I have been writing a lot about the transition from fossil fuels to alternative energy the past few years. One of the keys will be the moving to alternative energy will be the shift to EVs. The transition is clearly risky as we've learned in the short-term with some oil investments. The opportunities are also large.
I invite you to follow along as I work through the analysis even deeper at Seeking Alpha. Here are a few pieces to get started:
Why Oil Stocks Are Priced For Armageddon
Investment Thesis
I have dramatically reduced our exposure to oil stocks. I do believe there will be a rebound in oil in the early 2020s. During that time we will make a nearly full exit from fossil fuels.
I believe in what famed billionaire investor Stanley Druckenmiller recently said at The Economic Club of New York: " "Buy the disruptors, sell the disrupted."
To that end, I think that the biggest opportunities coming are in smart everything. IoT, AI, AR, VR and alternative energy with a smart grid that powers smart electric vehicles. We're already close to a tech based solution to methane and CO2 that churns out plastics without using petroleum. We will see advances in healthcare, smart buildings, utilities, almost all industries across the board. What's coming is amazing and it's only a few years away.
Our challenge is to manage risk and let the opportunities play out.
To that end, there are great ETFs - exchange traded funds - that we can add to our core portfolio. Our core portfolio includes the Invesco QQQ (QQQ) which is the Nasdaq 100 index which includes Apple, Google, Microsoft, Amazon, Intel, Cisco, Comcast, NVidia, etc..., a few dividend paying ETFs and dividend paying real estate income trusts (REITs).
Funds such as the Invesco Solar ETF (TAN) and higher dividend iShares Global Clean Energy (ICLN) are funds that you might see as well. Water, agriculture and various technology themes are also likely to be included. The ARK Innovation ETF (ARKK) is a satellite position that has beaten most of the market, but carries a little higher risk, with companies like Tesla (TSLA) and several biotechs included. We will also have select international exposure.
For those who have stocks, I have partnered with several analysts and services to create a universe of about 200 companies to select from. You'll notice several high dividend stocks this year that have performed well. While we wait for the future, we can collect that income.
We also have growth stocks for stock holding portfolios. Retirement portfolios will have limited exposure there, but the Sustainable Growth Investor portfolio will be over half in growth stocks. See our investment strategy offerings.
Exceptions To Selling Fossil Fuels
The exception to the exit from fossil fuel stocks will be companies that transition to alternative energy or other carbon mitigation businesses. So far, only Occidental Petroleum (symbol: OXY on your statements) is visibly heading in that direction.
Occidental, besides being a top 5 American oil and gas producer, has a robust carbon mitigation business. In their words: "... we are focusing on carbon capture, utilization and storage (CCUS) technology and on preserving and restoring ecosystems that act as carbon sinks, i.e., can absorb atmospheric carbon dioxide. In its Sustainable Development Scenario, the International Energy Agency (IEA) is counting on more than 2 billion tons of carbon being captured and stored in 2040. To meet that challenge, we are pushing ahead with our commitment to speed up the development of CCUS, alone and in partnership with others."
You'll note the 2 billion tons in the quote above. The market for Occidental is immense. And, they are the second biggest player after Chevron (CVX). Here is a good article on how oil companies are investing in carbon removal: Blamed for Climate Change, Oil Companies Invest in Carbon Removal
Both Occidental and Chevron have invested in Carbon Engineering Ltd., a Squamish, B.C. clean energy start-up company backed by among other, Bill Gates.
Occidental is also involved with sustainable biofuels and low carbon electricity. They recently started using solar in their oil and gas fields. In the future, they can use their own transmission network to hook up to the grid. With properties in several states, they can become a player in solar energy with partnerships.
Let's Talk
I know time is precious and driving around is difficult to do. So, please, set-up a time for us to talk by telephone in the very near future. I have a lot of time available in December. I have an online calendar for you to schedule a time to talk that is convenient to you: Kirk's Call Calendar
Have a great holiday season!
Kirk
