Excerpt from: Andrew Wilkinson's "SectorTrade -- A service of MoneyNews.com." 20 December, 2006
Whetting Your Appetite Further
Clearly, this under-the-radar natural resource is not as sexy as the shiny metals of the world, which may explain why a whole lot of assets arenít flowing into it...yet.
I think the better explanation, though, is because we all take it for granted...like the air we breathe. Itís free for the asking, keeps our gardens growing, even falls from the sky. Mention that we may face a national and global shortage, and most people write off the warning as some alarmistsí way to get attention.
Call me one if you want, but opportunistic is way more accurate. Iíve been gauging its profitability for some time now.
Water....more precious than gold and oil, more crucial to the health and well-being of the human race than either and evaporating in front of our very eyes.
Believe it or not, while water shortages in under-developed countries have been publicized, the U.S. governmentís report that a majority of states will face crises of their own over the next decade has gone largely unnoticed. The highest risk states also happen to be the fastest growing: Florida, California, Arizona, Nevada and Texas.
Iím not talking about Mother Nature-induced shortages, a.k.a. droughts. The problem with respect to water is that companies insist on using archaic technologies incapable of keeping pace with the growing demand for a clean, potable final product.
"Clean, fresh water is not only the most vital commodity -- it is also the most undervalued," said Bernard Savaiko, an economist at the New York Board of Trade. Americans spend "billions of dollars" annually on bottled water and use 408 billion gallons of water every day, according to the U.S. Geological Survey.
But with 300 million Americans and 6.5 billion people worldwide, the global water supply is tightening, potentially creating a sticky situation where water could be, as one Wall Street analyst, puts it "the oil market of the future."
In fact, while water and oil generally donít mix, the consumption rates of both are very similar. According to the United Nations, global water consumption is doubling every 20 years at a time when the worldís population -- in particular China and India -- is expanding.
The Chinese government reports almost 90% of Chinaís water supplies are polluted, and massive infrastructure investment is needed to keep up with its growing demand.
The one bright spot is that while Chinaís population is three to four times larger than that of the U.S., Chinese households currently consume only about 20% of the amount of their American counterparts. However, you can bet that as emerging countries expand, demand for clean water will continue to grow -- at home and in skyscrapers.
Most of the water consumed in the U.S. is made available through state-regulated utility companies that put caps on profits and raise rates infrequently. Demand will continue to outstrip supply and raise the likelihood of a water shortage in America until utilities step up to the plate, loosen the purse strings and modernize their technology.
Like any commodity, the key to investing profitably is to know the right time and place to plop down your money. Historically, natural resource stocks perform and hold up well over the long-term. Of course, add a shortage "wild card" into the equation and your well may never dry up.
Keep in mind now, this is not about the bottled water world; it involves a very specific segment of the industry. Right now, Iíve got my eye on an index comprised of the biggest, most influential players in this corner of the market.
Take my word for it, now is not the time to take unnecessary risks with your money. You want to invest in sectors that offer profit and safety over the short and long term.
Try a 30-day no-risk trial subscription to SectorTrade today and the name of this juicy ETF is yours!
Note: ESD has reproduced this article as-is, complete with link to the source of the article excerpt, Andrew Wilkinson's "SectorTrade -- A service of MoneyNews.com." ESD neither endorses nor profits from any aspect of the source/s associated with that link.
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