The Kraken awakes ...

Last week, Cop26 and climate change was on every media programme’s lips, from the news and farming to Strictly come Dancing. I am not sure what this attention will achieve in the long run, but one must be hopeful. 

However, with two of the major generators of carbon, China and Russia, staying away, success is facing a strong headwind. Nevertheless, with China and the USA talking to each other to make a common plan and the commitment of many trillions of dollars to address the problem, this is definitely a huge positive, and a big step in the right direction. Let’s hope that it materialises and does not disappear into a fog of politics. 

The arrival of twenty-five thousand people in Glasgow with their accompanying carbon generating transport, caused Greta Thunberg to comment that you could “stick Cop26 up your arse”! Perhaps a little direct, but from her point of view, understandable. On the positive side, no doubt the economy of Glasgow benefitted from this influx.

There can be little doubt that tackling the adverse results of changing weather patterns can only be a positive, but I do wonder whether the UK is moving too fast in endeavouring to become carbon neutral at the expense of the economy. After all, the UK generates less than 2% of the worlds carbon pollution. However, that said, it does raise some important questions:

•    Do we want to breathe polluted air?
•    Do we want to eat factory produced foods and sugar that leave many people obese and with diabetes? 
•    Do we need an over-populated planet?

Personally, I don’t think so. In which case, all of this attention must be a good thing. It ‘simply’ requires some adjustment and perhaps a re-evaluation of the timeline.

The above reminds me of a voyage that I did in 1960 from New Zealand back to the UK, via the Panama Canal. On the way home we were charged with dropping off stores to various islands in the Pacific. Pitcairn Island, Easter Island, the Galapagos, and a small atoll, Raevava, in the Tubuai Islands. This atoll was an active leper colony, barely above sea level and enclosed by a reef. Like all the others stops, because of the size of the ship we had to use a lifeboat to take the supplies ashore. In this particular case a man wearing a top hat and a pair of shoes (as you do) swam out to direct us through the reef. Now that is something that you do not forget. I know that Raevava ceased to be a leper colony many years ago, but I wonder whether it is now still above water?

During the last twelve months and more, I have been invested in funds that were involved with renewable, sustainable, green energy creation, technology and UK small companies. Of course, both Saltydog portfolios have covered the sustainable funds in the slow group which I follow, and very nicely they have done too, and the COP26 event should reinforce this direction. The same cannot be said of the UK Smaller Companies sector which is totally off the boil. Like Saltydog, I have entirely exited from this sector, even though I cannot fully understand why this event has happened. The sector was cheap when it started to go up and it is still cheap now it is going down. I will now wait and see what happens in the future. For the moment it is history.

Believing that carbon energy prices would rise in the short term because demand would outstrip supply, I bought TB Guinness Global Energy. Although this is going up, its stablemate TB Guinness Sustainable Energy is rising considerably faster. So I have made a 50% split and will watch to see which clears the hurdles first, before making a total commitment.

It is a similar situation with certain commodities. The growth in electric cars and mobile phones must put certain precious metal supplies under strain, with the consequent rise in prices. A fund like Blackrock Gold and General would benefit from this and the rise in carbon-based fuels along with the price of gold. This seems to be increasing with the present fear of inflation. At Saltydog we have purchased this fund and so have I.
 
I am pleased to see that my interest in hydrogen production is paying off with the investment trust Hydrogen One Capital Growth. This is tasked with investing into multiple businesses involved in the creation and storage of hydrogen worldwide. Its first four months of existence has produced an 18% rise, and long may it continue. ITM and Ceres would seem to be relaxed about just going sideways, up one week and down the next. Whether this has been a good investment depends on how early you bought the shares. If it was between £1 and £2, when we first discussed them, then you will still be pretty happy.

The relevance of all of the above will depend on your own individual circumstances. I see people of my age on the television running and climbing mountains – meanwhile each morning I feel good if I can get my leg into my underpants without losing my balance. All things are relative!

Best wishes and good luck with your investments.

Douglas.

Founder & Chairman