Archive for March, 2009

Climate Action Partnership Stock Portfolio vs. Dow, S&P

March 12, 2009

We contended previously that membership in the U.S. Climate Action Partnership does not speak well of a company’s mission or strategy, although there are admittedly good performers on the list. This is because a well-managed corporation does not need government mandates to force businesses and individuals to buy its products (e.g. alternative energy sources, compact fluorescent lamps). As an example, if General Electric was up to the job of engineering cost-effective wind turbines and solar panels, it would probably not be able to make them quickly enough to keep up with demand even without tax credits to encourage their purchase. When Henry Ford engineered an affordable alternative to horses and their solid waste, he did not need government mandates to sell his product either.

As an experiment, we created a hypothetical stock portfolio that assumes the purchase of $1000 worth of each USCAP corporate member’s publicly traded stock on January 2, 2002. (It does not include Duke Energy, DUK, because there appears to have been a stock split of some kind, Shell Oil, which has multiple symbols, or NRG, which was not listed in 2002.) This gave us $18,000 in eighteen stocks. The Dow Jones Industrial Average was 10,073.40 and the Standard and Poor 500 closed at 1,154.67 on January 2, 2002. March 9’s closes were 6,547.05 (down 35%) and 676.53 (down 41.4%) respectively. Our hypothetical $18,000 worth of USCAP stock (18 companies) would be worth $10,555.58 (down 41.36%) on March 9. In other words, a portfolio of equally weighted USCAP publicly traded corporations underperformed the Dow, and just about equaled the S&P 500. Had we also purchased $1000 worth of former USCAP members Lehman Brothers and AIG, our $20,000 investment would now be worth about $10,556 or so, i.e. down 47 percent from January 2, 2002. (more…)

Americans Wake Up to Obama’s Carbon Emission Scam

March 7, 2009

We reported previously that the U.S. Climate Action Partnership’s (USCAP’s) members include some of the country’s worst-managed corporations, as demonstrated by their need for government bailouts. These include former USCAP members AIG and Lehman Brothers, as well as government-dependent entities like General Motors and Chrysler. Our position is that companies that need government mandates to force people to buy their products or services contribute nothing to society, and they should not be in business. If General Electric, for example, cannot engineer cost-effective wind turbines and solar panels, and must instead get the government to require businesses and utilities to buy its products, it is a liability to the country and should not be in business. This message comes across clearly in Kimberley Strassel’s “If the Cap Fits,” from the Wall Street Journal.

    GE makes all the solar equipment and wind turbines (at $2 million a pop) that utilities would have to buy under a climate regime. GE’s revenue from environmental products long ago passed the $10 billion mark, and it doesn’t take much “ecomagination” to see why Mr. Immelt is leading the pack of climate profiteers.

Americans are fortunately waking up to Barack Obama’s plans to raise prices for consumers and knife the unions and workers who helped elect him by imposing carbon taxes that would enrich special interests (USCAP members) while driving energy-intensive businesses offshore. (more…)

Repudiate Obama’s Carbon Regulation Plans to Start Economic Recovery

March 4, 2009

Banking problems and “toxic assets” are major contributors to the ongoing decline in the stock market, but it is quite likely that investors took them into account last year. The 800 pound gorilla in the living room that nobody seems to want to talk about consists of Barack Obama’s agenda (per his State of the Union Address) to impose taxes on all fossil fuels, or require users of fossil fuels to buy carbon offset credits from the modern counterparts of medieval indulgence peddlers.

As long as this agenda continues to menace the United States, investors are rightly reluctant to invest in American manufacturing, transportation, and other energy-intensive sectors. If, however, enough Senators (including Democrats from coal-producing and manufacturing states) pledged to vote against and filibuster Obama’s cap-and-trade agenda, it would restore investor confidence, break the downward momentum of the stock market, and set the stage for an economic recovery. (more…)