How to play resource scarcity


I like this.


An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

By Melissa Shin, From

By 2050, it’s all over, says Jeremy Grantham: we’ll have either used up all cheap fuel or irreparably damaged the climate.

The founder of GMO Asset Management shared this grim scenario at the Ben Graham 2013 Value Investing Conference in Toronto yesterday.

And other major resources are at risk.

Consider that China currently consumes 59% of the world’s cement, 48% of its coal and iron ore, and 45% of its steel.

And the country has traditionally eaten a plant-based diet. But as it becomes wealthier, people will demand meat. Even now, the Chinese eat 47% of the world’s pigs.

As a result, agricultural stress will grow.

“There’s no room for bad weather,” Grantham says. Crop yields are decreasing: annual growth was 1.25% in 2011, compared to 3.5% in 1971. And the best crop yields – Japanese rice, German wheat – are topping out.

Food shortages will only worsen: we’re running out of phosphorus, an element with no manmade substitute that’s a crucial component of fertilizer.

“We need to mine it now to feed seven billion people,” Grantham says. He adds that 85% of the world’s high-grade, cheap phosphorus is in Morocco and the west Saharan region; the remainder is scattered around the world and in the ocean.

That supply, Grantham estimates, will only last about 50 years. In 25 years, we’ll be in crisis, he says.

Compounding the problem is the political unrest in Tunisia and Egypt, which is causing these countries to halt exports of the commodity.

And “Morocco won’t sell. I’ve met with them twice,” says Grantham. Regardless, he recommends buying phosphorus if you can – he owns some in his Foundation for the Protection of the Environment.

Potash, of which there are large supplies in Saskatchewan, Russia and Belarus, is also a component of fertilizer. So it’s another resource to consider investing in as food scarcity continues.

Aside from these commodities, he’s long on natural gas and short on grain.

His logic on gas? It’s $3.50 in the U.S., but $12 in Europe, so resource companies will find drilling attractive. “In five years, the price will have tripled, and it’s game over.” There will still be a long-term shortage.

Fracking does not address the cheap oil problem, he adds, because natural gas is a local market – it’s hard to move without pipelines.

His reasoning on grain is the major droughts of the last few years have caused farmers to overplant. “We will drown in grain” if the weather is good, he says.

Grantham also recommends investing in alternative energy companies, noting that the solar sector in particular has taken off. He predicts its delivery cost will fall over the next decade.

Copper ore, farmland and forest are also going to be scarce, and make good investments.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Post a Comment

Your email is never published nor shared. Required fields are marked *


Subscribe without commenting