The Life Aquatic.
Since overestimating the value of oil no longer seems possible – especially with Goldman projecting prices of $200 a barrel – the chances of making a profitable investment in the stuff appear to be drying up. Evaporating? Trickling away? [My apologies, evidently it’s also no longer possible to write about oil without suffering an infestation of moist puns – must be a variant of the syndrome that afflicts the owners of hair salons.] For those seeking an alternative liquid investment (forgive me!), perhaps the fluid with a higher potential upside these days is water.
According to IndexUniverse:
Water has emerged as the new “new” thing in investing. People gaze out at a growing global population and envision the Kevin Cosner [sic] flop WaterWorld come-to-life. They do the math on limited water resources and creeping pollution and they see dollar signs. There’s even a new name for the stuff: blue gold.
Starbucks and Fiji have long since figured out that any old liquid can be sold for outrageous amounts, but evidently the upside for water is even greater than imagined. Beyond just the standard drinking, cooking, bathing applications, hydrogen hydroxide turns out also to be a vital component in global infrastructure. According to Friday’s WSJ:
It takes 62,000 gallons of water to make a ton of steel. The typical car requires 39,000 gallons during its manufacturing phase. It takes 3,000 gallons to produce a single semiconductor before it’s placed into a computer.
So, how does one invest in the stuff? Start filling the tub . . . for a rainy day? How about investing in a company that makes the pumps and valves needed to move all this water around? But if you do invest in ITT (the industry leader), you’ll worry about company risk, country risk, and all the standard problems with a focused investment.
Perhaps that’s why the standard diversified investments – mutual funds and ETFs – are stepping up with a slew of new water funds (including two launched this week), which hold ITT as well as water utilities, equipment manufacturers, and purification businesses from around the world.
Lest you fear we’re speeding down the road to a new addiction, this one has something of an upside: America has some of the world’s largest water reserves.
For more on water – and it’s importance in the English constitutional system – here’s Monty Python: