A New Investment Vehicle?

As investors we’re on the lookout for assets that escalate in price over time. If that price escalation is predictable, then you have the makings of a sure fire investment.

Many investors take the stance of looking retrospectively and attempt to use history as a predictor of future performance. Imagine looking at the chart of a commodity like copper or gold or lumber or platinum. You would see a general long term upward price pressure, largely driven by devaluation of the currency. But short term supply and demand fluctuations dominate those trends. You see price spikes followed by periods of depressed prices that can last a decade or more.

Some have argued that the path to increased value is scarcity. Remove supply from the equation and prices increase as long as demand remains strong.

There is a relatively new product designed to create financial incentives to reduce pollution and green house gasses. Governments all over the world have introduced a tax of sorts on carbon emissions. This tax is in the form of carbon credits. I know, there are some purists out there who will argue that there is a difference between a carbon tax and a carbon credit. These carbon credits can be purchased and traded on the open market.

Virtually all companies will eventually need to purchase carbon credits so the demand for the product is virtually assured.

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Host: Victor Menasce

email: podcast@victorjm.com