One lump of coal, or two?

The holiday season is in full swing. People are out shopping, decorating, and preparing for the in-laws two week invasion. Susan & I use this opportunity to try and gain a little extra leverage over our kid’s behaviour. In years past, kids were threatened with a lump of coal in their stocking however in our house we have an ‘elf on the shelf’ for each kid. These elves travel to Santa every night to report on what they observed during the day. Soon the elves will likely be saving energy and tele-conferencing or texting Santa instead…

With Cap-and-Trade front and center in the news and the Climate Conference starting in Copenhagen this past Monday, one would expect coal to be a ‘unfavored asset’, at least until the 25th. Scientists, government officials, and non-government officials from 170 countries are presenting their cases and proposing a course of action on the topics of climate control and energy usage/restrictions. There is speculation on all sides of the issue as to what provisions, if any, will be agreed upon during this conference.
In a related development early last week, Australia, the developed world’s highest per capita emissions producer, rejected the proposed Cap-and-Trade bill. Stating that the bill would cost Australia; the 4th largest coal producing nation, 5 billion Australian dollars ($3.5B USD), 3000 jobs, and 10 coal mines. With the economic crisis still at the forefront of everyone’s mind, we will see what takes priority at the conference – economic recovery or global warming.
Adding to the drama was the recent scandal where by internet hacking revealed that several scientists either fudging or suppressed data to support their claims. Domestically, another related tidbit on this contentious subject was released Monday; with the EPA declaring that they have concluded that greenhouse gases are endangering people's health. Is this fact, political ploy or something in between? This declaration will effectively give the EPA authority to regulate co2 and other greenhouse gases in the US.
In short, the Cap-and-Trade battle goes on and may cause concern for anyone that has a hefty exposure to coal or the energy market.
Despite all this and regardless of if we were ‘naughty’ or ‘nice’ this may be a good year to receive coal, especially if it is in the form of coal stocks. This may sound ‘un-green’ from an environmental perspective, but from an investment standpoint, coal has yielded lots of ‘green’ returns this year and is a favored sub-sector within Energy.
Regardless of which side of the fence you reside from an environmental perspective, realize that technical analysis will help to steer us in an effective, unbiased and de-politicized manner regarding your investment portfolio. The bullish (positive) technical picture for coal remains intact at this point.
One way to invest in coal is through the ETF market. ETFs allow us to buy a ‘basket’ of stocks representing a specific sector. One such ‘basket’ is KOL (Market Vectors-Coal) representing an investment in 31 coal companies. This ETF scores 5.99 out of a possible 6 - almost a perfect score.