Invest in the Next Oil
by Carl Delfeld, Investment U Senior Analyst
Thursday, October 11, 2012: Issue #1880
“You can never plan the future by the past.”
- Edmund Burke, eighteenth century statesman
During the last century, oil was at the heart of the global economy, and oil prices oftentimes still lead the financial news.
Just last week, $5-plus-a-gallon gasoline prices in California affected markets and the presidential race.
But in the twenty-first century, the price and supply of another scarce commodity will dominate the headlines. A commodity even more important than oil, at the heart of everything we do, from growing food to manufacturing.
While we take an inexpensive and steady supply of water as a birthright, in many countries, this is anything but the case…
Take Jakarta, Indonesia, for example. More than 40% of its residents do not have running water. In many countries, the situation is even worse, with 10% of all diseases carried by impure water.
Water also plays a key role in geopolitics. One example is Tibet. The Qinghai-Tibet Plateau is the source of some 20 major rivers, and Tibet’s glaciers and lakes hold some 400 billion cubic meters of fresh water. Waters originating in Tibet supply around 30% of China’s fresh water.
So after returning to America after three years in Asia, I decided to get involved with a couple of entrepreneurial water companies. One used wave action off Galveston, Texas to create energy to pump fresh water to farming communities. The other was a deep-drilling technology company looking to find water locked in deep pockets of the earth’s crust in the Middle East.
Alas, neither of these gambits worked out, but my interest in investing in water has remained strong. The fundamentals seem unassailable.
✓ World per capita water consumption is accelerating – up six-fold in the last century, with no end in sight.
✓ The World Bank estimates that global water demand is doubling every 20 years.
✓ World population is growing at a rate of 200,000 per day and expected to reach nine billion by 2030.
✓ Only 2% of the world’s water supply is fresh water, and rivers and lakes are draining fast.
✓ Agricultural demand for water is skyrocketing.
✓ 95% of the world’s cities still dump raw sewage into their waters.
✓ Underground water levels are plummeting.
This is why Texas billionaire T. Boone Pickens has already become the largest individual water owner in America, with rights to an underground aquifer supplying 27% of all irrigation in the United States.
With this doomsday scenario and T. Boone leading the way, one would think that investing in water would be a no-brainer.
Not so fast.
First, if you think oil is political, water is five times more so. Governments heavily subsidize water prices and like to keep tight control over water supplies.
Second, most water investment opportunities are boring, low-growth utilities and water treatment plants.
This means your water investment strategy must look first to higher-growth emerging markets and, secondly, to breakthrough, game-changing water technologies.
In today’s edition of Investment U Plus I’m recommend a company that I’ve been tracking in South America. It’s up 68.3% so far this year, beating the emerging market index by a 12 to 1 margin. Better yet, it pays a 3.4% dividend yield.
I’ll also keep you posted in the coming weeks of any new developments.
In the meantime, can you imagine $5-a-gallon prices for water?
Good Investing,
Carl
Invest in the Next Oil,Any investment contains risk. Please see our disclaimer.
5 Responses to “Invest in the Next Oil”
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The problem of water has not been hyped in the popular press, and so most people don’t know how urgent and pressing a matter it is. My eyes were opened a little wider on this when I saw this episode on Charlie Rose last week. I would hate to see people who are merely looking for profits corner any markets on water, and so was impressed by the social concerns of the persons in this video but also by their sound business sense:
http://www.clicker.com/tv/charlie-rose/muhtar-kent-ceo-of-the-coca-cola-company-actor-matt-damon-gary-white-founders-of-water-org-on-the-global-water-crisis-3325172/
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Yes, $5 per gallon is already here, just buy individual plastic bottles of water in any gas station or party store
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I get a lot of these fancy newsletter and this one on water is true but the ultimate aim in these letters is to sell you some subscripton. I am a Canadian and would like to invest in this companay but it trades in Yankee dollars and I have no faith in the Yankee Greenback
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Of course, all newsletters are out to sell you something. Alternative health practitioners are out to sell you something, Big Pharma is out to sell you something, you, yourself are out to sell something…your skills and time traded for $. We all know this, because Nothing is free in life. Its up to us to sort through all the chaff to find the Real Gems….people who are willing to tell us the truth based upon facts, but do we also expect them to do it for free?
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Please stop sending “teasers” !!! If you have a solid recommendation, thanks. But to these long stories leading up to pushing for an upgrade: NO, thanks.
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