Posts Tagged ‘aig’

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…)

The Financial Crisis in One Sentence

September 30, 2008

The smart college boy/college girl MBAs* who run investment banks and other businesses have less practical ability than a man who did not even finish high school. Henry Ford told us in 1922 exactly why a good 20-30 percent of our investments vaporized during the past several months, and he summarized the cause in one sentence:

    The primary functions are agriculture, manufacture, and transportation.

There are exactly three ways to create wealth: grow it, mine it, or make it. While transportation does not add actual value, one usually has to move whatever one grows, mines, or manufactures. (more…)