Archive for investing

The Morality of Shorting

“I’ve never advocated a short sale because I hate the idea of profiting from someone else’s misery.” So said regular AltenergyStocks author John Petersen, in an article where he broke his rule and advocated shorting Tesla Motors (TSLA)

I’ve heard variations on this phrase hundreds of times, and I’ve long disagreed. But this time the phrase was coming from the keyboard of colleague whose intelligence I greatly respect, so it got me thinking.

I questioned my previous stance… is shorting immoral because you are profiting from the misery of the long investors? But I had to conclude that there are many instances when shorting is essentially moral.

Consider, a company whose business is profiting from the misery of others. For instance, a tobacco company, such as Phillip Morris (MO), to take a fairly un-controversial example. Aren’t the investors who own MO stock profiting from the misery of others? Wouldn’t the most moral course be to short MO, rather than going long?

There is a current of belief on Wall Street that, in the immortal words of Gordon Gekko, “Greed is Good” and the pursuit of maximum gain brings benefits to society. If you subscribe to this beleif, then of course there is nothing wrong with shorting, so long as you make money.

Yet if you reject the “Greed is Good” premise, and feel that there should be some moral dimension to our investment choices, you cannot also reject shorting out of hand. To do so would be to assume that all public companies are working for society’s best interests, something I find more than a little hard to swallow.

I have to conclude that shorting in and of itself is neither good nor bad… just as buying stocks is neither good nor bad. To decide if shorting a stock is good or bad, you first have to decide on your opinion about the morality of the company you are shorting or investing in. Your stock purchases are only as good as the companies you are buying, and your stock shorts are only as bad as the companies you buy are good.

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Three Upcoming Public Appearances

Tuesday, Oct 19, 6pm-8pm, Springfield MA. Which Clean energy Investments are Right for You?

Thursday Nov 4, Making Plays in Alternative Energy, Panel at Inside Commodities Conference, The New York Stock Exchange, NYC.

Tuesday, March 8, 2pm-5pm. Half day workshop. Greening Your Portfolio: How to Select Clean Energy Mutual Funds, Exchange Traded Funds and Stocks

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GreenerMoney.com

A lot of people have been coming to this blog looking for a site called “Greener Money” that supposedly offers free green financial advice. I don’t know where it is, but here is a series of articles about how to invest in Green Energy for beginners.

I’ve closed the comments on this post because people were writing to ask me for a free book. I don’t know where to get this free book, I just write a magazine column called Greener Money, and that is drawing search engine hits.

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Investing in Biomass

I’ve recently said that the best way to invest in both Advanced Biofuels and Cellulosic Ethanol, and Biochar (aka terra preta) is to invest in Biomass. Here is one way to go about it: buying Forestry ETFs or Stocks.

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The Algonquin Power Income Fund

I recommended the Algonquin Power Income Fund as a renewable energy income investment back in January, and as part of my ten clean energy picks for 2009.

Since then, both the stock and the ten picks have been doing well in comparison to the market, but Algonquin has entered into a couple deals, while I look into in a recent update on the Algonquin Power Income Fund.

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Hedging

Since I’ve recently been bearish on the market, but don’t want to wait on the sidelines, and expect that many of my readers feel the same way, I just published two articles on hedging strategies.

  • A hedging how-to, with five ways to hedge, and a simple method to fine-tune your strategy
  • How I’ve recently adjusted my hedging strategy to accomodate the insights of Taleb’s The Black Swan.</li>
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    The Raser Technologies (RZ) Saga

    A month ago, I bought Raser (RZ) in a gamble that one of thier plans to get project financing would pay off quickly. Unfortunately, the one I thought was most likely of these, an application for a DOE grant gaurantee, was rejected last week, so I sold at a slight loss.

    I’ll be keeping an eye on Raser (RZ) to see if I can pick it up again at a reduced price… there’s still a chance of a quick win if they get funding elesewhere.

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