Weatherproof Profits: Plays on Climate Change

Politics aside, Benjamin Shepherd looks at the long-term investment implications of global climate change. The editor of the Inflation Survival Letter also highlights two companies poised to benefit from this trend.

Steve Halpern: We're here with Benjamin Shepherd, editor of the newsletter Inflation Survival Report. How are you doing today, Ben?

Benjamin Shepherd: Good, and it's actually the Inflation Survival Letter.

Steve Halpern: Oh, I'm sorry. Forgive me.

Benjamin Shepherd: That's fine.

Steve Halpern: Before we turn to specific investment ideas, would you tell our listeners about Inflation Survival Letter and your overall strategy and the longer-term goals behind the publication?

Benjamin Shepherd: Sure, we actually launched this past November. It's our belief that we're seeing rising inflationary pressures in the US economy as it returns to growth and continues to return to health following the massive recession of a few years back.

We've seen the price of food double over the past ten years. We're seeing wages not keeping up with the rising costs so, really, our goal is to help people hedge their investment portfolios to keep up and exceed these rising costs.

Basically, we do that by focusing on companies and industries that have some built-in resistance to inflation, because they have the power to pass those cost increases through to consumers or end users.

We also really pay a lot of attention to valuation. It's very important that you not overpay for assets, especially income-generating assets, which we use quite a bit to add an extra cushion against inflation.

Steve Halpern: Now, you recently explored a fascinating subject in your newsletter; climate change. And you looked at the potential investment implications of what is a very long-term trend. Could you expand on that for our listeners?

Benjamin Shepherd: Sure, climate change is actually something that's really overlooked, particularly in the context of inflation.

When people think about inflation, they tend to think about the monetary policy side of things, governments printing money, but the other leading cause of inflation is, primarily, supply shocks, and climate change has the potential to be the mother of all supply shocks.

We've already seen that as far as green prices go, just over the past few years with the massive droughts that we experienced in the Midwest, droughts and fires in Russia and Ukraine, fires and massive flooding in Australia, and all of those forces have combined to drive a more than 30% average increase in the cost of grains, just over the past few years and, ultimately, that causes a whole host of price increases.

Obviously, there are the foodstuffs themselves, things like cereal. The price of meat goes up with the higher cost of grain.

Even the cost of gasoline goes up because of the ethanol mandates, so climate change really has the potential to have a huge impact on investors' portfolios and it's really a stealth impact because people generally just don't think about it.

Steve Halpern: Now, one investment idea in the sector that you like is the area of water management. Could you tell us about Lindsay Corp. (LNN)?

Benjamin Shepherd: Sure, Lindsay Corp. is a large conglomerate. It operates primarily in two main markets. The first is highway infrastructure.

Page 1 | Page 2 | Next Page The expert featured in this column, Benjamin Shepherd, may or may not own positions in any investment vehicle mentioned here. The views and opinions expressed are his or her own.