Green Alpha's Next Economy

An Open Letter to Google's Larry Page and Sergey Brin: Let's Bring "Don't Be Evil" to the Investment Industry

An Open Letter to Google’s Larry Page and Sergey Brin: Let’s Bring “Don’t Be Evil” to the Investment Industry

You won’t hear traditional investment managers say this: the Earth is warming, some natural resources are becoming scarce, populations are increasing, and the global economy is beginning to change to reflect these realities.  We’ve been brainstorming on how to offer the world a true, honest alternative to Wall Street, and we think that our next economy investment approach combined with Google’s anti-evil, iconoclast reputation would be a fantastic way to do that.

At Green Alpha ® Advisors, we seek, identify and purchase shares in companies who put their businesses in the path of these changes; companies whose business models both disrupt business-as-usual and represent the next, green economy. We focus on companies with proven, profitable businesses models. We still believe in buy and hold, and reject the notion that the true value of good companies changes ten percent or more each day. Green Alpha practices investment management with a transparent process, making our reasons for our portfolio positions clear, and we don't play games with synthetic assets such as credit default swaps or with computer tricks like high-frequency trading.

That is, we're doing the job that investment managers are supposed to be doing: making long-term investments in necessary businesses and watching them grow. If that makes us mavericks, maybe that says more about the world today than it does about us.

We want to help Google offer an anti-Wall Street investing house option. We’ve written previously about Google going way beyond search and building a next economy conglomerate. We can’t imagine why you wouldn’t want to add the key economic production function of equity markets to that mix.

One of Google’s many “green” logo variations (Image source: freshdialogues.com)

If we can speak to the millions of people who have seen the banks wreck the economy and cause foreclosures and joblessness – we have a chance to build a massive grassroots movement. All we have to do is light a match in the right place, and overwhelming public support for real investment banking will follow.

Furthermore, we’ll do it all investing in the emerging next, green economy – which almost by definition has to grow faster in coming years than the legacy, old, fossil fuels economy, and therefore we’ll earn our clients superior investment returns over time AND we’ll be providing a conduit of capital to the green economy which will help it succeed in supplanting the old economy.

We’ll become the new “S&P 500” for the 21^st century, and leave the old-timey indices in the dust.

Why do we think partnering with Google will advance this cause? Google is perceived by so many people around the world as doing things its own way, that the opportunity to pop the Wall Street bubble and give folks and institutions a real alternative is ridiculously huge. And, the business is ridiculously profitable at scale – yes, even when practiced honestly and while charging very fair fees.  Because once you have developed portfolio models (which we’ve already done, and have three-plus years of track record to show for it) you can allocate any quantity of clients and assets into them. This business scales like software, not like manufacturing, so it’ll be very accretive to Google’s bottom line to say the least.  Green Alpha is the right team to deliver all this for Google and the world.

Yes, there are a lot of people who manage money, who are very well qualified, who know how to do the math. But in a world of data and quantification, or really any world, where there are cultural constraints that prohibit innovation from occurring, you can make a lot of progress in a short period of time, simply by being a maverick. On that front, with respect to next economy investing, the bar is low. There is tons of opportunity to innovate, and we’re happy to be making our own contributions, notably by redefining an index for the next century and by developing an industry classification system to reflect it (our proprietary GANEX and NESC). Where we stand out is that we’re pioneer types who refused to accept the financial services status quo for what it is, and in turn started innovating. We refused to get in line with financial institutions and their largely fossil fuels-oriented, short term culture of rigging systems for maximum profit regardless of ultimate negative outcomes. And make no mistake, the culture of “show me the money” is deeply entrenched, to the point where we really could be a candle in the darkness given the right platform. We’ll no doubt take criticism for our beliefs, but as Red Sox owner John Henry famously said to Billy Beane, “the first guy through the wall is always bloody.” 

The summation is: we really do have a business approach that wins on several fronts: it’ll be very accretive to Google’s shareholders, it helps advance the sustainable, green, economy, and it starts putting a dent in the greedy, corrupt traditional Wall Street banks by beginning to capture their market share – meaning it also helps chip away at super-pac style political corruption as well. 

The world will always need investment management and capital allocation. We’re approaching that business by identifying civilization’s primary problems, determining what technologies and approaches best address those problems, and then investing in the best companies that provide those technologies. Let’s show the world it can be done right.

Don’t be evil. 

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

The Long Term Is Getting Shorter

Recently I had the opportunity to comment for a CNBC.com piece by Trevor Curwin titled "Thinking About Food at Davos." Curwin's article focuses on food insecurity, political instability, and climate change, and to what degree these things are intertwined. The conversation that took place during our interview got me thinking about not only resource scarcity and conflict, but about how suddenly recent events seem to have emerged, and what that might mean about world politics, economics, and next economy investing.

As I was quoted as mentioning in the article, people tend to think of climate change as slow and occurring over extremely long periods of time, such that we don't need to concern ourselves with it when making short term economic decisions. But now, on the contrary, it has become evident that large scale changes are occurring so fast that we in reality are firsthand witnessing a crucial, transformative time in human history. As recently as 10 years ago, for example, researchers were sure there would be ice at the north pole during summers until at least 2100. Now, data suggests the arctic may be ice free in summers as soon as 2020. So what are the economic implications for this accelerating change?

As we wrote recently in our annual shareholder letter:

We work hard to model an economy for the day when the equations of earth’s economy and global ecology must be made to balance for the preservation of both. For make no mistake, the time has come when the two are mutually dependent, and we can no longer court the failure of either if we aspire to continue on with civilization and the natural world as we have known them. The day is today.

Yes, we invest for the long term. But every day that the world's economy remains over-dependent on the 18th century energy technologies of coal and oil the risks to that economy increase.

The continuing uprisings in the Middle East provide a clear example. Anthropologists consider it axiomatic that resource scarcity causes conflict. That the first moment of the Arab spring was triggered by the self immolation of a man, a fruit vendor protesting dramatic increases in grain prices, is not a coincidence.  Was climate change directly to blame for the conditions that caused grain scarcity? It's tough to prove for sure, but it is easy to build an argument around events like the Russian drought that led to Russia banning grain exports, and the floods in China that led to China's first ever need to import soy beans.

These and other events have led to a 50% increase in world grain prices in the last year, and I personally believe they are climate related and so that anthropogenic warming thus indirectly caused the Arab spring. (Incidentally, HBO has a new documentary on the Arab Spring titled "In Tahrir Square" that I thought was worth watching.)

 
Tunisian bread riot in January 2011, the start of the “Arab Spring.” (Image indymedia.org.uk)

But even if climate change didn't cause the extreme events that in turn caused grain scarcity, it is safe to say that sooner or later, likely sooner, it will.  As climate-related events that result in scarcity continue to occur, conflict over rare essentials is inevitable. These events will include things like the disappearance of mountain glaciers that provide fresh water to much of the world's population; for example, 1.3 billion depend on the runoff from Himalayan glaciers alone. What happens when that runoff dries up?

And most mountain ranges with glaciers are struggling. A recent piece about the American Rockies provides a good example:

A steady decline in Rocky Mountain snowpack the past few decades has led to a classic cascading ecological effect, with "powerful" shifts in mountainous plant and bird communities, according to scientists with the U.S. Geological Survey and the University of Montana. "This study illustrates that profound impacts of climate change on ecosystems arise over a time span of but two decades through unexplored feedbacks," said USGS director Marcia McNutt. "The significance lies in the fact that humans and our economy are at the end of the same chain of cascading consequences."

That last sentence bears repeating: "The significance lies in the fact that humans and our economy are at the end of the same chain of cascading consequences." We have to remember that whatever human economies can ever become is by definition limited to what the earth can provide.

So while the turmoil associated with the Arab spring did have positive outcomes like the removal of unjust dictators, as conflict escalates in general, the outcomes can't be as positive. History shows that resource wars are horrible, zero sum disasters overall. So, from this point of view, the Arab spring can be viewed as less of a blossoming of freedom than as a harbinger of destructive struggles among more and more people for fewer and fewer resources. The World Bank estimates that 1.4 billion people in this world live on less than US1.25 per day. What happens to them as food prices double, and how do they respond? We’re beginning to see.

So it's close to or even past time for civilization to act in transforming world economies away from fossil fuels and other destructive practices. Again, we're seeing a critical, transformative moment in history, ranking right up there with civilization’s primary defining events. We have to stop using fossil fuels wherever realistic to do so. It's not like economically viable alternatives don't exist. 

We simply can't afford to fail in the transition to a next economy world where we no longer need the central grid, where every window is making electricity, and distributed sources are self sustaining for their local homes, business and communities.  Yes, this will end our dependence on dirty, health damaging fossil fuels from unstable parts of the world. But it’s much bigger than that: the next economy will be individually, personally, economically and climatologically emancipatory. 

In light of all of this, the entrenchment of the fossil fuel plutocrats and their huge campaigns to disinform the public about renewables means we may be at the most dangerous time financially and ecologically in the world's history. There are enormous risks emerging now, and money will be lost by those not prepared for those risks. But crisis and risk also provide opportunity, notably to those who provide solutions to problems and risks. Next economy investing then can be defined as a way to provide capital to those solutions, and is also the clearest path to competitive investment returns as the world becomes ever riskier and more politically and environmentally complicated. It amazes me that how we decide to manage our economies over just the next few years will make the difference between a new dawn of innovation, freedom and security for mankind, or a dangerous, dirty world fighting for what's left.   

Whether the Arab Spring ends up representing a blossoming of social justice and democracy or the early stages of large scale resource wars is up to us.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

Minimizing a Key Threat: State of the Union Address 2012

Americans, rightly, prefer specifics and plans, as opposed to rhetorical vision and platitudes, from their president in their State of the Union addresses. We couldn't agree more, so here are our thoughts about President Obama's 2012 address, with respect to our area, the next economy and investing therein.

President Barack Obama delivers the 2012 State of the Union Address (Image source: whitehouse.gov)

Two years ago, President Obama in his State of the Union Address said, "The nation that leads the clean energy economy will lead the global economy and America must be that nation." So how are we doing?

From a next economy point of view, the critical parts of last night's State of the Union Address were:

• Oil and gas development are the centerpiece of the administration's energy plan
• Natural gas is the primary to the 'clean energy' part of the energy plan
• America is the leader in battery technologies
• The president attempted to encourage more development in wind, solar, and other renewables by encouraging clean-energy tax breaks and the removal of subsidies to profitable oil companies
• The president attempted to leverage American competitive spirit: "I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here."
• "Differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change, but there’s no reason why Congress shouldn't at least create a clean energy standard."  So,
• Major new renewable standards by executive order were announced, three million homes' worth via government land and private development and 250,000 homes' worth per year to be purchased by the Navy
• Efficiency and conservation were mentioned as easy and as job creators, so the president proposed incentives to businesses to become more efficient, and asked Congress for legislation to that effect

Unfortunately, a lot of these fall more on the rhetorical side, although we do welcome the few specifics that were offered. Unquestionably, it is a partial contrast with the rhetoric coming from Republicans' campaigns, which exclusively pander to big oil and Wall Street by pretending climate change and resource scarcity do not exist, so they can pursue their depletist, dangerous, destabilizing policies.  But, sadly, it’s not nearly enough.

Here's what the president didn't say.  He didn't say that the climatic and resource challenges facing America are the most long-term economically destabilizing risks that exist. He didn't say that three million homes' worth of renewable energy is a good start but tiny next to the progress required to avoid financially disastrous resource scarcity and climate change, and he didn't mention a timeframe for that.  He didn't acknowledge that the climate disinformation campaign causing all the disastrous pandering, policy stagnation and partisan gridlock is, in the words of NASA's James Hansen, America's foremost climate scientist, a "crime against humanity."

Since the possibility exists that this could be President Obama's last State of the Union Address, the president should want to make his most full, complete case for his legacy, for what he wants his administration to stand for.  It's easy to see why he would fear taking on the most profitable companies in the history of humankind in a larger way than merely proposing taking away their tax welfare, but he should have wanted to make his strongest case on all fronts. We can only hope the economic realities of pursuing a clean efficient future will speak for themselves, because our policymakers, even the good ones, are way behind.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

Optimism in Spite of Tough Year for Green Equities: Green Alpha Advisors Annual Portfolio Commentary and Client Letter 2011

In 2011, after three years of operations, our flagship portfolio, the Green Alpha® Next Economy Index (or GANEX) saw its first year of losses and benchmark underperformance.  Our portfolios have experienced volatility from the beginning, and as we have now seen, volatility can and does move prices rapidly in both directions, both up and down. But, surprising as it may sound, we don’t believe 2011’s performance will have undue influence on the longer term returns of our investment strategies.

We believe this because we’re different: we spend our days figuring out which technologies, systems, means of production and general business approaches are going to work well and thrive in a changing economy characterized by things like resource constraints, increasingly severe weather, growing world populations and conflict, and, eventually, real limits to and costs on carbon. As such, we love our portfolios’ long term performance prospects.  Because even if congressional gridlock or Wall Street greed stagnate the overall economy for years to come, the next economy (or, if you like, green economy) aspects and proportions of world economies are going to have to grow. Because the alternative to accelerating the growth of the next economy is continuing, to the extent possible, the growth of the destructive, business-as-usual economy, which is based on finite fossil fuel resources that destroy health, damage Earth’s climate systems, and undermine our economic and physical securities.

Since we seek to invest in the best business solutions to civilization’s primary threats, we by definition have a high level, long term view. ‘Macroeconomic’ may not be sufficient to describe our approach…’planetary-economic’ might be more like it. We work hard to model an economy for the day when the equations of earth’s economy and global ecology must be made to balance for the preservation of both. For make no mistake, the time has come when the two are mutually dependent, and we can no longer court the failure of either if we aspire to continue on with civilization and the natural world as we have known them. The day is today.

Subsequently, we don’t worry about things like what’s going on with short-term interest rates, or consumer surveys or what the CPI seems to be saying this month. In the face of the technological and production function changes that are now required of us, short term numbers like that are ephemera that can serve only as distractions. Neither do we try to discern ‘growth’ from ‘value;’ to us these distinctions are noise confusing the signal of true investment management: that is, finding and investing in the top companies providing mandatory products and services that it will be tough for us to do without. What matters is identifying companies and stocks that provide the leadership we need to get Earth’s big equations to balance: these companies may be of any size, from any sectors, and based wherever we find them.

Earth’s economies may stagnate or grow; either way, we believe things like renewable energy, clean transportation, sustainable infrastructure and water resources must grow in value. Over time, the value of stocks in our models will not be dependent on Wall Street gamesmanship, but on simple necessity.

As awareness of the magnitude of our growing resource-climate-security problems advances, so will the valuations of our portfolio companies.

Meanwhile, in 2011, investment returns for the Green Alpha Next Economy Index (GANEX) and the Sierra Club Green Alpha Portfolio (SCGA) were, after two benchmark beating years in 2009-2010, disappointing. Most of the losses in 2011 occurred in Q2 and Q3, with Q1 being relatively positive and October being exceptionally good.  However, Q2 and Q3 were so bad that total year losses were large. For our 2011 portfolio factsheets, click here for GANEX and here for SCGA.

Markets in general fared poorly over this period, and the macroeconomic backdrop for this is well known: the European banking and sovereign debt crises, the U.S. debt ceiling “crisis” and legislative gridlock including the failure of the “Supercommittee” to make meaningful changes and the increasingly undue influence of special interest money in politics.     

Green economy investments, however, fared particularly poorly. Again, we do think there are many reasons for long term optimism (for exhaustive detail on these, check out our blog), but it seems likely that a still weak global economy will create problems for the renewable energy industry, significantly because government subsidy support is under pressure as budgets face austerity, and subsequent reluctance from banks to provide credit to these industries.

With solar in particular, much has been made of rapidly declining prices and narrowing profit margins, as supply has exceeded demand in the recent short term. We believe rapid uptake of solar in the coming one to two years will not only consume this supply overhang but will soon exceed it. That said, it seems premature to express conviction that solar shares (appx. 13% of the GANEX is exposed to the solar industry value chain) are at a bottom.  (See this blog entry for more).  It’s not just solar that’s getting beat up this year in the renewable space; wind power, wave power, and energy storage have been hammered down as well.

The comparables for earnings and revenue growth get particularly tough for Q1 & Q2 2012 vs. same period 2011.  This is not just in the Green Alpha space but at the corporate level in general.  Now, the large reductions in revenue and earnings growth by analysts are sending the year over year growth rates into the negative zone – that will normally bring down valuations very quickly, as we have seen. 

Another reason we may not yet be at the bottom, apart from the true structural issues mentioned, is that there is a concerted disinformation campaign underway to discredit not only renewable energy but even the fact of global warming which provides one major incentive to adopt renewables in the first place. Joe Romm at Climate Progress does a great job of covering this (see here), and he frequently notes that the Solyndra “witch hunt” is now a primary weapon of disinformation.

In the short to medium term, this fabricated headwind will no doubt adversely affect our returns.  However, the fact that disinformation by definition obscures the reality of renewables’ cost competitiveness and effectiveness means that it is causing a classic example of inefficient markets.  That is, artificially cheap buying opportunities for those with the tolerance for volatility. Many of the reasons for the very low valuations are not structural or fundamental, but are made up by people whose interests are in the fossil fuels status quo. Ultimately, this cannot stand.

If there are reasons to remain optimistic in the short term, they center around these low valuations. Virtually all valuation measures, price to book, price to sales, price to earnings, price to cash on hand, enterprise value to EBITDA, discounted cash flow and others are at all time lows that don’t represent the true prospects of the underlying firms. Again, disinformation means inefficient markets.

Also in 2011 we were pleased to unveil our Next Economy Sector Classification (NESC) scheme to help investors see our portfolios’ diversification. We believe NESC represents a far better view of portfolio allocations and diversification than do the old GICS and ICB industry systems (which, for example, place solar energy into “Oil and Gas”). You can see the NESC in practice on our factsheet, here.  

Figure: sector allocation in the GANEX as reflected by the NESC

From the NESC standpoint, the top performing Industry & Sector in the GANEX Portfolio was the Products (Industry): Consumer Goods (Sector), with Portfolio exposure of approximately 18%.  Holdings in this sector include Kandi Technologies Corp. (KNDI, 51.02% in 2011) Green Mountain Coffee Roasters (GMCR 36.49%), Hain Celestial Foods (HAIN 24.02%) and Tesla Motors (TSLA 7.25%). 

On an absolute return basis, of the 78 securities we have positions in across portfolios, the best performers for 2011 are: Telvent (TLVT, 53.63%), Kandi Technologies Corp. (KNDI, 51.02%) and Whole Foods Markets (WFM, 38.47%). 

The companies that hindered portfolio performance the most in 2011 were: First Solar, Inc. (FSLR -74.06% in 2011), Cree, Inc. (CREE -66.55%) and Vestas Wind Systems (VWDRY (ADR) -66.57%). Again, with these, and with particular respect to solar companies, we think these valuations are irrationally low and solar module sales in the next few years will bear that out.  Given the price pullback in 2011, many of our holdings have become incredible values.

Obviously, we’re disappointed with the recent short term performance. But we continue to believe and hold to the macroeconomic premise that the best companies providing the best solutions to the problems of resource constraints, carbon constraints, warming, and an increasingly populous world will grow more rapidly than will legacy economy companies, and therefore we expect to provide better portfolio returns over the long term. The basis of our next economy companies doing well is fundamentally a belief that society is ultimately rational and will do what it must to preserve itself, in spite of some contemporary evidence to the contrary.

Green economy companies thriving or failing is not just a matter of portfolio returns: it is an existential binary for civilization.

Thanks for your continued support of Green Alpha Advisors and investing in the Next Economy.

Sincerely,

Garvin Jabusch, Co-Founder & CIO

Jeremy Deems, Co-Founder, CFO & COO

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

The Chevy Volt: Trying to be All Things to All People

We're within a year of the launch of GM's flagship electric vehicle (EV), the Chevy Volt, and we're already seeing detractors call it a failure (e.g. "Revenge of the Internal Combustion Engine") and begin using it as evidence that the entire EV premise won't work. This outcome was predictable, not because EVs are conceptually flawed, but because the Volt is a terrible value proposition, whether measured against better EVS or against high-mileage internal-combustion engine cars. The Chevy Volt isn't failing because it's electric, but because it's a bad value.

The Volt is not a pure EV. Basically, it's a Chevy Cruze outfitted with a relatively small battery pack and electric motor attached to an independent drive train. The battery pack is low-powered enough that it depletes after just 35 miles, and what you’re driving after that is just a heavier, gas-powered Cruze (the two cars are built on the same platform). So at best the Volt is a hybrid, and not even a very efficient one, because unlike Toyota's (and others) single hybrid drive, the Volt runs separate drive trains for its electric and gas motors. In effect, it's trying to be a gas powered Cruze, and also an all-electric Leaf as well as a hybrid Prius. A car can be an EV, a hybrid, or a gas-burner, but not all three. I understand the desire to try to bridge the gap in an effort to appeal to more consumers, but the result is an inappropriate juxtaposition that appeals to few.

Chevy has said one reason for the lack of enthusiasm around EVs is potential customers may have range anxiety, and in the case of the Volt, who can blame them?  Even combining the ranges of the Volt's fully-charged battery pack and a full tank of gas will only get you about 300 miles, which not too different from the electric-only range of some pure-EVs, and 200 miles less than the 500 mile range of the plug-in Prius.  If your daily driving averages at or below 35 miles, though, and you charge every evening, you could drive the Volt in pure-EV mode indefinitely and never fill the tank. But then you'd never be using the conventional drive train, which you paid a lot for. And for me, this is the heart of the Volt's limitations. It has two independent drive trains and three transmissions (to make the transmissions work together), making the final car complex, heavy and expensive. The better models of cars using any of the single drive train systems (internal combustion, electric or hybrid) can outperform the Volt for the price. This includes Chevy's gas-only Cruze, which rings in at about $19,000 and gets 42 MPG. For comparison, the Volt is about $45,000 (or $38,000 after federal tax credit; economy info below), the Leaf is $35,000 (or $28,000 after the credit) and burns no gas, and the Prius is about $28,000 (no tax credit available) and gets better than 50 MPG.

The Volt compares so unfavorably with the Leaf and Prius also because once you've driven that first 35 miles on electric power, drained the battery and switched to the gas engine, the Volt only gets 33 mpg. "And why, you should be asking," quipped Motor Trend, "does the Volt in gas mode deliver 13 [I count 17, but okay - GJ] fewer mpg than the Prius?" It's simple, the Volt is two cars in one, sporting almost entirely separate gas and electric drive trains, making it heavy, unwieldy, expensive and uneconomical.  All this over engineering also makes the vehicle very internally complicated, which presents opportunities for problems; for example, the Volt’s unique liquid cooling system appears to be the culprit in recent fires. No big surprise that sales are trailing expectations.

Prius, Leaf and Volt (image source: hybridcars.com)

Volts aren't as popular on the used market either.  After 36 months, a Volt will lose 58% of its value, while a Prius will depreciate 46%, according to Kelly Bluebook's projections. The secondary market as usual is figuring out how to price value, and maybe a three year depreciated Volt at $17,000 is comparable to the equivalent used Prius at $15,000, but I think I still would choose the Toyota.

GM had big ambitions for the Volt, planning to make 10,000 units during 2011, then quickly ramp production to 45,000 Volts in 2012. To date, though, they've sold only 5,000. There are good reasons for this poor sales performance, but none that indicate EVs as a class are bad cars.

Nevertheless, don't be surprised to see GM begin to announce things like "we tried with the Volt to make a big push into electric cars, but Americans just aren't ready," or "consumers have made it clear they prefer gas engines." And when this happens, don’t believe it. Because the fact is that it's not EVs Americans don’t like, it’s inferior products.

The conclusion for potential consumers seems to be, if you want a hybrid, get a Prius, it's far less expensive, far simpler and arguably more functional than the Volt.  If you want a pure EV, the Leaf is a fine choice, but there are several other interesting models from smaller, niche, pure-play EV makers that range in price and luxury from about $900 (Kandi Technologies) to $60,000 and beyond (Tesla Motors).

Electric vehicles are the future. Since we're just at the earliest stages of adoption, though, it's possible for one bad model to have a disproportionate negative impact on perceptions. But don’t believe the negative hype. As I mentioned recently, EVs will "'slowly but steadily gather momentum for a few years' until a tipping point is reached 'where they're obviously the superior value, and in many ways the superior performance option across the board.'"

Disclosure: Green Alpha Advisors is long KNDI and TSLA

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

Solar Power: The Case for the Demand Side

Solar energy's critics love to discuss reasons photovoltaic (PV) solar energy is a bad investment. Some go so far as to say that solar power does not even work, others talk about an oversupply of PV modules on the world market, and tell us that this "glut" proves solar will fail as an industry and that green energy in general is a scam. These of course are lies, perpetuated by fossil-fuel industries (and/or their investors and/or their beneficiaries) who are terrified of losing significant market share to cheap, clean, renewable energy.

The charge that solar does not work is laughable and I won't waste space defending the basic, obvious science. As far as the scam charge goes, I would counter that it is fossil fuels that are the scam. Fossil fuels have proven to be not only dirty, health-endangering, planet-warming, leaving us vulnerable to supply disruptions and keeping us under the thumbs of unfriendly regimes, but also ultimately the most expensive forms of energy. Do its proponents really think folks can’t see that the non-stop requirement to locate, mine, drill, ship and refine fossil fuels can possibly be as cheap large scale renewables, which literally get their energy source material for free from the sky?  

How cheap will solar become? At current silicon prices, about US$52 per kilogram, US$700 worth can power an average European home indefinitely. Energy expert Kees van der Leun has done the math:

I realized how little silicon was needed to supply the annual electricity consumption of an average European family (4,000 kWh). Under European solar radiation, it would take 1,400 cells, totaling less than 30 pounds of silicon. Of course, you need to cover the cells with some glass and add a frame, a support structure, some cables, and an inverter. But the fact that 30 pounds of silicon, an amount that costs $700 to produce, is enough to generate a lifetime of household electricity baffled me. Over 25 years, the family would pay at least $25,000 for the same 100,000 kilowatt-hours (kWh) of electricity from fossil fuels -- and its generation cost alone would total over $6,000!

And Europe's not even that sunny; as you move south, the cost keeps dropping. For me, this shows how cheap solar really can be, and therefore how scary it must be to fossil fuel executives. Small wonder they’ve brought out the big guns of disinformation, stock shorting and congressional lobbying. Enough said here for now. 

On to the supply glut argument. This is the critics' best argument, because, over the short term, it is to some degree true. The huge cranking up of supply we've seen in the last couple of years is by design, though; it is intended to make solar modules cheap enough to penetrate the world energy markets deep and at every level. So in fact the argument of oversupply is actually a position against the solar industry's best growth tactic. Let's take a look at who's buying.

Back on May 6th, Reuters reported that China had upped its solar installation plans to grow from less than one gigawatt today to 10 gigawatts (GW) of installed capacity by 2015 and, according to Fortune, to 50 GW by 2020. A more than 50 fold increase in nine years.

China has a primary renewable plan that includes leading the world in both solar production and installed capacity. For the moment, the U.S. still has a solar industry trade surplus with China, but the differences in policy and attitudes have put that leadership at risk. China is likely to increase its installed solar capacity by at least 1,000 percent by 2015, a short four years from now. Anyone interested in China's key role in the solar story will want to read Melanie Hart's outstanding analysis of China's solar policies and plans, published on Climate Progress.

India, according to its government's National Solar Mission, is expecting to grow its installed solar capacity from a tiny 54 megawatts in 2010 to nine GW by 2016 and to at least 20 GW by 2020. Bear in mind that even one GW of installed solar PV power means about 3,000 acres of panels, even in sunny India.  China’s and India’s official solar growth plans alone will require 210,000 acres of PV modules by 2020. This may or may not be reduced by the additional deployment of solar thermal as well.  

But even India's and China's aggressive solar plans would be small next to potential Saudi Arabian plans to generate enough solar electricity to equal the energy content of all its oil exports. In a previous post, I took a swing at estimating how much solar PV this would require. Suffice it to say here that there's not enough solar manufacturing capacity in the world today to meet that kind of demand. If the Saudi's hit 1/10th of their goal, module manufacturers will be plenty busy. 

What of the world's largest economy? All in, the U.S. currently has maybe 2.7 GW of total installed capacity. But with prices falling, our demand curve is so steep that the Solar Energy Industries Association believes we'll be bringing on 10 GW of new solar capacity each year by 2020. This alone will consume most of the 70 percent annual increase in global solar production capacity. Solar is America's single fastest growing industry.

All in, it looks like the booming increase in solar energy capacity production will not ultimately result in a "glut," but will do well to keep up with demand. It's fortunate that there is in some places (China, GE, e.g.) enough foresight to ramp production sufficiently to have any chance of meeting all these development plans.

And all this is just the beginning; these are merely the growth stories I could easily glean in routine scanning of the news. A truly comprehensive catalog of solar development plans would no doubt require a long book.

GE CEO Jeff Immelt sees all this clearly. GE is next year opening a thin film solar manufacturing plant in Colorado, capable of producing a new panel every 10 seconds. Like me, Immelt believes demand for PV is soon to exceed supply, so I'll give him the last word:

"We are all-in. We are going to invest what it takes ... Because I know by 2020 this is going to be at least a $1 billion product line. I don't care about Solyndra or any of that other stuff, we did this with no government funding. We can do this. It's fair to be critical of Solyndra but make no mistake, in India and China between now and 2020 there is going to be 200 gigawatts of solar power (installed)," Immelt said. "So let's not lose the forest for the trees. It's not like something is inherently wrong with solar energy."

Note: Immelt’s remarks at Columbia University, as reported by Reuters on 11/03/11

Disclosure: Green Alpha has no positions in GE.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, orGANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

MF Global and the Threat to True Capitalism

Yesterday, U.S. regulators disclosed that investment firm MF Global, in direct violation of law, had not been separating client money from house money when making extremely risky bets. MF Global filed for bankruptcy, losing at least $700 million in client deposits and possibly more, as authorities note that MF Global may have secretly moved hundreds of millions more offshore. MF Global’s CEO was one Jon Corzine, formerly a U.S. Senator, Governor of New Jersey, and CEO of Goldman Sachs.

Corzine’s crimes were especially egregious. Previous Wall Street transgressions, such as selling toxic mortgage-backed assets as AAA, were fraudulent, but using your clients' assets to cover your own losses (comingling, in the parlance of the profession) is a violation of the trust that is fundamental to our whole system. It's the kind of blatant law-breaking that corrodes the whole system. In a recent post I noted that:

If Goldman Sachs or Morgan Stanley told the Treasury that they were insolvent tomorrow, we'd have no choice but to bail them out again. And that's because they were able, via owning Congress, to prevent even trivial reform in the wake of the last crisis. The Dodd-Frank financial services reform bill is a hollow shell. Again, right now, no one has any control in Washington that isn't trumped by the power of Wall Street.

Fortunately, MF Global had nothing like the scale of a Goldman or a Morgan, so it could be allowed to fail without directly causing systemic collapse. The fact remains, though, that failure to take any kind of corrective action or to give regulations any real punitive power in the wake of 2008 will result in continuing malfeasance. Two days ago, Bloomberg reported the following:

The collapse of MF Global points once again, in the strongest possible terms, to the importance of having a substantive, teeth-bearing regulatory regime charged with overseeing the kind of asynchronous risk-taking that gives people like Corzine the incentive to gamble with other people’s money in hopes of reaping financial windfalls. And yet, more than three years after the collapse of Lehman Brothers and the onset of the financial crisis, we don’t have in place anything close to necessary regulations to try to prevent companies like MF Global from exploding.

This is extraordinarily dangerous: If Jon Corzine, like all his cronies in the wake of 2008, goes unprosecuted, it proves beyond any doubt that the U.S. investment banking system is fraudulent and that the oligarchs that rape and pillage taxpayers, the public, the environment, and even their own fee-paying clients, can get away with whatever they want and remain unprosecuted. This could be the beginning of the world losing faith in, and deciding not to do business with, U.S. markets and institutions.

Think about it. If you're a Chinese or European investor or bank, and you've learned that a company headed by a former U.S. Senator, Governor and Goldman-Sachs CEO has stolen $700 million in client assets with impunity, you’re going to think twice about trusting the rule of law to protect your assets in that country. 

Efficient markets depend on people knowing what's going on. As long as disinformation and outright crime is both allowed and unpunished, markets lack clarity and are, therefore, terribly inefficient. That's why there's so much volatility now: no one feels secure that they really know what’s going on. Because they don't. For us at Green Alpha, this is an existential threat. It doesn’t matter how straight we play the game, or how solid and profitable our next economy portfolio companies are. If a total lack of confidence in the infrastructure of investing –- the marketplace that allows us to buy these fantastic companies –- causes it to fail, how then can we or the economy proceed? Is there any rule of law at all?

We can't let it come to that. Corzine should be prosecuted and, more importantly, the system that let this happen again should be reformed. Dodd-Frank for practical purposes does not exist; Wall Street lobbyists and money have seen to that. Fine, forget it. Start over with a new bill and make sure that capital is not gambled with but put to its intended use: deployed to the smartest companies with the best prospects for long-term growth. The economy needs true investment banks, not casinos. 

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, orGANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog"Green Alpha's Next Economy."

The Kochs' Belief in Free Markets Is Great; Too Bad They Don’t Practice It

The famous Tea Party backers and right-wing libertarian ideologues the Koch brothers, owners of Koch Industries, a huge fossil-fuel conglomerate, directly and through their network of think tanks and “grass roots” organizations, espouse an “America loving” set of policies that loves free markets and hates regulation. And their words at times almost sound convincing, and indeed have convinced many Americans. But look closer at their actions. The policies and projects they promote actually stifle true capitalism and promote a regulatory structure to make sure it stays stifled in a way that benefits only their own business interests. 

Patrick Michaels of the Cato Institute (which was founded and subsequently funded with $14 million by the Kochs) is one of the Kochs' main bulldogs. He says of global warming that "this is a problem that’s gonna solve itself," and of carbon that "society will address the emissions of carbon dioxide and the energy issues because of pressures for increased efficiency."  And of the Kochs directly, Michaels has said, "they think free markets are efficient vehicles to create environmental protection; I think they're right."

Free markets are the best way to address carbon emissions and to protect the environment. Fantastic. In a world of true capitalism, where money chases the best and most efficient ideas, this would be true. Because wind and solar are already near parity with fossil fuel derived electricity, and with more scale and continued development, experts and industry analysts agree that these renewables have the ability to become far more inexpensive. In a truly free market, this is where the bulk of new investments and government benefits would be going. But in the bought-and-paid for world of American politics? Not so much. The Kochs have lobbied for dozens of self serving initiatives, many of them regulatory in nature (surprised?), including the right to engage directly in the writing of legislation. As I’ve mentioned before, oligarchs’ ability to craft legislation is surprisingly easy and inexpensive; according to Bloomberg News:

The energy companies [Koch and ExxonMobil] helped write the [fossil fuel promoting] legislation at a meeting organized by a group they finance, the American Legislative Exchange Council, a Washington-based policy institute known as ALEC.

The corporations, both ALEC members, took a seat at the legislative drafting table beside elected officials and policy analysts by paying a fee between $3,000 and $10,000, according to documents obtained by Bloomberg News.

The opportunity for corporations to become co-authors of state laws legally through ALEC covers a wide range of issues from energy to taxes to agriculture. The price for participation is an ALEC membership fee of as much as $25,000 -- and the few extra thousands to join one of the group’s legislative-writing task forces.

I wonder how many American voters know some of their legislation is written by corporations and carried unedited to the floor of the House? Not that the Kochs' and others’ behavior in this regard is at all surprising.  As The Economist recently noted, “it's in the interest of business leaders to push for rules that stifle competition and interrupt the market mechanisms that allow good ideas to flourish.” In other words, to step on the capitalism that allowed them to get where they are. I suppose that the inverse corollary, that smaller business’ role is to fight to make the best new ideas known, is one reason I write this blog.

True, the Kochs oppose selected regulations: those that could erode the market share of their businesses.  In 2010 the Kochs contributed to 62 of 87 of the new Republican members of the House, making them instrumental if not singlehandedly responsible for the GOP takeover. The first thing they asked their cub Tea Party and GOP congress people to do? Dismantle the EPA. Remove all regulations and health and safety protocols around fossil fuel mining, refining and burning. Never mind that solar is as cheap and becoming cheaper now, even if the health effects such as lung and heart disease and mercury poisoning are not counted in oil’s and coal’s costs. Acknowledging that would be true capitalism, and again, the Kochs have no interest in that.

A Koch Industries refinery (image source).

(As an aside, if you’re not convinced about solar’s capital efficiency, consider: with polysilicon spot prices now as low as US$51 per kilogram, “30 pounds of silicon, an amount that costs $700 to produce, is enough to generate a lifetime of household electricity.” As solar thus becomes cheaper and cheaper, I fail to see how the nonstop required process of mining, transporting and burning coal can possibly be as cheap or efficient as a means of getting electricity. A true capitalist sees this and starts making his investments accordingly. And, in fact, a lot of smart money is pouring into renewables.)

The reason the Kochs talk free market but don’t actually practice it is because they don’t really have America’s or the peoples’ best interests in mind, but only their own.  If you’re constantly pimping fossil fuels, and driving policies that will benefit those only, even when other sources of electricity have become as cheap and cheaper, to say nothing of cleaner and safer, you are stifling true capitalism. Capitalism only works when investors have access to accurate information.  The disinformation propagated by the Kochs and their ilk, especially regarding climate change and renewable energy, is anti-capitalist in the extreme and serves only to make dollars chase their old, busted, 18^th century energy technology. For example, one of the Kochs’ pet groups, Americans for Prosperity, is about to launch a multi-million dollar ad campaign once again falsely using Solyndra as evidence that renewable energy is a “scam.” There’s a difference between a capitalist democracy and an oligarchy. (Or as Citibank would have it, a plutonomy.)

Don’t take my word for it.  Look up any Koch-backed initiative and ask yourself “who benefits?” What you’ll find, by thus viewing their actions and ignoring their nice platitudes, is that the Kochs benefit, their fossil fuel businesses benefit (an example just now being their connection to the Keystone XL pipeline); or labor suffers so dirty energy bosses can become even richer, and so on.

Ralph Waldo Emerson pretty much nailed it (and may as well have been referring to the Kochs) when he said “What you do speaks so loud that I cannot hear what you say.” Word, Mr. Emerson.  It’s time we pulled back the rhetorical veil and saw the Kochs for the anti-capitalist, pro-legislation fat cats they really are. Free markets are indeed great, let’s bring them back.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, orGANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog"Green Alpha's Next Economy."

The Pending Solar Apocalypse -- Not!

The hysterics around recent solar industry announcements that in general profit margins are narrowing are, as usual with all things solar recently, completely overblown. "Is This A Death Spiral for Solar Companies?" might be my favorite histrionic headline.

Yes, narrowing margins are making life difficult for smaller, higher cost producers. But this is and has always been a standard part of the evolution of any industry from niche to growth to mainstream. An undervalued name we own and that I’ve used as an industry representative example before, Canadian Solar (CSIQ), announced October 17 that, due to the rapid growth in the solar industry and emerging commoditization of some components, their overall profit margin is expected to shrink to 12% by year end 2011. Meanwhile, their industry is growing at 10 times the rate of the overall U.S. economy and will far more than make up in volume what it loses in margins. This is the normal progression with any new technology, and is usually considered a good thing. In fact, most mature industries operate -- profitably -- at or below 12%. Here's the Fortune/CNN 2009 list of profit margins by industry:

Issue date: May 4, 2009

As you can see, solar, even with its newly revised, lower, 12% margins would still rank 6th of 53 on this list (if it were included). And the truth is, as solar grows and grows, and panels become cheaper and cheaper, margins will continue to drop to 10% and below. But, again, the industry is maturing into a high-volume business wherein scale will more than compensate for this narrowing just as occurred in most of the above industries.  Yet when was the last time you heard a pundit claim that most of these industries was in a “death spiral?”  I would argue that with its booming growth, solar is a better long term investment than any of these "stalwart" industries that currently operate between 1% and 10% margin rates.

Also bear in mind that as panels become ever cheaper and margins narrow, solar is fast becoming the cheapest source of electricity of any kind. Extrapolation of current trends shows that solar will be the cheapest electricity in the world by 2018, latest. What happens to industry growth as that day approaches?

After CSIQ's announcement, its shares dropped another 13% to $3.00, which is less than one-fifth of their $16.03 per share in cash. Ridiculous. CSIQ was already priced at one-quarter of cash, like a company hemorrhaging money, not making it. So the reduction in margin announcement should hardly have had the effect that it did, so what the further decline represents for me is a buying opportunity.

Bear in mind that China has made a $313 billion commitment to green energy, primarily solar, over just the next four years (the U.S. commitment is trivial by comparison, no doubt thanks in part to some dangerously misguided calls for America to give up on solar altogether). The favored Chinese manufacturers of solar PV will thus have no problem maintaining liquidity much less solvency as the industry, predictably, matures and consolidates. This kind of large, rapid investment in solar PV manufacturing has resulted in global supply outpacing demand at the moment, which is one of the factors causing shrinking industry margins. However, we believe this is a temporary imbalance because we’re observing aggressive solar scaling, utility-scale and rooftop, in nations worldwide. More on that in a later post. 

As an aside, we disagree with current U.S. based efforts to sue China for solar panel price dumping. Dumping, which is defined as selling a product under production cost to capture market share, is not the same as out-competing, which has the same effect. If China has invested so much more in its solar capability that its cost of production is significantly lower than ours, so be it; the appropriate response is to invest in our domestic industry to make it more competitive. It will be interesting to see what the WTO concludes, but I don’t think the dumping case is necessarily clear. In any event, winning the case will allow the U.S. to apply tariffs to foreign solar panels, thus raising the cost for consumers, prolonging our dependence on fossil fuels (although that may be the point) and keeping energy prices higher overall.  

Again, solar is a booming growth industry that is adding jobs, revenue and profits worldwide (including here in America), that is going to keep growing, and fast, for years if not decades: how many of us are aware that already, solar employs 100,237 people in the United States and is booming, compared to coal's 80,600 and shrinking jobs? [Note: the coal jobs figure is from the U.S. BLS. The BLS does not keep track of solar jobs, but refers interested parties to The Solar Foundation’s “National Solar Jobs Census,” cited above.]

The trick for investors is to find the low cost manufacturers with access to capital and with already profitable business models. Solar as an industry is here to stay; investors who own the best solar companies now will be very pleased in the long run.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

Is this 2011, 2008, or 1929?

I spent some time at Occupy San Francisco this weekend and talked to a lot of people. Protesters are mad about any number of things -- but a general sense of unfairness, of the rigged game, seems to be the overarching theme.

 

Occupy San Francisco, October 15, 2011, photo by Garvin Jabusch

And things are unfair: As far as I can see, there is not at present any power in Washington, D.C., that can trump the influence of Wall Street. And although I support the aims of OWS, it's only realistic to conclude that the banker masters of America aren't worried about the movement yet.

Think about it. Banks have gotten away with whatever they wanted: They paid rating agencies to rate toxic assets AAA so they could sell garbage as premium on one hand, then, knowing trash assets would ultimately be revealed as worthless, sold them short and bought insurance policies that paid off when they failed, making tens of billions in the process. Playing both sides like that is illegal on its face, and yet not one banker has been tried -- much less convicted or punished.

Then, citing their imminent failure and the threat of collapse of world economies should they fail, these same banks in 2008 managed to move all of their terrible assets onto the books of governments around the world, most notably to the U.S. Treasury. Banks kept the windfall, yet moved the poison onto the taxpayers.

Next, the banks engineered a situation wherein they're making billions, risk-free, on the Treasury. Explaining to the Fed that they need access to free capital in order to keep credit and liquidity flowing, the banks asked for and received a basically limitless ability to borrow money essentially interest-free from the Fed. Only, most of this capital is not making its way into business loans and other job-creating uses, it's being used to buy Treasury bonds, which of course do pay interest. By borrowing money directly from the Fed then lending it back to the Treasury for more interest, banks are on course to siphon over $400 billion from the taxpayers in 2011.

It gets still more egregious. These same banks, now saved by and operating with taxpayer dollars, next used those dollars to continue buying policymakers, only now they were using their bought legislators to make sure that no reform could ever prevent them from doing the same thing all over again.

And guess what? Now the world's weaker central banks, such as Greece and Ireland, are close to collapsing under the weight of all these nationalized toxic assets. The U.S. banks, in turn, have tons of exposure to foreign banks and may risk failure when Greece and Ireland, e.g., can no longer pay their debts. This is a real risk: 2008 all over again.

If Goldman Sachs or Morgan Stanley told the Treasury that they were insolvent tomorrow, we'd have no choice but to bail them out again. And that's because they were able, via owning Congress, to prevent even trivial reform in the wake of the last crisis. The Dodd-Frank financial services reform bill is a hollow shell. Again, right now, no one has any control in Washington that isn't trumped by the power of Wall Street.

If Washington and the central banks are powerless to slow these titan-like banks, what are protesters on the street gonna be able to do? Again, OWS, for now, is among the least of Wall Street's concerns.

Alright, so, what can be done?

After reading my previous piece on OWS, a friend posted the following to my Facebook wall:

"'There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done,' - Guess who? Teddy Roosevelt. I urge you to read (or re-read) his New Nationalism speech. He's a republican hero, of course. Today a democrat [I would reduce that to 'politician' – GJ] would be lynched for the ideas put forth there."

My friend is right both in noting that TR was a real trust buster who understood that giant institutions, in TR's time or any time, will totally own us unless we break them up, and also in his implication that we need leaders with the balls to go after Wall Street, Teddy Roosevelt-style.

So that's step one: Seek out, encourage, and vote for true reformers. From everything I've read and heard, electing Elizabeth Warren in Massachusetts would be a good start. For a primer on her recent career and efforts to make the fledgling Consumer Financial Protection Bureau actually matter, I point you to Suzanna Andrews' Vanity Fair piece "The Woman Who Knew Too Much." Warren understands that the giants need to be broken into smaller pieces, whose failures won't destroy entire economies.

Step two is to give reformers like Warren a fighting chance by reducing or ideally eliminating the role of corporate money in politics. Right now, the best public push for this is MSNBC host Dylan Ratigan's "Get the Money Out" campaign. Apart from joining efforts like this and voting for actual reformers, there's little an individual can do at present to fight the money flow from Wall Street to D.C. (On a personal note, I was interviewed by Ratigan a few years ago on CNBC at their NYSE set. To put it diplomatically, he was not especially progressive then; glad to see he's evolved.)

Next of course, and to repeat a point from my previous post, we have to reform the tax code. This, along with "get the money out" should be a priority of the OWS platform. And the claim that the top 10 percent of earners pay 70 percent of income taxes and therefore should keep their tax cuts, while true, doesn't fly. It doesn't fly because the top 10 percent own 93 percent of all financial wealth and 85 percent of all net worth in the United States; on an economically level playing field, the top 10 percent would be paying taxes on a par with their share of the nation's net wealth, not on a par with their labor income, which is small compared to their investment income. Personally, I favor a flat tax with zero loopholes for anyone, including corporations. That way, the Treasury would be able to claim all it is due with no confusion or legal shenanigans, and no one could really say it's unfair. But, everyone in every group loves their loopholes, so this one remains a dream.

Finally, keep up the visibility. If we all stand by and watch the way we did in 2008, the lords of Wall Street will never be checked. The banks may not care about OWS, but leaving the streets is no way to push forward. The 1 percent might not care, yet, but the media (except for Murdoch's Wall Street Journal) are noticing, and as statistician Nate Silver recently Tweeted: "Observation: Occupy has had more success in 'shifting the narrative' than either (i) Obama or (ii) the 'Professional Left'".

So keep it up, because a repeat of 2008 might cause enough anger to create an even greater political and social backlash. But let's not let it come to that. Because if a repeat of 2008 has equally bad consequences during an already weak economy, it could result in a repeat of 1929.

Note: For any who may wonder why investment managers are repeatedly discussing OWS in their green economy blog: We decided that insofar as the rigged system of "the 1 percent" is doing what it can to perpetuate the fossil-fuel economy at the expense of the next economy, and subsequently the Earth and civilization, we have an (arguably fiduciary) obligation to our stakeholders to address that system and its opponents.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."