Profiting From Past

I know that we are well into this year already but Happy New Year!

Best and Worst of 2013

In 2013, we had a few that make the list of best and work performing stocks. In the following weeks, we will highlight in detail the lessons learned from these picks.

Best: Genworth Financial (GNW) – This stock was a top performer and bottomed out in the low single digits. It rebounded into the double digits and is still pushing higher.

Worst: Aveo Pharmaceuticals (AVEO) – This stock was a roller coaster. Up sharply on promising news of drugs that treat cancer, and then it came crashing down the when the FDA didn’t approve the drug after clinical trials.

Do We Learn from the Past

I often hear people say “We will learn from our mistakes and not repeat them”.  It is a great notion but how often does this really happen in society.  My few years as an amateur investor question how often this really happens.  I find it interesting how often technical investors look at charts and patterns because they have seen similar events in the past and look to benefit from it.  The government mainly uses models based on past events to address current markets, however; the ever revolving cycles of market excess and then subsequent crashes still continue.  You wonder why very few investors identify crashes before they occur and if we all are too happy to enjoy the good time to do “what is right” to prevent or cushion the crashes that are inevitably coming.  A few key subjects shine light on this very topic:

-          Income Equality

-          Immigration

-          Civil Rights

-          Public Schools

-          Stock Market Crashes

-          Regulation

-          Mass Shootings

-          Pollution

I found a very interesting article that highlights the issues of coal and smog in China and you first question why they even have this problem in this day and age.  I also am not too critical because history shows that we rarely learn from other people’s mistakes and often time erodes the ability for us to learn from our own previous mistakes.  As you remember the issues of pollution in China, flash back to the days when this exact scenario was happening here in America or in other places.  You may ask “Why didn’t they learn?”, “This has happened in other places?”, and “What solves the problem?”.  Here is an interesting article that highlights interesting world of coal.

Wall Street Journal – “The Future of Coal: New Pollution Rules…”

Author: Rebecca Smith & John Miller

Link: http://online.wsj.com/news/articles/SB10001424052702303330204579248771284421960

Excerpt:

The world was riveted in October by eerie photos of Harbin, an industrial city in northeastern China that was smothered by thick smog from burning coal.  The U.S. had its own encounters with choking pollution several decades ago. Though nearly forgotten today, the incidents sparked the creation of the Environmental Protection Agency and federal regulations that have reshaped the electricity industry—then and now the country's largest industrial source of air pollution.

The agency's early efforts have resulted in important gains. Since reaching a peak in the late 1970s, U.S. utilities have slashed their release of their two biggest air pollutants, cutting sulfur dioxide, which causes acid rain, by more than 80% and reducing smog-forming nitrogen oxides by more than 75%, according to federal statistics. Utilities did it—and slashed soot emissions as well—while continuing to burn enormous amounts of coal.

I don’t claim to have an answer but doing what’s right for people and technology innovations often lead to a positive future and maybe they must happen together.  As an investor, simply remember that life has a repeating quality to it but also look for things that make people’s lives better and technological innovations that solve old problems in new places.  All three came be opportunities for you to invest in.  Here is an interesting article that highlights how technology may improve an old problem:

Wall Street Journal – “The Future of Coal: New Pollution Rules…”

Author: John Miller

Link: http://online.wsj.com/news/articles/SB10001424052702303332904579228161981168296

Excerpt:

The unexpected comeback story in the U.S. coal industry is the Illinois Basin. The area had been one of the four major U.S. coal basins—along with Wyoming and Northern and Central Appalachia—but became less popular with the passage of the Clean Air Act in 1970. Illinois coal contains high amounts of sulfur, which contributes to acid rain. Now the spread of scrubbing technology, which can remove 97% of a coal-fired power plant's sulfur dioxide, has put Illinois coal back in play. As power plants installed scrubbers, coal companies reopened mines over the last decade. The state of Illinois was expected to produce 56 million tons of coal last year, up 70% from 2010, according to the Energy Information Administration.

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