Water ETF's

[texfly101]

Since I posted in another forum topic a reference to water ETF's, I thought that I would move it over to here as it looks like the proper forum. I posted as follows:

Being a civil engineer by trade and having worked in this industry for 30 years before moving to aerospace, I have always thought that this area would be an growing investment someday. I have done a lot of water drilling projects and designed a lot of water and wastewater plants, and feel that there is a future demand for this resource just like oil. The infrastructure of the US is starting to hit the end of its design life (typically 20-50 years), and this industry will be guaranteed growth in the future just because it has to be done to keep things working. I am looking at Water Resource related ETF's as a result. Their investing in water and wastewater utilities and equipment manufacturer's stocks places them strategically to be able to take advantage of any increased demand for water. These companies have been on a rise lately and being specialty products that are not consumer discretionary, should hold their value even in a downturn of the economy. I think that there is a dual support for them. First its the aforementioned end of design life for public conveyances and need for replacement. Secondly, its if the economy hits a downturn, the politicians like public works projects to inject cash into the economy. Both speak of increased revenue streams and profits. I see a tremendous demand for their services and equipment. Its just whether to choose for the domestic market or the emerging markets. In a downturn, I feel that the domestic market is safer as the monies will be there due to the politician's efforts. The emerging markets can say no if their economies' downturn empty the coffers. Decisions, decisions. As far as the underground rights, that's a different story that's a TBD. Water law says that you can't block a downstream user of water. It also says that you can't dam a source and flood upstream property. Whether that pertains to underground sources is being debated in courts. It will have a profound impact on who gets what and who pays for what. But it will have to be gotten out of the ground by drilling and pumping. Hence the article that was posted by Henry.

and a following link to a good article on water ETF's

http://seekingalpha.com/article/53026-investing-in-the-looming-worldwide-water-shortage
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dj

[nodoodahs]

I responded to the first thread, here is my reply:
http://www.marketthoughts.com/forum/viewtopic,p,18610.html#18610
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He was wearing my Harvard tie. Can you believe it? My Harvard tie. Like oh, sure, HE went to Harvard.

[texfly101]

I have to agree, its probably not for me. I might look back to it in an economic downturn if the governments took on policies of infrastructure rehab projects, particularly in the areas of Waste Water Treatment and Sewage Transmission and Disposal as they are directly connected to water supply. But thats far into the future most likely and taking a cue from the deep analysis of the companies involved, cherry picking them is probably the best strategy.
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dj

[HenryTo]

Thanks, Bill, for linking it again. I highly recommend reading Bill's article for those who are interested in investing/speculating in the "water story."

The best way to invest in these kind of ventures is to do it via private equity, similar to what T. Boone Pickens and the "Principal Investments" group of Goldman Sachs are doing. If I recall correctly, the Principal Investments group in Goldman is actually much more profitable than either prop trading or investment banking.

[texfly101]

After reading Bill's commentary and considering Henry's reply, I do have different thoughts about these ETF's. Bill's in depth analysis was very revealing and thanks Henry for the suggested strategy. It really helps to have these considerations to look at. And I agree that its not for me at this time.
This is probably a lot like the commercial side of aerospace right now in where the suppliers of Boeing and Airbus are probably better bets as they will be leading the sector and will show the direction that it will take. In the world of water supply, the drilling companies and equipment manufacturers will definitely lead any upside movement in the sector. Cherry picking those companies, as suggested in Bill's commentary "Water Might b e This Year's Ethanol", is a good recommendation. Thanks
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dj

[rffrydr]

The need writ large:

http://www.latimes.com/news/local/la-me-skechers14jan14,0,3183703.story?coll=la-home-center
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

The "water story" is definitely worth keeping an eye on going forward - starting with India:

http://www.ndtv.com/convergence/ndtv/story.aspx?id=NEWEN20080053697&ch=6/20/2008%209:40:00%20AM

[HenryTo]

Nestle's CEO on the current "water crisis":

http://biz.thestar.com.my/news/story.asp?file=/2008/6/18/business/21577668&sec=business

On the other hand, folks have also been discussing the "upcoming global water shortage" for decades now (article dated September 22, 1985):

http://select.nytimes.com/gst/abstract.html?res=F40C17FC3F5D0C718EDDA00894DD484D81

Article dated December 20, 1965:

http://select.nytimes.com/gst/abstract.html?res=F20C1FFE3C5D167A93C2AB1789D95F418685F9

[HenryTo]

Just when you thought you've seen it all: Japan now planning to export water (a commodity no less) to Australia in as little as three years:

http://www.bloomberg.com/apps/news?pid=20601101&refer=japan&sid=aQFJx39wWRw8