While the market goes gaga for technology companies, bidding their prices to levels assuming constant growth to infinity, I wonder just how new apps or viewing devices make my life better versus things created years ago.
In a wonderful little book full of big insights, The Great Stagnation, economist Tyler Cowen says our lives in material terms are not much different than in 1953. The cool stuff we saw on The Jetsons in the 1960s hasn’t happened. No jetpacks, or living forever, or visiting Mars.
“Life is better and we have more stuff,†writes Cowan, “but the pace of change has slowed down compared to what people saw two or three generations ago.â€
Market bellwethers like Amazon and Netflix are astronomically valued. But these companies do not change our lives fundamentally—they only allow us to efficiently buy and watch more STUFF.
It’s inventions made between 1880 and 1940 that have really made life better. Professor Cowan lists a few important ones: automobiles, electricity, household appliances, telephone, mass production, pharmaceuticals, radio, television, and indoor plumbing.
Younger readers can’t imagine a world without these things. I can’t either, except for indoor plumbing. Although I grew up living in Abilene, Kansas, with indoor plumbing, I remember visiting great-grandparents who did not have modern facilities.
These days you think the world’s going to end if the Internet is slow. Imagine having to go in the middle of a cold, windy Kansas night. You put on shoes and an overcoat, and tromped out to an uninsulated, rickety outhouse 50 or 100 yards from the residence. In the summer, a different sort of discomfort was associated with the process.
So while I’m awed by the latest gadgets like anyone else and a proud Amazon Prime member, I don’t think Jeff Bezos’ company is life-changing enough for the stock to be worth 539 times earnings. As I get older, it is those who designed and created indoor plumbing that I thank each and every night.
Which brings me to today’s article by resource investing legend Rick Rule of Sprott Global Resources. Many of you know him as the go-to wise man for junior resource companies in the precious metals and energy areas. Today he has another precious resource he believes you should consider for your portfolio… a resource none of us can do without, no matter what neat technology we hold in our hands.
Rick not only lays out an ironclad investment thesis, but provides specific investment ideas. You can read more from Rick and his team at Sprott’s Thoughts.
Enjoy,
Doug French, Contributing Editor
A Big Arbitrage Opportunity in California Water
Most consumers in the developed world take access to cheap, plentiful water for granted.
Today, water is incredibly inexpensive. People complain about their water bill… but that’s because they use too much water. Low prices and high availability have led to overuse, insufficient conservation, and unnecessary waste in areas with a finite supply of water.
Water availability varies widely by region. Because it’s heavy, water is difficult to transport from places where it is plentiful to areas of scarcity.
The current Californian drought has left California’s reservoirs at nearly half their average levels, and the snowpack in the Sierras—California’s “above-ground†reservoir—is at 12% of its normal level. All of California’s main water supplies are in jeopardy.
