Pholesolus

Watch Climate Change Get Solved In One Chart

Long
NEE/XOM  
NEE/XOM  
This is a ratio instrument that tracks the price of NEE shares in terms of XOM shares. NEE is a utility company making strides in installing renewable power into its energy mix. XOM is one of the oldest and biggest dirty oil and gas players. As you can see, the global rivers of capital allocating resources and assigning valuations have, within the last two years, begun to assign massive premiums to renewable players in anticipation of a green-ification of our power grid. While this move honestly took a bit longer than I would have anticipated - Solar became the cheapest power source in the world in terms of $/watt in early 2016 when FSLR created its breakthrough telluride panel - it has nonetheless played out.

As it turns out, buying this spread at that price, in early 2016, would have netted you a cool 600% with no overall market exposure.

I think this chart is great for two reasons:

1.) It shows that capitalism is still alive and kicking, able to solve some of the world's biggest problems through consensual transactionmaking
and
2.) It provides a great template for trading some of these macrotrend ideas at work in the present time. Boomers getting older - long a healthcare spread. Wealth transference - short a wealth management spread (as more and more millennials want more transparency and lower fees when it comes to investing). etc etc. Discern the best trends you see happening around you, determine who the winners and losers are likely to be, and place a hedged trade like so. Some, like this, just work better than others :)

Comments

OLD and DIRTY? Yep, a lot to like 'bout this one~!!
Reply
I like this strategy. How can I place a trade like this ? What specific securities should I have considered buying to take advantage of this move in the ratio of the two stock prices? Thank you !!
Reply
@jad700, find a macrotrend you are confident will continue to play out, research companies with exposure to it, and then go long the winner and go short the loser. Betahedge for sizing and never trade the legs seperately, treat it as one trade
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Do you have an electric car or a car that uses dirty gas? Do you pay a power company or do you have a solar powered home? Just curious? Dreamy chart though
Reply
Pholesolus lauralea
@lauralea, I use public transportation (living in NYC) but at my second home in *undisclosed US town* I have a tesla with solar and the whole deal. I know I'm ahead of the curve but I think the investments I've made have both paid off and been for the benefit of the environment. I don't know how ConEd generates their power for my main place in New York though, probably nat gas & point taken
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