How to Hedge Your Portfolio Against a Possible Trump Victory

Place your financial bets on having LESS renewable energy and MORE climate change.

If you’re worried about the economic impact of a Trump victory, you should be thinking of hedging your risk. One hedging strategy is to place a bet on climate change. By undoing Obama’s climate regulations and scuttling the Paris Agreement, Trump will set back climate policy, here and around the world by years, maybe decades, He’ll undermine renewable energy, especially wind power, which he hates. Even if a later president manages to pick up the pieces, a lot of extra carbon will go into the atmosphere in the meantime.

Yes, this is bad news, but maybe you can take advantage of it as an investment strategy. Here are some possible moves you could make:

  1. Clean energy stocks. An obvious one: the hedging strategy is to sell stock in these companies short to take advantage of the market drop.
  2. Northern real estate. Almost as obvious: acquire options to buy land in Duluth, Anchorage, and Bangor. The climate will get milder there while the deteriorating climate will push people out of the Sun Belt. A Trump victory will amplify these trends. Someday, beachfront property on Lake Superior is going to be worth a lot of money.
  3. Florida real estate. Florida is the state that is likely to suffer the earliest from climate change, which Trump will make worse. People are going to start to realize that. So land values are likely to slide faster than otherwise over the coming years, especially in South Florida. If you have any land in Miami or Lauderdale, a Trump victory is the time to sell.
  4. Coal stocks. These are likely to go way up after Trump wins, in a wave of optimism about the industry. That optimism is misplaced. Trump also loves fracking, so natural gas prices are going to stay low and coal will remain an economically unappealing fuel. You can take advantage of the initial over-optimism and the inevitable market correction.
  5. Geo-engineering start-ups. A Trump victory will make controlling carbon emissions much tougher. Yet the effects are going to be getting a lot more obvious and scary. So there will be a lot of pressure in a few years to do something. Making a new international deal to cut emissions will be harder than the first time, after the U.S. has cut and run from the Paris Agreement. Geo-engineering (putting solar mirrors in space or chemicals in the stratosphere) will look like an attractive way out. Time to get in on the ground floor!

Before the SEC gets after me, I should warn you that I know almost nothing about finance. So don’t take this as serious investment advice! But what I do know is that Trump’s election would be a huge setback, possibly a fatal one, to the global effort to limit carbon emissions. At the very least, it would make the problem more severe and require more drastic measures later.  That’s a risk that’s too big to hedge.

 

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