EPTIs there any credence to the idea that we're in multi-decade "carbon bubble"? Where economic growth has been inflated by ecologically unsustainable energy sources and other practices, and that once more sustainable / eco-friendly business practices are implemented over the next few decades (hopefully sooner tho), we would see a structural contraction? Or should new technologies be able to step in and replace the economic growth?
Trading/Investing Thread - Page 28
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Bagration
United States18282 Posts
Is there any credence to the idea that we're in multi-decade "carbon bubble"? Where economic growth has been inflated by ecologically unsustainable energy sources and other practices, and that once more sustainable / eco-friendly business practices are implemented over the next few decades (hopefully sooner tho), we would see a structural contraction? Or should new technologies be able to step in and replace the economic growth? | ||
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No0n
United States355 Posts
On April 18 2020 05:58 Bagration wrote: Appreciate everyone's input on this - thanks. Another question - I'm assuming that everyone here is relatively young (40 years or younger) so our investments are going to have to last us several more decades (hopefully many, many more decades). Is there any credence to the idea that we're in multi-decade "carbon bubble"? Where economic growth has been inflated by ecologically unsustainable energy sources and other practices, and that once more sustainable / eco-friendly business practices are implemented over the next few decades (hopefully sooner tho), we would see a structural contraction? Or should new technologies be able to step in and replace the economic growth? No, not really carbon bubble. Carbon energy may be replaced by renewables in the future, but it's not a bubble. Similar to horse market in late 1800s. Everyone uses horses to get around, and breeding horses + horseshoes etc was a market. Car comes, destroys horse market, but did we see structural contraction because horses no longer relevant market? No, we see more growth than ever before. This is more likely scenario with renewables replacing oil. New market replaces old, chances for new growth as oil is phased out. Oil still used by poorer countries as stepping stone to modernize to become developed economy, just like coal -> cleaner forms of energy right now. On April 18 2020 05:21 Malinor wrote: I have a question, maybe you guys can help me out. I am only invested in ETFs and single stock right now. Investing in oil looks interesting right now, basically buy at the current oil price and sell... at a future oil price. But how do you even do that? Is there maybe an ETF that does that or what do I have to do. Some help would be much appreciated. The easiest way to directly trade oil would be through futures contracts. The ETF, as KwarK said, is USO (WTI), or BNO (BRENT). Would be careful though, hard to speculate on price of oil in the future. Just because something's cheap doesn't mean it should be bought. | ||
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FiWiFaKi
Canada9859 Posts
I haven't bothered to differentiate between dividend and capital gain type stocks, but it seems pretty good for someone without too much capital. For income from 50-100k, the tax rate is 7.5%~ lower than capital gains. As you have a lot of capital it gets worse and worse of course, above $200k you should probably just avoid dividend stocks all together because your return will just be lower than so many other people that invest in it. Anyway, for Canadians it seems like a pretty decent choice, over 5% dividends, and today was at 28% down from its rather stable peak. I think my play here is sell at 83.65 (bought at 56) or after 2 years, whichever comes first. Been really tempted to pull the trigger on selling my S&P500 position, it just feels so overvalued, but I think I'm trying to get too greedy trying to maximize gains in an uncertain time. I think the smart thing would be to just hold the position while the market recovers over the next 1-3 years. At first you say you'll be happy with a 10% yearly return, then you push 15%, and there's always that urge to squeeze out a little more. Funny though about the person asking about stocks a little bit ago, and mentioning the only advice they would give their friend is wait a couple weeks for things to stabilize S: | ||
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FiWiFaKi
Canada9859 Posts
On April 18 2020 05:58 Bagration wrote: Appreciate everyone's input on this - thanks. Another question - I'm assuming that everyone here is relatively young (40 years or younger) so our investments are going to have to last us several more decades (hopefully many, many more decades). Is there any credence to the idea that we're in multi-decade "carbon bubble"? Where economic growth has been inflated by ecologically unsustainable energy sources and other practices, and that once more sustainable / eco-friendly business practices are implemented over the next few decades (hopefully sooner tho), we would see a structural contraction? Or should new technologies be able to step in and replace the economic growth? I don't think it's a huge issue. When you look at the top stocks in the US, so much is financial, medical, technology (which years ago maybe meant industrial type stuff which pollutes, but now it's Facebook, google, Microsoft, Amazon... Companies that aren't so bad for the environment), services. I don't see a correction happening for that in the next 20 years. If carbon tax increased 5x, I don't think the indeces would drop by more than 5-10%. Beginning of a little rant: It's too easy to start reading doomsday articles and it can seem logical, you can find indicators for anything. My father was telling me about the impending crash since 2013... Reading financial news is just so shitty because there's always money involved and everyone has an agenda. I have an economics degree that I did concurrently with engineering, my ex was an accountant with tons of contacts in finance... And what I've learned when surrounded by them and understanding their thinking, there's no such things as experts in these fields, and their motivations were usually much more shallow than those in science. Imo, to give yourself an advantage in investing, go to your local university website, and find the course list for economics degree. Make the drive to the university bookstore and see what textbooks are needed for the courses, download them online, and just read them an hour before bed every day. Everything about economic theory is good, everything about markets is good, public policy/public finance, wage theory, international trade. The next one that is important is accounting. The first 3-4 accounting courses offered are important to understand, tax considerations impact how companies behave, and just knowing the language when doing your own research help. After that, the first 3 finance courses, again, just to give you a good base to grow your knowledge from... If you start from a base of reading reddit your knowledge will be very disorganized, structuring knowledge well is probably the biggest advantage of our education system. And try to have a job that gives you a lot of life wisdom. I'm a project manager, and I think that's a pretty good option. Someone like a programmer will struggle because they spend too much of their time in abstract space, not in contact with people. But when you can put yourself in a position of being the bridge between scientists, office people, clients, trades, get some government officials in there too, you get a wide exposure to thinking from many types of people. Any kind of supervisory operations position is amazing for this. I'm still young and know I don't know a lot, but I think if you have a good head on your shoulders, and have that base education, the rest of the knowledge comes easier through experience than formal education (the ability to put yourself in others shoes, and understand their thinking is invaluable), but I don't think that's something a book can teach you, just have to put yourself in that position. | ||
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Malinor
Germany4733 Posts
On April 18 2020 05:32 KwarK wrote: USO is an example of an ETF you’re talking about. But get rich quick tricks don’t exist, it’s priced around future demand picking up. Also rolling futures will slowly erode your capital due to oil in the future being more expensive to buy than oil today due to storage costs. Let’s say oil is bought and sold for $20 today. If I try to buy some and have it delivered in a month I may need to pay $21 because I’m effectively paying for someone else to buy oil at $20 plus store it for me. If oil goes up to $25 in a month then my contract to buy it at $21 has yielded a $4 profit. But if it remains at $20 then I’m going to lose money. Oil in the future is more expensive and gets closer to the current price as the future date approaches. You’ll need to get lucky for your plan to work. Just being willing to wait isn’t enough. Thank you. I will look into it, but I am really not into Futures, or in general anything fancy. So I will probably stay away from it. I can hold on to my cash a while longer and see what the market does. | ||
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IgnE
United States7681 Posts
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pmh
1399 Posts
On April 18 2020 05:58 Bagration wrote: Appreciate everyone's input on this - thanks. Another question - I'm assuming that everyone here is relatively young (40 years or younger) so our investments are going to have to last us several more decades (hopefully many, many more decades). Is there any credence to the idea that we're in multi-decade "carbon bubble"? Where economic growth has been inflated by ecologically unsustainable energy sources and other practices, and that once more sustainable / eco-friendly business practices are implemented over the next few decades (hopefully sooner tho), we would see a structural contraction? Or should new technologies be able to step in and replace the economic growth? On a very large scale there is a multi century or even milenium "bubble", based on the growth of the world population and the growth of the percentage of the world that is developed (which essentially is a sort of productivity growth). This will end one day,once the world population no longer grows and the world is fully developed. When that happens all real growth (not growth based on monetary inflation) has to come from the yearly growth of productivity in an already developed world (which mostly depends on technological progres and the demographics of the world population). That growth is much lower then the 3%-5% yearly growth of the world economy we see today which could give some problems during the transition that will then have to be made. It is interesting from a theoretical macro economical point of vieuw but it is not something any of us has to worry about because it wont be in our lifetime nor the next,there still is a lot of room left for growth in both areas (world population and development percentage). I dont think there is a carbon bubble,our growth is mostly based on the growth of available energy (together with the 2 factors mentioned in the above paragrah) and for the past 2 centurys that energy came from carbon. Carbon is "sustainable" as energy source for a very long time,there still is a lot of carbon left to burn. The world wont decide to fully stop with carbon untill there is an alternative energy source to fully replace it. This is what is slowly happening now but as long as the total energy output keeps growing during this very slow transition (which it does) it wont be a limiting factor to overall growth. New technologys will step in and they will replace the carbon slowly and steadily,but that is something different then replacing the economic growth. All this is kinda interesting but not relevant for investing today other then the very slow transition away from carbon. There is not much room for growth in the carbon sector itself,which is reflected by the valuation of carbon stocks. They are priced around their dividend yields which are very high when compared to most other sectors. They are not priced at 100 times earnings anticipating a large growth of the sector in the future like some of the tech stocks. But ya,all this is more macro economics then investing,let alone trading. I find this very interesting from a theoretical point of vieuw but it has little relevance for investing and trading today. For investing:i dont think it is wise to leverage your positions in a time like this but if you make the right call then the pay off will be very good. Andy beal bought up a lot of distressed debt on the height of the financial crisis,a risky move but he was right and made huge profits. | ||
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LegalLord
United States13779 Posts
Unprofitable shale propped up by cheap money debt is certainly a bubble, but hardly on the kind of scale that’d fundamentally reshape the economy. It’s just one more in the long list of troubled financial assets that are too fragile to survive unfavorable economics. | ||
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iPlaY.NettleS
Australia4381 Posts
I note that the US Fed is now buying junk bonds of all things, people looking for a 40 year investment timeframe are optimistic i feel - we're in unprecedented territory.Also should be noted companies buying their own stock to boost prices has increased substantially in recent years, a big reason for the jump in the S&P.This will likely slow during the current crisis. | ||
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pmh
1399 Posts
This is partially off set by globalisation,immigration and international trade,which more or less can pool the demographics of different areas. China will also get a "boomer" problem if you look at their demographics (but they also still have a lot of room for development/industrialization left so i am not sure how big of an impact chinas boomer problem will have on world economic growth.). It will start to have an impact around 2030 and the years after. But there is still many other areas which will then have a young population and like africa and india (and specially africa has a lot of room for development and industrialization as well,which could be one of the reasons for chinas interest and investments in that region). Eventually the whole world will have a "boomer" problem and at that time i think population growth world wide will come to a stop. I dont know when this will be but i think for the world as a whole this will still be a long time,maybe near the end of this century and possibly even later. Un i think is predicting peak world population around 2060? i am not sure i havent looked into it lately but personally i think it will be later then that. Its not something we have to worry about just yet. (not taking into account unpredictable events that could halt population growth world wide or even lower the population). | ||
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Vivax
22158 Posts
With what's happening though, one could argue that external triggers and the response are responsible, not the model. The model also didn't consider how fast the pollution would progress I think. I'm personally more worried about all the crap in the oceans than global warming. It certainly would help to move away from the credit-based system (I think that's the root cause with the debt doom loop, not energy or boomers), but how do you do that without having a planned economy and maintaining an illusion of free choice? | ||
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Vivax
22158 Posts
That's probably it for leveraged oil funds. Calling another top in major indices today. Not advice. Gold/oil ratio at 332 for the first time in history. | ||
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LegalLord
United States13779 Posts
OPEC and friends provided a fairly nice cut to supply to help stem this. But the rest of the reduction in supply needed to stabilize this will have to come through shale bankruptcies. | ||
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Vivax
22158 Posts
On April 21 2020 02:20 LegalLord wrote: After WTI hit below $20 the other day it looks like the bottom just fell out for oil. Too much supply, and probably several leveraged investments hit a snag somewhere along the way. OPEC and friends provided a fairly nice cut to supply to help stem this. But the rest of the reduction in supply needed to stabilize this will have to come through shale bankruptcies. Don't just look at shale, think of all the debt leveraged oil funds will default on and the losses for their counterparties. -81,34 % as we speak. I've never seen anything like this. Fun fact, ran out of heating oil two days ago. Maybe I can get paid to fill it? Giants liquidation of futures is turning a commodity into a liability. Imagine holding negative futures. At least with options you have a right, but not the obligation. https://fred.stlouisfed.org/series/T10Y3M Reminder that we aren't even officially in the shaded area yet. Fed's holding the door. | ||
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CorsairHero
Canada9491 Posts
On April 18 2020 05:21 Malinor wrote: I have a question, maybe you guys can help me out. I am only invested in ETFs and single stock right now. Investing in oil looks interesting right now, basically buy at the current oil price and sell... at a future oil price. But how do you even do that? Is there maybe an ETF that does that or what do I have to do. Some help would be much appreciated. did you see this happening? WTI Crude -3.34 -21.61 (-118.28%) | ||
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Vivax
22158 Posts
![[image loading]](https://pbs.twimg.com/media/EWISwSnXQAYe2Bu?format=jpg&name=medium) They'll have no choice but to pile into the later futures or face liquidation? | ||
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CorsairHero
Canada9491 Posts
Lost life savings in the market today. Not sure what to do. submitted 2 hours ago by Hello everyone. I went long on an oil etf Friday afternoon after oil took a huge hit Friday thinking it would recover. I had a 175k position. I’m looking at it today and it’s at 1885 dollars. I’ve lost it all. I’m not sure where to go from here. It was extremely risky and stupid and was my life savings. I’m 28 and make 45k. Most of that was money I saved from inheritance. Not sure where to go from here. I have proof of all the trades. This hurts. I also have a baby on the way and recently married. I was greedy and tried to increase my money and instead lost it all. HOU apparently | ||
micronesia
United States24753 Posts
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farvacola
United States18846 Posts
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CorsairHero
Canada9491 Posts
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