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I think it's time to do some research and figure out the appropriate short.
by finnh 10y ago
I think it's time to do some research and figure out the appropriate short.
- simonebrunozzi 10y agoI was thinking about it. How would you short something like this?
- sbierwagen 10y agoThe general problem with attempting to profit from global warming is that you end up having to short the entire financial system, and it's tough to make money from the idea of "everything stops working".
- finnh 10y agoI dunno - waterproof bulldozer manufacturers should do pretty well.
- scarmig 10y agoRealistically, both Canada and Russia are countries likely to be net beneficiaries of global warming. Taxes won't have to be increased as much to deal with the effects; more taxes will be generated from increased agricultural productivity; and heating costs will decrease. Must be some way to hedge your personal losses from global warming with investments there.
- zzzzzzzza 10y agohttps://www.theguardian.com/cities/2016/oct/14/thawing-permafrost-destroying-arctic-cities-norilsk-russia https://www.theguardian.com/cities/2016/oct/14/thawing-perma... maybe not so much in the short-medium term.
- sulam 10y agoBefore you short, read the Big Short and imagine yourself as Michael Burry. Very often you can be short, right, and lose your pants because markets are slow to recognize things that they are paid to ignore.
- finnh 10y agoYup. The markets can be irrational longer than you can be solvent. But there must be some arbitrage with derivatives or something, right? =)
- maxerickson 10y agoYou could go long on post sea level rise oceanfront properties. There's probably a few places where a narrow strip of land has enough of the right slope to be a win for quite a range of sea level increases.
- pixl97 10y agoAnd then some idiot will scam the taxpayers in to building a large seawall miles out from your location, leaving you high, dry, and broke.
- maxerickson 10y agocjlars already brought up a similar strategy with less sensitivity to sea level changes and less sensitivity to interventions. Maybe the best climate change hedge is investing in low carbon power production. (incrementally) Good for the climate, benefits if things go worse than expected.
- acchow 10y agoNo, that's exactly the problem. If you're betting on the market's irrationality fixing itself, you better be able to weather the storm of however long that takes.
- bronson 10y agoVery true. And the Army Corps of Engineers might decide to build some levees and pumping stations, delaying the reckoning indefinitely.
- yardie 10y ago
- toomuchtodo 10y agoEasy. Have someone on Wall Street create a derivative for you that increases in value as Miami Beach real estate value declines, and be willing to pay the premium for decades. If you wanted to speed things up, find a way to force saltwater into the water table faster without being caught by regulatory agencies. Sulam's sibling comment nails it.
- cjlars 10y agoThe inflection point, if there is one, is likely a decade or more away. Real estate losses will be unique to each area. So you're more likely to see a smattering of "Hurricane Katrina Moments" than a wholesale reversal in the financial markets a la 2008. Deep out of the money options on overexposed instruments is a plausible position to take here, especially during the ~6 week hurricane season. Another thing to note is that it costs money to short -- you are borrowing the shares after all, so you need to pay interest on the loan. This makes a multi-year position shorting select REITs troublesome. The position I'm taking (roughly) is to hold oceanfront property with excellent sea-level protection. Think cliff-front, not beach-front. A different play? Construction companies specializing in sea level mitigation.
- bzbarsky 10y agoCliff-front property may have its own issues. For example, the cliff parts of Cape Cod are eroding by an average of 3 feet per year according to http://woodshole.er.usgs.gov/staffpages/boldale/capecod/quest.html http://woodshole.er.usgs.gov/staffpages/boldale/capecod/ques... -- and that link claims that sea level rise would be expected to speed up erosion. Of course if you pick sturdier cliffs you might be better off.
- sseveran 10y agoThats pretty easy for an institution to do. You would simply find the most exposed developments with the highest credit ratings and buy CDS on their bonds. The issue is that if this is not a crash (e.g. prices rapidly collapse triggering defaults) its very hard to monetize.