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Saturday 26 June 2021

The Bottleneck Retirement Plan

I do not have a voluntary retirement plan or a pension. I have the means to put money away specifically for retirement, but I choose not to. Instead, I use an investment strategy that has been described as "the most and least insane thing I've ever heard". Here is that strategy:


In 2017, I called this deliberate non-plan the "Smith & Wesson Retirement Plan". In the case of a climate Armageddon, a pension is worthless. In the case a post-scarcity utopia, a pension is unnecessary.  Factoring in some totally made up probabilities, I estimated back then that $1 locked away for 35 years was worth about $0.60, assuming it was a retirement plan with traditional investments. My valuation has not improved since then.

Tax deferment and generous employee contribution matching aren't enough to make up the difference, especially if you can negotiate for a raise in lieu of pension matching.

To be clear, this valuation is specifically about retirement schemes in which money is locked away until some arbitrary retirement age, usually 65, in exchange for a one-time payout or a constant income until death. 

Today, I'd like to update that philosophy into something less grim: The Bottleneck Retirement Plan.


The goal of the Bottleneck Plan is traditional: maximize the chance of a comfortable retirement. However, unlike a traditional plan, it acknowledges the probability that you and everyone you love could boil to death in a hell of our own making.

 The Bottleneck Plan investment strategy to achieve its goal is simple: Invest heavily in a wide portfolio of companies that are all-in on clean energy and technology.


The Plan works on the assumption that at least one of two things will happen:

 1. Clean energy and environmental services see massive growth and long-term gains.

2. Society collapses, taking your retirement portfolio with it.


It's possible that both will happen, in sequence. It's practically impossible that neither will happen.


This assumption does not apply to every company, or even every sector, but to the field as a whole. It doesn't mean that anybody with a leaf in their logo is guaranteed money, or even that any technological path is guaranteed money. It simply means that the field of clean tech (clean energy, carbon capture, and environmental restoration) can be collectively is as close to guaranteed to provide you old age income as any investment can possibly be, including cash. It also does not mean that other investments will fail in the long-term.

In 2020, I wrote about using such investments as a means to 'buy absolution' for your climate sins. It may quell your climate anxiety, but whether or not you making these investments actually helps in some way is a more complicated question. Dollar-for-dollar carbon offsets are probably still your best shot at that, but you are just giving away money. Buying $10,000 in clean energy stock is a lot easier to justify to your family than buying $1,000 in offsets.

Wealthsimple has a 'clean energy' category, which is a good start, but they try to discourage risky and day-trader style behaviour, so it's mostly mid and large caps (larger, better established companies that have a larger total value, or market capitalization). You can find a few more small caps with the text search. Also, every company wants to appear green, so do some due diligence and find if a company's main source of revenue is clean tech, or if it's just a small part of their operations for marketing purposes.

You may notice that I'm only minimally invested in solar power manufacturers, that's just because those investments are obvious choices and I expect they have already reached fair value. Impossible meats isn't on this list either because it's been hyped up already. Most of these are smaller, high-risk companies that only produce a narrow range of products.


AQMS*, Aqua Metals, NASDAQ, USD.  This company recycles lead, mostly by extracting it from wet cell car batteries. Solar panels use a lot of lead, so there's opportunity here for recycling old panels and for making new ones sustainably.


AQN*, Algonquin Power & Utilities, TSE, CAD. A collection of diverse clean energy and wastewater collection projects. Some hydroelectric. Also, some natural gas, unfortunately. Not actually owned by the Algonquin people as far as I can tell. (Please correct me on this if I'm wrong)


BEP, Brookfield Renewable Partners, NYSE, USD. Diverse generation of clean energy, including cogeneration. No natural gas.


BLDP, Ballard Power, TSE/NYSE, CAD/USD. Manufacturers of hydrogen fuel cell and backup power systems.


CLMT, Purpose Global Climate Opportunities Fund, ETF, CAD. Exchange traded fund focusing on clean energy.


CSIQ, Canadian Solar, NASDAQ, USD. Manufacturers of solar cells.


GRN*, Greenlane Renewables, TSE-V, CAD. Collecting biogas from landfills and poop, and converting it into renewable natural gas for electricity and fuel.


INE*, Innergex Renewable Energy, TSE, CAD. A collection of diverse clean energy projects. No natural gas. Some hydroelectric.


LPS*, Legend Power Systems, TSE-V, CAD. Manufacturers of a consumer-side smart grid system that reduces total power usage and protects against surges.


NPI, Northland Power, TSE, CAD. Diverse generation of clean energy, including cogeneration and "clean burning" natural gas.


OPTT*, Ocean Power Technologies, USD. Manufacturers of wave power generators. Honestly, this is a real long shot, and I don't know if they will ever be profitable.


PYR*, PyroGenesis, TSE, CAD. Manufacturers of plasma torches for extracting metal from waste.


RNW*, TransAlta Renewables, TSE, CAD. The renewables branch of TransAlta. Power purchase and distribution of clean energy and natural gas.


SOL, ReneSola, NYQ, USD. Solar power manufacture and power generation.


SOLR*, Solar Alliance Energy, TSE-V, CAD. Development and procurement of solar power plants. Very small cap, not yet profitable.


SUNW, Sunworks, NASDAQ, USD, Manufacturers of solar cells.


XBC*, Xebec Adsorption, TSE, CAD. Generation of renewable natural gas from biogas, and electrolysis from hydrogen.


PLUG, Plug Power, NYSE, USD. Hydrogen fuel cell manufacturers.


VEGN, US Vegan Climate ETF, ETF, USD. Exchange traded fund focusing on climate solutions.


At the time of writing, the author holds a long position in any stock with an asterisk * next to its symbol (which means he personally profits when these stocks go up).

The author has completed the Canadian Securities Course, but the credential has expired. This is not financial advice. Copyright not intended. Those experiencing diamond hands for more than 4 hours should consult a doctor. All reproductions or accounts without the express written consent of Major League Baseball...

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