Selling Fossil Fuels Before They Are Worthless
[/fusion_text][fusion_text]We have seen large foundations and endowments work to divest from fossil fuel companies over the past few years. That has been done because decision makers worry that such companies are ruining the planet. Is there also an investment case to be made for making such moves? Possibly.
Let’s fast forward to a world where the effects of climate change continue to accelerate. What if the stories about Miami’s drinking water being contaminated by seawater come true? What if there are major droughts/floods that affect the food supply? At some point the world’s population would be forced to make dramatic changes to our societies. Any company that makes money by burning coal or extracting oil will be worth a lot less. They could even be literally worthless. For those who don’t believe even in 100 years that those things could happen, you should still consider that cleaner fuel sources are getting cheaper by the day. That also can make fossil fuels worth less.
Of course, climate change and its affects are impossible to predict. It could take 10 years for society to be forced to make dramatic changes because of the effects of climate change. It could also take generations. So don’t make your investment success depend on the demise of Exxon Mobil and Arch Coal. It might not happen during your investment time horizon.
All I’m saying is, it might not be a bad idea to own a little less of the fossil fuel companies. That could be a tailwind to your returns over the next few decades. You can do it while staying diversified. I can help.[/fusion_text][separator style_type=”single” top_margin=”” bottom_margin=”” sep_color=”” icon=”” width=”” class=”” id=””][fusion_text]
Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.