Follow the Government’s Money: The $1.2 Trillion Pivot to Climate
1. There’s no guaranteed way to make money in the markets. But following the government’s ’money trail’ comes pretty close…
When politicians in Washington plow billions of dollars into an industry, pay attention.
It’s usually a telltale sign to be bullish. Stocks from that sector will likely soar.
Just look at the defense industry…
After World War II, the U.S. set out to build the world’s greatest military. The government spent billions of dollars working toward that goal. During the height of the Cold War, 10 cents of every tax dollar went toward defense spending.
This was a huge windfall for defense contractors. And it ignited a fire under their stocks.
Over the last half-century… Raytheon Technologies
rocketed 14,700%. Northrop Grumman
rose 43,400%. And General Dynamics
returned an incredible 47,600%.
Silicon Valley was another government “pet project.”
In the early days, the government offered huge subsidies to tech startups. For every $1 a venture fund invested, it added another $2.
The government slashed taxes. It financed the first internet infrastructure. And it drew from its massive defense budget to invest in new technologies.
Silicon Valley was awash with cash. Soon, tech startups were everywhere. And many were slam-dunks for early investors…
Like Oracle
. From the time it IPO’d until the height of the dot-com bubble, ORCL surged 74,000%.
Cisco Systems
— the inventor of the internet router — IPO’d in the ’90s. You could have bought it for $0.08/share. By 2000, it was trading for $82. That’s a massive 102,400% gain.
Apple
also started as a Silicon Valley startup. Investing $1,000 in AAPL when it IPO’d in 1980 would have made you a millionaire today.
As you can see, investing alongside the government is one of the surest ways to boost your returns.
We’re facing another big “government trail” opportunity today. And I have a simple way to profit…
2. World governments pumped $1.2 trillion into this industry in the last three years…
The world continues to move toward “green” energy…
It doesn’t matter whether you think climate change is the most important issue in the world or a hoax.
What matters is international agencies… world governments… and the largest companies on Earth are spending over a trillion dollars on “green” initiatives.
They’re weaning the world off “dirty” oil and gas and pushing consumers toward clean energy sources.
And the money spigots are gushing now.
Data from the World Economic Forum shows investments in clean energy jumped to a record $1.2 trillion last year.
The Inflation Reduction Act is the largest clean energy bill in U.S. history. It will hand out $370 billion in tax credits to renewable energy projects.
And the European Union plans to spend $610 billion on climate change over the next four years.
When you total up all the green initiatives, they dwarf all the “megaprojects” throughout history:
Investor dollars are turning green, too.
VCs poured a record $70 billion into clean energy startups last year. That’s a 90% jump compared to 2021:
Big Four accounting firm PwC found $1 in every $4 of VC funding last year went into climate tech.
Love it or hate it, the green energy transition will be one of the defining disruptions of the next decade.
3. “OK, Stephen, does that mean I should buy solar and wind stocks?”
Wind and solar are great renewable sources. But they both face a huge problem…
They can’t deliver a steady supply of energy.
Wind doesn’t always blow, and the sun doesn’t always shine. Currently, coal and natural gas produce electricity when wind and solar energy fall short.
The only way to truly go green is to ramp up energy storage capacity. In other words, install more batteries. That would allow us to store excess energy produced by wind and solar.
Batteries are the No. 1 priority right now. And battery production is where most of the government’s money will flow to.
In fact, it’s already happening.
Roughly two-thirds of the money spent by the Inflation Reduction Act has gone toward battery investments.
4. Here’s how to profit from the green energy megatrend…
The biggest beneficiary of this trend is Contemporary Amperex Technology (CATL on the Shenzhen exchange). It’s the world’s largest battery producer.
In fact, I’m convinced that by 2030, CATL will become one of the top 10 largest companies in the world.
Unfortunately, CATL is a Chinese company… and it’s off-limits to most US investors.
One alternative is to buy the Amplify Lithium & Battery Technology ETF
. It invests in global battery producers and battery metals miners.
CATL is a top-3 holding in BATT and represents about 7% of the ETF. Other holdings include Tesla
, BHP Group
, and Albemarle
.
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