Investing for the future?

Lately something has been plaguing me and I can’t get it out of my mind.

How do I invest and plan for the future when all I see in the future is the turmoil caused by Peak Oil and our unsustainable lifestyle?

You see, I do all the financial planning for my little familia. I assist my parents with their 401K choices. I help my friends with their choices. I make all my own personal stock, bond and mutual funds choices too, not to mention checking, savings, cds, etc. I’m not in any way a licensed financial planner, but I have received plenty of college training on these subjects and they are of interest to me so I spend some time reading about them and keeping up on things during my little spare time.

Frankly, I think I stack up better than most “advisors” who are nothing more than trained sales people pushing stocks the company tells them to push. Which is why I never got into that field. I can’t stomach doing that with people’s hard earned money. I’ve seen how bad advice has big consequences to the individual but not the person giving the advice. Sorry about that…where were we…oh yeah. How do I continue to do that with all these big ideas swirling around in my head?

I don’t know. It’s hard to do. As oil gets more expensive all products will become more expensive. This leads to inflation, which is bad. But, will it force some companies to just shut down? Possibly. What happens as people start figuring out what is happening and they start staying home and quit eating out or buying so much food from a long way away or driving less or buying smaller homes? While I want those things to happen morally, financially I can’t figure out how to plan for them or use these ideas to my advantage to maintain or grow my wealth for my future generations. Even if I’m not invested in those industries directly, my mutual funds probably are, and if things start to teeter than it would seem feasible that even companies with little direct impact from the changes would be affected, at least in the markets, as the country enters a pretty deep recession, or possibly even a depression. But the difference here is that it won’t be temporary like the depression of the 30s. This will be a permanent change. Without cheap oil nothing will be as easy as it had been, which means less leisure time for people, less available disposable income for people, smaller markets for products and less overall financial wealth. (We will ignore personal/spiritual wealth for now) While there could be a boom as maufacturing is shifted back to America from other countries and it becomes more local the entire economy will be a fraction of what it currently is. How does someone plan for a future like that when so far all we’ve ever known is growth, growth, growth? How did people save money 100 years ago before so many people were invested in the market? Just by putting it in a savings account? This is something I’m struggling with all the time.

As I’ve continued to invest I have drawn some moral lines in the sand where I personally have forsaken potential profits because I morally disagree with what is going on in those businesses. I can’t own a cigarette company or an oil company directly (I obviously don’t control what my mutual funds purchase) because of my moral standards about those businesses. (This is in direct violation of my financial training but that’s OK) This choice has caused me to pass up a lot of profits in the past, and probably a lot more in the future. But now there are a lot of companies running up against what I believe, even ones I own. I thought for fun I’d run through my portfolio and detail out every stock and the problem I have with it.

Sprint (S)–(Full disclosure, I use to work there and that’s how I got most of the stock) While telecommunications is an essential part of our life’s is it sustainable? On the surface I say yes, but the biggest part of their business is mobile phones which contribute to car accidents and encourage our wastefulness when we throw away a phone every 2-3 years, especially with all the manufacturing that went into everything revolving around phone calls with the components, shipping products all over the world and especially the batteries on phones.

Embarq (EQ)–This was spun off from Sprint recently. It is Sprint’s old local phone division. I don’t have much too say here. It seems to be relatively straightforward. Other than the use of resources wiring up the phone lines I can’t see much to complain about here.

Entertainment Properties Trust (EPR)–This is a real estate trust that owns movie theaters that it than leases to movie companies. It would seem that this would contribute to our countries sprawl as they mostly are built in new shopping centers that keep being built on the outskirts of towns. Additionally, I’m concerned that as our world keeps changing we will have less available cash to attend movies so that could cause problems here.

Investors Real Estate Trust (IRET)–This is a real estate trust that owns apartment buildings and commercial buildings in the upper midwest. See EPR for concerns.

Lions Gate Films (LGF)–This is an independent movie producer that makes movies that are then sold or distributed by the large movie companies. I’m concerned about the resources they waste making movies and disposable cash in the future.

Berkshire Hathaway (BRK.B)–This company has tons of different companies under it’s umbrella, but one of the largest is GEICO. What happens when or if people stop buying cars? How does that affect this company? There are also plenty of other companies here that are concerns to me but I could spend 50 pages talking about them all.

But even after my little piece of the world I’m running into companies like automotive companies, fast food companies, food conglomerates, construction companies, banks, manufacturers, real estate companies and defense companies that I’m having a hard time justifying, even if they are compelling values. How do I find suitable choices? I can’t. That’s my problem. Everywhere I turn it’s waste, waste, waste. Even the company I work at now contributes to these concerns.

I’m having a hard time figuring out how to do all this and plan for the future. Anyone have any ideas?


7 responses to “Investing for the future?

  1. I don’t have any stocks, but I’m considering Honda. They are getting into the solar business in Japan, so it seems pretty clear to me that they are planning for the future.

    There will always be a market for cars, and manufacturers that build small, light and efficient will continue to see business. At least I think so.

  2. Liz–

    I’ll play devil’s advocate for a minute if I can. Will there always be a market for makers of efficient automobles? I’m not so sure. Let’s say the price of gas climbs (once the world knows that we are past peak) to $5-6 a gallon. Natural gas will also climb and thus utility rates will rise. This means that consumers now have less discretionary funds available to buy things, and these things will cost more because the raw materials they depended on to make them cost the manufacturer more, and the cost to build these products increases, thus they have to increase their prices to us, the consumer. But, the consumer can’t keep up and just decides not to buy a new car this year. No big deal, but when that happens next year, and the year after and the year after now we are talking about a serious recession, and it has the makings to affect all kinds of industries, not just automobile. It affects banks who finance cars, and oil companies who supply gas and lubricants, and glass companies and tire companies and auto part companies and plastic companies and other companies who all supply parts for cars. So now you are seeing a reduction in revenue across lots of industries which will lead to a loss of jobs, which in turn leads to people who have jobs “runkering down” and spending less on cable and eating out and movies and possibly even health care. Then the spiral repeats. Now we are in a depression.

    We’ve had plenty of these down periods in the past, but we’ve always had cheap oil to bring us out of it and to provide all the energy we need for the recovery. Now we won’t. On top of that our farm lands are depleted and at what price point will it be inefficient for our farmers to feed the land with fertilzer and pesticides, all created from Natural Gas? Our crop yields will drop. According to what I’ve seen yields being 25% of what they were wouldn’t be unexpected with no fertilizer for these dead lands. So now food is scarce and expensive and people have less income. And it won’t just be in America but across the world.

    Now talk about all the countries that depend on us to export them food, one of the largest being China. Will they let us not export them food so their people starve? They hold a lot of our country’s public debt (I think a trillion $’s worth), is it feasible for them to dump it on the market to cause a serious devaluation of our currency? Possibly. That brings on big time inflation.

    Will the manufacturing of “green” products even be feasible in the future with our increased energy costs? I don’t know.

    I don’t know if any of this will happen, or if all of it will happen, but this is the kind of stuff that makes it hard for me to see into the future to figure out what to do. I’m probably a little extreme but I still have to account for these things.

  3. Commodities.

    As our dollars start to rapidly decrease in their buying power, I think we’ll want to be invested in something tangible, like food, energy (I know), and metals. I personally think that investments in oil companies are smart, and I don’t see a moral dilemma. In fact, as a shareholder, you can have some (small) influence on the company’s behavior.

  4. Bah – sorry – just saw you’ve clearly already seen that! Carry on… 😉

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