I took a read through Joe Biden’s climate plan today. I’m optimistic that Joe is going to be the next president of the US, and I’m very onboard with the idea of supporting progress towards a sustainable future with my own investment decisions.
As a strategic investor, it’s almost certainly going to be useful to try to draw some early insights about a major infrastructural investment by the US government, as they seek to rebuild the economy and jobs post Covid-19. If Biden follows through on this key campaign promise, this will not only be very good for America, it will also help the rest of the world, as any major technology innovation will drive benefits for all of society. If I’m able to get ahead of an investable trend, hopefully it will also be beneficial for my portfolio.
Biden’s plan specifically calls for investment in roads and bridges, renewable power, telecoms, the auto industry, transit, housing, and agriculture and conservation. There are likely to be many very investable opportunities presented by this plan, but the areas I’ll focus on are those where I feel I have a better understanding, and where there are substantial opportunities for technology innovation to amplify the pace of change, and deliver multiples of growth rather than simply incremental improvements.
I’ll therefore undertake a little extra research into the following areas over the next few weeks:
- Energy – clean energy technologies, battery storage, advanced nuclear power, electricity grids
- Transportation – domestic auto manufacture and auto infrastructure, electric vehicle charging stations, mass transit
- Telecoms – universal broadband and 5G
A lynchpin of Biden’s plan is to “buy American”, so this is immediately an easy filter to apply when trying to identify a company that will benefit from the climate plan.
Presumably this principle will extend throughout supply chains, and so for example the construction sector will receive significant investment, with secondary benefits felt by American companies that support heavy industry, such as (sustainable) local mining, training and education of American workers, transportation of heavy goods, etc.
An interesting comment that I noted from a recent podcast interview with Chamath Palihapitiya (@chamath) was that it’s often unnecessary to spend considerable time trying to identify the one company that will benefit from a macro-economic change. It’s often sufficient to simply buy the category winner, and to benefit from their already outsized exposure to the growth area.
Although this might be a way of shortcutting my research, I’ve done very well historically by buying smaller companies that I think have a superior strategy, better leadership, or a better culture of innovation. But it’s to be noted that this comes with the risk of a bad judgement call, or that the great company simply fails to execute successfully.
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