Once the markets pick up on water commodities we can brace ourselves, the minute we turn on the water tap we will be billed as if filling our car at the filling-station ..................
Investing in Water: The Most
Profitable Investment of the 21st Century
by Louis Basenese, Advisory Panelist, The Oxford Club
by Louis Basenese, Advisory Panelist, The Oxford Club
Editors Note: Oxford Club Advisory Panelist and
IPO expert Louis Basenese constantly monitors the world's fastest-growing
industries. Below, Louis details the fundamental forces at work
driving one of today's hottest growth opportunities…
Right now, there's one commodity that sells at gas stations for almost twice the price of gasoline - and U.S. consumers never complain about it.
In fact, this precious resource
we often take for granted is in critical shortage in more than 80 countries
worldwide. And it will forever be in high demand, as every living being's
survival depends on it.
Of course, the commodity
I'm talking about is water. And the effects of its shortage are of major
concern…
Nearly 40% of the world's
population does not have access to clean water. And this problem is not going
away anytime soon. It's actually getting worse…
Less than 2% of the
world's water store is fresh water - to quench the thirst of 6 billion people.
And according to the International Food Policy Research Institute, by 2020, an
additional 2 billion people will be competing for this shrinking resource.
But the problem isn't 14
years from now; the problem is now. Below, we'll review why investing in water is turning out to be the most
profitable investment of the 21st century. But first, let's look at the
problem…
At this moment, clean,
safe water is scarce across the globe. Fortunately, several players in the
private sector are working hard to solve this problem. And for investors, this
industry provides perhaps the most profitable opportunities of the 21st
century.
Two Catalysts: Global
Warming And Population Growth
Water is the
single-largest health problem in the entire world. According to SIWI.org,
90% of the 5,000 daily child deaths are related to some sort of
diarrhea-related disease.
And torrid population
growth is not only stressing water use, it's causing massive pollution and
depleting the largest aquifers on the planet. Unstable politics of water-poor
communities, states and countries is triggering heated tensions - and in some
cases, all-out wars. And global warming is drying up lakes, eroding
shorelines and depleting rivers.
Consider the following:- Within 50 years, more than half of the global population will be living with water shortages. They will affect 4 billion people by 2050.
- The Dead Sea has dropped more than 66 feet in the past 100 years and is now losing about 3 feet each year.
- Lake Chad in Africa is now 1/20 the size it was 35 years ago.
- Water-borne diseases kill one child every 8 seconds.
According to
the National Academy of Sciences, Mother Earth is now the hottest it's been for
at least 400 years.
More specifically, over
the last 100 years the surface temperature of the Earth has risen 1 degree
Fahrenheit. And while that doesn't sound like too much, it's enough to
wreak havoc on eco-systems, erode shorelines, dry aquifers and cause massive
water shortages all over the world.
According to the IPCC, if
global warming is not stopped, the earth could heat up another 3 to 10 degrees
Fahrenheit by the end of this century. Time magazine points out that,
"Mount Kilimanjaro has lost 75% of its ice cap…" Moreover, it could
completely lose ALL of its ice by 2020.
The result is less inland
snow, a reduced amount of fresh river water, drying aquifers, and intense
strain on any ecosystem relying on irrigation. With entire regions becoming
unsuitable for crop production, both food and water will need to be transported
into the water-deprived nations, dramatically hindering their ability to
contribute to world GDP.
And the world's
fast-growing population isn't helping the situation…
From the beginning of
time through the middle of the 1900s, the global population grew at a steady -
but not alarming - rate. Now, it's multiplying exponentially.
There are just over 6.1
billion people on the planet right now, but by 2050, census officials predict
there could be as many as 9 billion people on Earth. And more demand for
water simply means that the already under-supplied resource will become scarcer
in the years to come.
The World Bank points out
that global demand for water is doubling every 21 years. And, at present,
1 billion people on the planet don't have access to safe water. "In
Latin America alone, about 15% of the population - roughly 76 million people -
lack safe water, and 116 million don't have access to sanitation
services."
So how do we solve this
water crisis?
Opportunity in Water Investing Is
"Dripping" From This Shortage
The answer lies in the
private sector - companies working night and day to solve the world's water
woes. The global water industry has been heating up for several decades,
and the story's certainly not new.
Many savvy investors have
already recognized that investing in water stocks is simply the investment of a lifetime. Some have already
locked in huge profits over the past few years. Here are just a few
examples of water investment successes:
- Investors who put $10,000 dollars in Consolidated Water (Nasdaq: CWCO) in 2000 banked a cool $71,061.43 by February of 2006.
- Water has to be moved, as well… and the lucky few who invested $10,000 in the IPO of American Commercial Lines (Nasdaq: ACLI) in the early part of 2005 would have made more than 310% by May of 2006.
Think of it this way: Bottled water sells for roughly $1.50 a liter at the gas station right now, while gasoline sells for around $3 a gallon. With 3.78 liters in a gallon, bottled water would be selling for $5.67 a gallon - almost twice the price of gasoline. And water companies don't have to build expensive oil wells and refining plants that are toxic and environmentally unfriendly. The overall cost to bring water to market is, in many cases, lower.
In the end, investing in water stocks is a smart play all around for those seeking constant, stable returns. Global Summit Management (SGM) reports that from 2000 to 2005, water utility stocks returned 134.57%, while the S&P 500 clocked in at a mere 2.74%.
And those who invested in water stocks for a 10-year period were even happier. The stocks banked 446.01% from 1995 to 2005, versus 9.06% in the S&P.
Conclusion on Water
The world needs safe, clean drinking water and acceptable sanitation levels. Demand is outstripping supply. And several smart companies are solving the problem, which bodes well for investing in water for long-term gains.
Good investing,
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