Tuesday, March 2, 2010

Global cooling: Profitable contrarian investing?

I have penned a new monthly newsletter for the folks at Qwest Investment Management entitled Global cooling: Profitable contrarian investing?

Here is the abstract:

While it is critical that we take serious our collective responsibility for the health of our global community, scientists today are debating the real cause of global warming and most recently the cooling trends. Prudent investors should monitor these debates as they may have an impact on their portfolios. For example, if scientists conclude we are now going through a global cooling phase, this would certainly impact pricing and/or demand for certain agricultural and energy commodities and subsequently affect portfolios.
This is a controversial topic. For those readers who would label me a denier, I would reply that I stand in the same camp as Phil Jones of the CRU when he stated in a BBC interview that:

It would be supposition on my behalf to know whether all scientists who say the debate is over are saying that for the same reason. I don't believe the vast majority of climate scientists think this. This is not my view. There is still much that needs to be undertaken to reduce uncertainties, not just for the future, but for the instrumental (and especially the palaeoclimatic) past as well.
Notwithstanding Al Gore's latest op-ed in the New York Times, I remain agnostic about whether the Earth is warming or cooling, or what the possible causes of any warming trend is. As an investor, however, we have to be aware that the consensus may be shifting and the big money can be made by correctly going against the crowd, especially when the crowd turns in your direction.


Matthew said...

I don't believe your argument here makes sense. The uncertainties being referred to by Phil Jones are all about how much it the earth is warming, the relative contributions of the various mechanisms, how fast it is warming, how the warming will be distributed, etc., but he isn't uncertain that warming is happening.

Using his uncertainty about how exactly warming is happening makes as much sense as being agnostic about gravity because there is uncertainty as to the exact nature and size of the gravitational constant.

You should find some other reason to be agnostic, if agnostic you wish to be.

tom brakke said...

Agnostic and analytical. A good starting point in any research, especially one charged with ideology.

I looked at this awhile back and said we should start warming up the models. The recent SEC action regarding disclosure is another indication that investors need to think about all of the potential implications of this scientific and political debate.

keithpiccirillo said...

Thanks for the links Mr. Hui.
Too bad for everyone research objectivity was so lax. This permitted yet another unneeded area where extremists can cast dark political clouds of doubt into the atmosphere.
I check in on Donald Coxe but he too is shaped by a political slant. He is pretty much a denier, right wing, and covers sunspot information at his site as well.
I still wonder how efficient and valuable cold weather hybrid seeds would be and would think MON should have a place.


Evan said...

Interesting. Part of me wonders whether you are married to your bullish commodity views.

On the other hand, much of the glocal warming crowd was the global cooling crowd a few decades ago (witness the Time global cooling cover in the early 70s)