Next Generation Investing_NGI; Foreward, Statement of Purpose

Changing the World Through Investment
June2008

When Adam Smith wrote Wealth of Nations in 1776, he could only imagine the place to which his theories in economics would steer society. America was just beginning its shift from a colony of Great Britain to the new United States, still yet to be explored or defined. Smith's economic principles seem to echo this sentiment of expansion; the idea of consuming the country’s resources to accommodate the accumulation of wealth in the growing nation was a realistic and logical option.

The expansive wilderness seemed limitless in its abundance in relation to the resources it had to offer. Consumption seemed like a fine economic model to build the next two centuries worth of wealth upon. Growing populations, though, have shown the people of this country and even the planet as a whole, that the earth is a place of finite resources; Adam Smith's fundamental principles seem to be killing the very ecosystems that we depend upon for survival. Upon our collective realization of this simple fact, we are faced with different scenarios based on our choices.

Here at the beginning of the twenty-first century, depending on your proclivity, we are standing at crossroads or on a precipice. Either way, there are choices to be made and questions to answer. Where will all of this wealth that the United States has developed over the course of the twentieth century end up at the end of the twenty-first century? Will oil set the agenda for the economy, politics, your daily routine, and the weather over the course of the next century, or will money gradually shift into renewable energy and sustainable economics? Will we choose this shift on our own timeframe based on an evolved sense of ethics and responsibility, or will global climatic shifts hasten the hour of reckoning and spiral investors further into buying and selling tailspins.

If the current collaborative communities today are any indication of the overall readiness of the American consumer to get on board and pay to play in a more environmentally friendly world, then it is only a matter of time before renewable energy and sustainable living go mainstream.

It only makes sense to preserve the basics on earth, clean water and air, and to do this using sustainable systems that generate wealth for a broader cross-section of the global population.

The desire to preserve basic life-supporting ecosystems on the planet over the next century, will cause educated and professional people to simply make the decision to switch their energy service providers; that is, if renewable energy sources can provide enough energy to power their daily lives with no interruptions in convenience. If this is the case, then switching to renewable power sources becomes a sound investment over the long-term. If alternative energy sources can enter the market conveniently, then the money will ultimately follow, if for nothing more than to remove the grey cloud that follows the burning of fossil fuels in terms of poor public image and dirty, half-dead, fat cats.

Who are these people making these world changing decisions? Some are already walking among us. They begin with a new generation of investor who believe in the optimistic scenario of the events still left to play themselves out over the course of the next one-hundred years or so. They are the next generations after them and those still to come. They will be handed the reigns of an economic carriage in dire need of restructuring on a global scale. They will be given an infrastructure that needs to be retrofitted and streamlined for efficiency. They are you and I.

Today’s CEOs are beginning to make the switch to greener ways, realizing the profitability of portraying a better, more caring public image, although, most of their actions would be described by future environmental economic enthusiasts as mere baby-steps. Some corporations capitalize on the environmental movement in marketing campaigns only, but raising awareness is an important first 'baby step'.

These 'baby step' corporations pursue the bare minimum of standards so that they can put the name environmentally friendly in big letters surrounding their products. This practice steals some of the thunder from the environmental movement, but it gets people thinking about the choices before them. Is global warming real? Will climate change cause us to alter our comfortable lifestyles? None of the answers to these two questions really matter to the Next Generation Investor. To this person, sustainability and responsibility are ethical and moral obligations, not economic choices. Sometimes, it is the media that exploits the public’s fears about global warming and tries to animate doomsday scenarios in order to fulfill some people’s desire to see an apocalyptic future unfold because this is good for business. No apocalypse is good for life; we all lose under these types of scenarios.

Whether it is fear-mongering or it will happen, the simple truth of Al Gore’s "Inconvenient Truth" is that, one day, all of us here will be gone, and it simply feels like the better choice to leave this world when we go with clean air, water, and sustainable systems for the future generations than it does to follow down that pessimistic road shrouded in grey clouds and concentrated wealth.

This idea of concentrated wealth is something that pure capitalism opposes. Monopolies prevent competition, and today’s monopolies are no different than those of days past. Today’s monopolies are not a single company like in America’s early industrial years. They come in the form of an industry. Oil has become this type of monopoly. In terms of alternatives to fossil fuels, there are not many. Alternative energy, as of 2008, makes up less than 3% of America's energy matrix, and yet, it falls under attack in the mainstream media anytime it starts to make any type of headway.

So much of the world’s collective wealth is in the hands of the oil industry; not to mention the political influence that goes along with that. In the past, it was the other corporations that cried foul and asked the government to intervene, but today it is the citizens who are organizing to ask the government to intervene. They want the government to stop subsidizing the oil industry and to begin subsidizing alternative energy. For now, no one is listening to the public's cry for help. It is only a matter of time, though, before politicians will have to listen to the groundswell of public opinion expressed in public forums.

The simple fact of the matter is that the consumer and general public, in their respective societal roles, have a voice and can organize around ideas and practices like never before. No more need for the slow process handed down to from Guttenburg in the form of the printing press. Today’s and tomorrow’s technology allows us to share ideas or take action more quickly and in larger numbers. This happens through the internet, email, cell phone, texting devices, portable video. These devices take the place of the town hall meeting in Adam Smith’s day and have the ability to accommodate more of the public than even the largest lecture hall in colonial America.

This new open source immediate communication allows people to do more than simply speak to politicians and corporations with their wallets. Rather, they can organize, share different strategies, and collectively require changes in political or economic policy much more quickly. It has also been demonstrated that collaborative design yields higher efficiencies of design and the use of more sustainable practices.

Adam Smith was describing a world before all of this; a world before America’s industrialization; a world before America was the dominant world power, and most significantly, a world before the swelling global population, human influenced climatic shifts, and the consumptive habits of the wealthiest, as well as those of developing nations depleted the world’s basic resources; those resources being clean land, water, and air. He was describing a world in which technology had not yet captivated us, made America the leader in globalization, and brought all of the world’s creatures seemingly in the wrong direction in terms of survival.

Why take aim at the field of Economics in general, you say, the source of America’s rise into the position of global military domination and source of unparalleled economic prosperity? The simple matter of fact here is that economics is the most powerful force on the planet that we humans have. Collectively, we can influence the natural systems of the planet positively or negatively. Any real change that will affect the planet in ways that can counter the last century’s unfettered pollution practices will have to come from inside the field of economics. Globalization has made it so that nearly every person on the planet is affected by consumer products and world markets at some point during every single day. Economics is the cause of many of the environment’s woes, but it also can, after retrofitting it for the twenty-first century, become the environment’s greatest ally.

Over the coming century, the very foundation of the global market system will barely be recognized in its future state compared to its status today. Of course, I am speaking about the market’s dependence on oil. A brief lesson in history can inform us about what happened when we switched over to crude oil in the nineteenth century. The amount of wealth generated and the technology boom has brought us to the level of prosperity that we enjoy today.

The shift of financial wealth, once again, can create economic prosperity for a new generation of Americans. The money, this time, will have to move from the oil industry as the resource runs dry into more environmentally sensitive industries, and this trend has already been put into motion. Other regions of the world have already mainstreamed alternative energy, and America is lagging behind with many of its citizens begging our government to catch up.

While there are many examples pointing to the alternative energy 'bubble', or its coming failure, there are many resources you may reference in order to cite reasons why the mainstreaming of alternative energy sources will be able sustain itself as an industry this time around. The fact that many countries in the European Union are all but committed to sources like solar, wind, ethanol, or wave generation does not speak lightly about the money involved and the sustainability of the movement where government support is shown through more than lip service.

For an investor, though, the ensuing book that will accompany this blog, accepts the assertion that much like Europe, American wealth will flow into the alternative energy sector over time, and those who seek out the opportunity to capture some of that wealth will be rewarded financially. While profiting monetarily is one of the aims of this blog/book, the other aim is to help contribute to a better lifestyle for all living creatures on earth.

The blossoming new generations of investor are beginning to demand that their investments not only grow in value, but they also want to invest in corporations that they see as advocates of their belief systems. This new aspect of investor personality can be seen in all forms of media; it is even beginning to spread into boardrooms in the form of Green MBAs. Many major universities are now beginning to incorporate environmental principles into their MBA programs.

This blog provides information contrary to the notion that bigger, faster, and more numerous widgets and gadgets are better suited to provide wealth for the citizens of a nation over time. Rather, this essay assumes that the qualities of efficiency, effectiveness, and environmental sensitivity are more beneficial words to associate with widgets and gadgets today and in the future. Consumers are beginning to demand it. The auto industry speaks to this, broadly, through the growing demand of hybrid or electric vehicles. Smart grids try to capitalize on this same notion.

For nearly 232 years, the ideas that Adam Smith put forth have guided us to the current precipice or to the crossroads that we now stand upon or at, depending how one looks at it, as we look out over the valley of the twenty-first century before us. The path of economic policy that the United States has followed for the past century has ultimately resulted in a significant depletion of natural resources on the planet, and in some cases, it has led us down a path where our economic practices have started to threaten many life forms here on earth. The most recent statistic is that somewhere in the range of 200 species go extinct every year.

Who knows what the future will bring; natural disasters, shifting global power structures, world wars, peace and prosperity, new technologies, the elimination of dire poverty.

One thing at the end of the twenty-first century, though, is perfectly clear; our great-grandchildren will be living in a cleaner world with more sustainable systems supporting their daily routines IF the common sense ideas proposed in this book/blog play themselves over the coming decades. If not, it is this author's opinion that we are doomed to the same fate of every other living creature on earth, and that is, a planet that is so polluted with ecosystems so out of whack that life as we know it will have trouble continuing to go forward.

Common sense says that humans will adapt to their changing conditions before it is too late; this author believes that we are beginning to make the changes necessary to improve the quality of life for our grandchildren and beyond. This trend of environmental responsibility will only continue to expand over the course of the next century. Therefore, those individuals who invest early in environmental economic principles are the ones who will fare the best in terms of sustaining wealth over the coming years.

This world-view is already beginning to take shape in some of today’s renewable markets. It is long past time for these ideas to come to fruition.

The world-view that Adam Smith presented in his economic theories does not accurately describe the world that we presently live in; there are some ideas that he theorizes that cannot sustain themselves throughout the twenty-first century. Some of these include his ideas around consumption, maximizing production, societal principles of justice when it comes to doing business, the optimistic ‘invisible hand’ of the market, and the idea of limitless resources. These are serious concerns that need to be addressed with concrete business plans by every corporation that hopes to sustain itself through the twenty-first century. The ones that make the adjustments will be the ones still around in 100 years.

It is essential for all investors to adjust their investment strategies to account for the shift of wealth that is coming; those that account for this shift in their investment strategies will not only grow their money, but also they will be able to do this by investing in a more sustainable future. Without any adjustments, current investors stand to lose all of the financial ground they have gained over the course of their entire lifetime and will, most probably, stand naked and poor with only a polluted planet to hand over to their grandchildren.

This idea of looking beyond their own lives connects people to a movement much larger than themselves; one that inspires hope in the generations yet unborn. It is a hope in a future fulkl of life and opportunity rather than one that spirals down to the bottomless pits of war. There will be wars abroad that will inevitably have to be fought over oil, but we will also have to fight battles domestically over environmental regulations as we deplete our own natural resources like coal, natural gas, and timber.

The idea of reversing these environmentally destructive economic practices and of being part of a movement that has so much potential to not only build the sustainable future that we all dream of but also build and sustain wealth over the long-term is inspiring. A plethora of literature will soon be flooding the market (of which this is a part), and to the astute reader, it all makes sense.

The generation that was named after the algebraic symbol for the unknown variable is becoming this new breed of investor; this is a chance to define a generation and a movement over the course of a lifetime and because this vision is sustainable, it will last past their lives and on into the future generations. We are the next generation.

This is not a blog/book that is trying to convince you of anything or postulate an argument of any sort. Arguments involve a sense of ‘right and wrong’, and this essay merely analyzes current data and extrapolates trends for the coming century. It attempts to look at generating and sustaining wealth long after we are all gone from this earth. It is, quite simply, a user’s manual for investing in industries that have the potential to be able not only to sustain wealth, but also sustain the health of the planet starting today and well into the future. So, it is with this purpose of setting out to change the world through investment that we embark upon our mission.