The Iconoclast Investor

As Editor of the Cabot Green Investor, I know people encounter many of the same issues I’ve been writing about lately in Green investing. For instance, there are a lot of mutual funds that say they are Green and socially responsible, but when you drill down into their holdings, there is little to differentiate them from plain vanilla large-cap funds. Many ostensibly Green funds have Microsoft, JP Morgan Chase and Pepsico as their top holdings. Talk to managers of these funds and there is always a roundabout argument to be made for companies like these being Green, not that I know what they are. Microsoft uses very little packaging, perhaps? The low prices of Pepsi’s Taco Bell keep the U.S. Mint from having to print more bills? JPMorgan Chase is recycling taxpayer money? Very often, the label of “Green” and “socially responsible” on mutual funds is just a guise to justify greater fund fees and expenses.

Many people instead turn to Green ETFs. Yet with ETFs you not only buy the good names in Green, they buy plenty of the bad ones as well–the companies with poor strategies, obsolete technology and sometimes even “greenwashing” executives, those who claim they are green because it is trendy. For every winner you get with an ETF, you grab half a dozen also-rans, too. That may pass in a raging bull market, which lifts every stock, but not in a mild bull market, let alone a sideways or bearish one.

That’s why at Cabot Green Investor, we focus on the most promising of Green stocks, weeding out the winners from losers through a combination of Cabot’s time-tested technical analysis and investment parameters with good solid research and a gut developed over years of investing. We aim to build a portfolio of 10 Green stocks, quickly cutting losing stocks to preserve capital for our winners. That’s why the Cabot Green Investor has far outperformed every mutual fund and ETF in the Green space this year. No doubt, it’s been a difficult year for everyone in the market–there isn’t one stock mutual fund in positive territory for the year, Green or not, and every Green ETF is down at least 20% and most closer to 40% for 2008.

For the year so far, Cabot Green Investor subscribers have enjoyed some big winning picks, like American Superconductor (AMSC), a wind company that gave us a 40% profit on in just six weeks this summer, and a domestic environmental remediation firm we’re still riding a double-digit profit on. There is no denying that with the market crash of October we’re down, but just in the single-digits as of early November. I know that’s a lot like a pitcher bragging about an eight-inning complete game, but we’re proud of how our adherence to a proven formula has put us far ahead of the competition. The simple fact is, the more you conserve now, the more you have for later. That’s true both in your winter energy bill, and your investment portfolio.