As developed global markets struggle to extract themselves from the ‘great recession’, investor attention is often directed to other parts of the global economy in an effort to find other opportunities. A good amount of that focus has landed squarely on the shoulders of Brazil, and, to a lesser extent, Chile, with good reason. There is much to like about both these economies. In fact each puts some developed nations to shame when it comes to their robust fiscal, economic regulations and well managed growth over the last few years. In this multi-part series we will take a look at both separately to see what makes them an appealing investment opportunity for those that are willing to take on some risk.
Brazil has the largest economy in South America and ranks as the world’s fifth most populous country and tenth largest economy. It is uniquely situated in that it shares borders with every country in South America with the exception of Chile and Ecuador. The country has rebounded strongly since the economic problems of 2007, driven by domestic demand as rising incomes create a growing, increasingly consumer-oriented middle class . Brazil is also seeing greater freedom in its export policy, which has led to strong ties with China. In fact, China surpassed the US in 2009 as the largest trading partner. While many assume that trade must be one of the biggest drivers of the economy, it actually only represents a small part of Brazil’s GDP and these exports are further diversified geographically with a low dependence on external financing and reserve accumulation. Incredibly, this has led to Brazil’s international reserves being able to cover the country’s sovereign and private external debt obligations. Read more…
On January 14th, Caledonia was proud to be part of a watershed moment in New York at the United Nations headquarters, where institutional investment leaders were present to construct a unified approach to the importance of a low carbon economy within the industry. Investor groups representing $13 trillion called on US Congress and other global decision makers to “take rapid action” on carbon emission limits, energy efficiency, renewable energy, financing mechanisms and other policies that will accelerate clean energy investment and job creation.
Watch the video below for a summary of the summit.
ETF’s continue to be an investing favorite due to their simplicity, transparency, intra-day pricing and trading, low cost and tax efficient structure. In the past, we have often been in the position where we have had to fill allocation gaps with other investment vehicles as the ETF landscape was not yet complete in its coverage of every sector. With so many options now available, it is becoming easier and easier to get the coverage you need for a well rounded portfolio.
One such example was in the world of international fixed income, particularly at the government bond level. Domestically, there are a number of fund choices out there that cover the full spectrum of fixed income options such as treasuries, municipal and corporate bonds, high yield bonds etc. Exposure internationally has been much more limited, particularly for government rated bonds, a great shame given the yields that some governments are offering on relatively high quality bonds. Finding a safe haven in the US has been easy, but with yields of treasuries sitting at such low levels, such as the 5 year paying a 2.1% coupon, the gains are very limited. Compare that to an Australian government 5 year bond offering 6.2% coupon and the rates become much more attractive. Read more…
The ETF landscape continues to expand. With the recent launch of new products from major players like Charles Schwab to smaller investment firms that specialize in focused industry areas, there is no shortage of choice for the individual investor. While many of these are often a spin on well established domestic/international/bond indexes there is occasionally a fund that comes along that stands apart from the rest of the crowd.
Launched a couple of days ago, First Trust’s/Clean Edge Smart Grid ETF (GRID) fills this criteria. The fund is built around companies that focus primarily on smart grid technology plays and aims to track the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index. This technology covers everything related to networks, energy storage, electric meters, enabling software and other elements involved in the electric infrastructure sector. Read more…
Southwest Airlines (Ticker: LUV) is implementing measures that will not only further its positioning on sustainability but will improve its efficiency and therefore its profitability.
Weight is a critical element in any aircraft and corresponds directly to flight performance, including fuel efficiency. Over the past two years Southwest has been experimenting with a “green plane” where numerous small improvements in the design and materials used in the seats and the cabin have been tested. The result is a lighter aircraft (by about 472 pounds) that burns less fuel (9,500 gallons less fuel per year). Multiply this approach over Southwest’s fleet and the savings really add up.
“Considering that Southwest flies more than 3,300 flights a day an average distance of 635 miles per flight, the savings would be dramatic. Southwest calculated that it could save 90.6 million gallons of fuel and reduce carbon dioxide emissions by 1.9 billion pounds a year.”
Extrapolate those figures to the aviation industry nationwide, fuel consumption could be cut by 760 million gallons and carbon dioxide emissions by 16 billion pounds a year.
It’s easy to be cynical about the aviation industry from a sustainability standpoint. Planes consume lots of fuel and generate large amounts of carbon dioxide. However we at Caledonia are always excited to see sustainability and profitability complement each other. As Southwest claims, it makes good business sense. Expect other carriers to follow.
Enroll in e-statements. Aside from reducing paper waste, opting to receive your brokerage and bank statements online can save you time and money. Vanguard, for instance, will waive custodial fees if you sign up to receive statements and other documents electronically. However do pay close attention to storage and access policies. Charles Schwab is great in this regard as it provides access to all statements, confirmations and tax documents for no additional charge for 10 years. Yet other institutions, particularly banks, may only offer access to records for as few as several months in some cases.
Pay your bills online. This is an obvious time savings but this practice can also save money. You no longer have to pay for checks, envelopes and stamps. For many this can result in a savings of hundreds of dollars per year. However do be careful of online banking fees as some institutions will gouge you under the radar.
Use your credit card more. Please don’t get me wrong, I’m only suggesting responsible use of a credit card (where you pay it off monthly and don’t carry a balance). During tough economic times like we’re experiencing now, more service providers than ever now accept credit cards in order to guarantee payment as well as receive it more swiftly. Although it may not be advertised, you can now use your credit card to pay everything from legal fees to school fees. No need to write checks anymore and further benefits to you include the advantage of an essentially an interest free loan from the credit card company and either program points or cash back depending upon the credit card. There are other sound reasons to use a credit card for routine purchases and you’ll find some of those here. Read more…
With so much economic news to consider these days, it is easy to find yourself struggling to keep on top of even the basics when it comes to your personal finances. Here is a short checklist of things to review to ensure you are on track with the essentials and help get you through this tough patch.
1) 401k
With many 401ks reduced to 201ks after the last 16months of market activity, plenty of people have become complacent with their assets in these retirement plans, and are content to ride the recent wave of market activity. Consider taking a closer look at your options to protect against an even more catastrophic loss in the event we see a second recession follow the last. If such were to become as deep, or deeper, than the recent downturn, you would be looking at decades of working years to re-inflate the once healthy nest egg. Laying up and waiting for an established trend to form is the safest play, and getting some advice on your fund options will pay big dividends.
2) Cash Holdings
Cash is king when we see market volatility on this kind of scale. Having the ability to buy when stocks and funds are crushed near all time lows can give you a once in a lifetime buying opportunity, particularly if your investment horizon is a long one. The danger lies in the timing, not trying to predict the lows and essentially catch a falling knife. Be patient and wait out the uncertainty, even if it means missing out on the early part of a new trend. Moving in and out of the market is a surefire way to reduce your overall wealth, as the majority of people get whipsawed by buying high and selling low. If you are getting most of your information from the media – watch this Peter Schiff video as a reminder of why you shouldn’t believe the majority of what you hear or see in the press.
3) Emergency Fund
Not enough people consider this important reserve until it is too late. Building up a safe, liquid cash position enables you to be flexible when critical life changing events occur, such as losing your job, covering health care costs, making emergency home repairs, etc. Being able to weather six months to a year provides enough buffer to get back on your feet.
Auto factories normally conjure up images of smoke stacks and waste pipes spewing filth indiscriminately into their hapless surroundings. Subaru on the other hand has achieved “Zero Landfill” status with its Subaru of Indiana Automotive, Inc. plant. In fact, the manufacturing site itself is a natural wildlife refuge and this from a facility that can produce up to 200,000 vehicles per year.
Not surprisingly, Subaru has bandied its achievements in environmental stewardship in its advertising. Subaru cheerfully makes bold statements on its own website:
“Here’s something to think about: next time you take out your trash at home for collection, you’re sending more trash to landfills than the entire Subaru manufacturing plant in Lafayette, Indiana (SIA) does in a year. The Subaru plant was the first auto assembly plant to achieve zero landfill status – nothing from its manufacturing efforts goes into a landfill. It’s all reused and recycled. Each year, SIA actively recycles 99.3% of excess/leftover steel, plastic, wood, paper, glass, and other materials. The remaining 0.7% is shipped to the city of Indianapolis and incinerated to help generate steam. In 2006, SIA recycled 11,411 tons of scrap steel, 1,537 tons of cardboard and paper, and 963 tons of wood. That’s equal to conserving 31,040 mature trees, 31,572 cubic yards of landfill space, 711,631 gallons of oil, and 10,759,000 gallons of water.”
Now passionate environmentalists might argue that recognizing Subaru’s efforts are akin to congratulating the tobacco industry were it to produce a less poisonous cigarette. After all, much of Subaru’s line up is composed of inefficient vehicles such as the Tribeca SUV. Furthermore, Subaru’s positioning within the marketplace with its standard AWD is an efficiency trade-off as the extra weight, cost and complexity of an AWD drivetrain will always be at odds with good fuel economy. And to make matters worse, while AWD does offer specific benefits, to tout it as a necessity, particularly for safety, is a consumer rip off right up there with high octane gas.
In this weekly ETF update I wanted to take a look at one of the leading China ETF’s that is available to investors today. While the phenomenal growth of China has been somewhat diluted by the global economic crisis, there is little sign in the near term that things are grinding to a halt. GDP growth is expected to fall in around 6.5% this year which is only marginally below the 7.7% avearge we have seen since the early 80s. With the SSE (Shanghai Stock Exchange) index up 52% year to date the results speak for themselves, and even though only select foreign investors can gain access to the coveted A shares there is still strong opportunities available to investors in US listed ADRs. Read more…
Supporters of green and clean technology, take heart. The news coming out of Europe in the past few days shows unilateral support for a groundbreaking climate package that is set to have far reaching effects for nations moving toward carbon reductions, increased efficiency, and the pursuit of energy independence.
Under the guidance of summit chairman and French President, Nicolas Sarkosy the 20/20/20 plan is an accord by all 27 member states of the European Union to increase energy efficiency, cut carbon emissions and increase renewable sources of energy, each by 20% and all by 2020. Read more…
As developed global markets struggle to extract themselves from the ‘great recession’, investor attention is often directed to other parts of the global economy in an effort to find other opportunities. A good amount of that focus has landed squarely on the shoulders of Brazil, and, to a lesser extent, Chile, with good reason. There is much to like about both these economies. In fact each puts some developed nations to shame when it comes to their robust fiscal, economic regulations and well managed growth over the last few years. In this multi-part series we will take a look at both separately to see what makes them an appealing investment opportunity for those that are willing to take on some risk.
ETF’s continue to be an investing favorite due to their simplicity, transparency, intra-day pricing and trading, low cost and tax efficient structure. In the past, we have often been in the position where we have had to fill allocation gaps with other investment vehicles as the ETF landscape was not yet complete in its coverage of every sector. With so many options now available, it is becoming easier and easier to get the coverage you need for a well rounded portfolio.
The ETF landscape continues to expand. With the recent launch of new products from major players like Charles Schwab to smaller investment firms that specialize in focused industry areas, there is no shortage of choice for the individual investor. While many of these are often a spin on well established domestic/international/bond indexes there is occasionally a fund that comes along that stands apart from the rest of the crowd.
Southwest Airlines
Enroll in e-statements. Aside from reducing paper waste, opting to receive your brokerage and bank statements online can save you time and money. 
In this weekly ETF update I wanted to take a look at one of the leading China ETF’s that is available to investors today. While the phenomenal growth of China has been somewhat diluted by the global economic crisis, there is little sign in the near term that things are grinding to a halt. GDP growth is expected to fall in around 6.5% this year which is only marginally below the 7.7% avearge we have seen since the early 80s. With the SSE (Shanghai Stock Exchange) index up 52% year to date the results speak for themselves, and even though only select foreign investors can gain access to the coveted A shares there is still strong opportunities available to investors in US listed ADRs. 
