metals producers and energy suppliers. Go long Miners (XME), Oil & Gas (FRAK, OGZPY, RNFTF), and Global Shipping (SEA).

Arctic countries will have longer agricultural seasons and melting glaciers make natural resources more accessible. Boom times ahead for Canada, Russia, Scandinavia, Iceland. Go long Scandinavia (EWD, NORW, EDEN, EFNL, GXF), Canada (EWC), Russia (RSX). Take positions in RUB, DKK, CAD futures.

Drought and Famine

Massive drought means more wildfires, and private firefighting is a growing industry employed by big insurance companies. Buy flame-retardant manufacturers such as Albemarle (ALB) and Chemtura (CHMT). Service providers like MSA Safety (MSA).

T. Boone Pickens beat you to the water game, but you can invest in investors of water rights through PICO Holdings (PICO). Or, track water indices such as the S&P Global Water Index (CGW), NASDAQ US Water Index (PHO), NASDAQ Global Water Index (PIO).

We’ll need drought-resistant crops, of course. Go long Monsanto (MON) and Syngenta (SYT). Agricultural commodities in general will likely become more precious, and investment is accessible through agriculture ETFs like DBA.

A Rising Tide Floods the Poor

South Asian countries will lose significant land mass as they fall into the ocean. Take short positions in Bangladesh, India (INDA), and Vietnam (VNM). I don’t really like shorting dividend-paying assets, so a better play may be to avoid moving there.

Island nations like Fiji and Maldives will disappear underwater, so visit them while they still exist. Now that’s priceless.

Green Initiatives and Stuff

If you enjoy railing against the inevitable and believe that government subsidies can form a sustainable business model, opportunities abound in carbon taxes, cap-and-trade schemes, electric cars, solar panels, and carbon-capture technology for power plants. Green tech is already overbought, but trend-chasers can show up fashionably late by investing in clean energy (PBW), solar (TAN), and nuclear power (NLR).

If, on the other hand, you think that climate change is a passing anomaly and we’ll revert to the mean in due time, do the opposite of all of the above.

See Also:

Disclosure: I am long SEA and MON.

May 23, 2014

Unable

Eleven years ago, I crash-landed a Cessna in Las Vegas after the control tower issued instructions for a high-speed landing that I didn’t have the experience to execute.

In the aftermath, I underwent an interrogation and checkride with an FAA Safety Inspector who decided not to revoke my license. I was a competent pilot, he decided, albeit a stupid one.

In parting, he suggested that I reinstate a standard ICAO phrase in my vocabulary: Unable.

Unable is the most underused word in aviation. It means the air traffic controller just told you to do something, and you can’t do it. No reason needed.

As humans, pilots are prideful beings. Many learned to fly in the service. The tower could ask for a double barrel roll on short final and the pilot response would undoubtedly be Wilco.

Remember when JFK Jr. crashed his plane off the coast of Martha’s Vineyard by flying into low-visibility conditions? Nah, ATC didn’t tell him to do that. He had two women in the plane with him. I imagine it must be difficult to say Unable to two women, one of whom is your wife.

Pilots have a hard enough time citing unable when facing down a life-or-death situation. It’s even harder on the surly bonds of earth, where death happens slowly. The employer who asks you to work weekends does not suffer the consequences of your failed marriage. The investor who sends you to Vegas isn’t the one gambling with the life of his company. Unable.

A control tower can’t see wake turbulence, icing conditions, or mechanical distress. According to NTSB investigators, no matter how ridiculous a tower directive, the cause of accident always ultimately comes down to pilot error — for being unwilling to say Unable.

No Air Traffic Controller has ever died from pilot error.

See Also:
Just Say “Unable” –AOPA

May 20, 2014June 30, 2018

Unionizing Against Uber

Uber drivers on strike in SF (March 2014)

Uber screenshot: Striking drivers in front of Uber HQ

When I became a UPS employee, I had to pay a $35 fee to join the Teamsters Union. I wasn’t employed long enough to even recuperate my union fee, but that is a story for another day.

At UPS, the drivers, loaders, and dockworkers all work for the labor union. Only the managers and supervisors actually work for UPS, Inc. The unions formed because laborers need to organize to wrest their fair share from greedy corporations. Those aren’t my words; that’s in the Teamsters’ Mission Statement.

Last week, I met a former UPS supervisor.

“Those Teamsters were the worst,” he said. “They knew which boxes had iPhones and shit from the packaging, and would hide them behind fake walls and steal them. I had to break up several theft rings.”

I guess this was part of the Union’s mission to wrest their fair share from greedy corporations.

This past weekend, with the help of Teamsters, Uber drivers banded together to form their own labor union.

Uber was supposed to be a neutral platform, a portal to a liberated marketplace unimpeded by the taxicab tyranny. Uber even calls its drivers “partners”. Partners with no equity.

Uber drivers work for themselves, but only in the sense that Uber does not provide a commercial insurance policy and drivers are legally culpable in the event of an accident.

Uber does help with things like financing luxury vehicles. A large proportion of Uber drivers are former taxi drivers with scant savings. They can’t afford the towncars needed to drive for UberBLACK.

At the SHARE conference, a Lyft representative described how Lyft was empowering underserved consumers by providing them with access to vehicle financing (but only for luxury SUVs). Clearly what underprivileged consumers need are Ford Explorers and Cadillac Escalades so they can get their kids to school like ballers.

To qualify for Uber’s financing program, the driver must have an active signed “Payment Deduction Authorization Agreement” and must make 90% of their monthly payment from Uber earnings. As a result, supposedly self-employed drivers lock themselves into 5 years of indentured servitude to the tune of $50k.

Meet the new boss. Same as the old boss.

In other news, Uber is now valued at $10 billion.

May 20, 2014August 26, 2017

Happy Anniversary, eToys!

15 years ago today, eToys IPO’d on Wall Street.

Look at the rubbish that kids had to play with in 1999. No wonder millennials lack creativity.

May 19, 2014February 6, 2016

How to Hire Insecure Overachievers

“Our ideal candidate is an insecure overachiever.”

That’s what the McKinsey partner told me during my interview. Yeah, once upon a time I wanted to work at McKinsey & Co. They didn’t make me an offer. I was certainly insecure enough, but maybe not overachieving enough.

Not a secret: The people who go to work in management consulting and banking are insecure overachievers.

Insecure overachievers make great employees because they work long hours to win approval from authority figures. However, they are a very tricky species. They love prestige. They don’t like risk. They need social acceptance. Banking and consulting are not considered socially admirable professions these days, but remember – insecure overachievers don’t care what the 99% think. They need social acceptance from the 1% who matter.

They love structure and a clear path for advancement, but want to keep their options open. That’s the most important thing to an insecure overachiever: lots of options. It can never appear as though they have reached their final destination, because that would imply that they have exposed their maximum potential. As long as they appear to be in transition, they can claim to be holding out for something better.

The “up or out” policy instituted in law, consulting, and banking is perfect for insecure overachievers. Maybe McKinsey is just a springboard to an executive position at a Fortune 500 company, and Goldman is just a stop before partnership at a $50B hedge fund.

As Wall Street bankers migrate to Silicon Valley, they bring their hiring practices with them. Insecure overachievers could never admit that their final station in life is a shared desk at Facebook. That’s why Google recruiters often tout this selling point: The best part about working at Google is the job you can get after you leave Google.

Because insecure overachievers need Google on their resumes before they are ready to start the next billion-dollar company.

Google gives new hires teddy bears and security blankets.

Elaine's Idle Mind

and Devil's Workshop

How to Profit From Climate Change

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Unable

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Happy Anniversary, eToys!

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How to Hire Insecure Overachievers

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