But it will play a role in minimizing the ultimate cost of climate change. With complex systems (like climate systems and markets) it is again the problem of making predictions. With non-linear complex systems small inputs can have big results. But that said reversing changes in natural systems is essentially impossible due to issues in entropy.
What I mean is, if the changes in climate are structural disorders within the system, retaining the original state will be impossible. Anyway these are open questions and it is still worth reducing CO2. My criticisms at the time were that carbon finance is a sideshow distracting from the need for hard laws. I said in my notes markets create conduits which avoid structural change by moving money about, and this is their inefficiency over time.
Hard laws stop this. This is how the Enron conduit was stopped and how mortgage problems were being stopped. But another conduit was opened up to reflate assets in the wake of the crash. I have developed my ideas of conduits since then but so have those creating them.
About those companies, at the time the market was sky high and these companies were hot, thus there was no point in investing in them, if you wanted to make money from a rising share price (there are other reasons for investing). That was my opinion at the time. I had to choose companies which were constrained in some way but which could grow.
A crash came but this company was well worth watching from what its state resulted in terms of market movement (which is something you want, if you can deal with selling and buying, something in between trading and investing). As the market became like the forex market, wild valuation swings happened for some companies. They fell with the despair but rose again with the optimism.
My main pick to watch was YGE. It behaved interestingly in the crash, those constraints pushed it far down and then its strengths bounced it far up when floods of cash came back into the market where it has remained (nice profits if you invested near that bottom). Its lifetime chart is a great example of support becoming resistance, but after a double valuation probe downwards.
This is very important, again do not get caught up in technical terms look at what the market is chaotically reaching for, at the boundaries is information linear enough to understand. The reason those patterns do not work is because that information is highly non-linear, it does work, but not in the way you see it. The underlying causality is not obtainable. That is why models (and trades unfortunately) fail on a regular basis.
Can changes in the financial markets, another non-linear complex system, be reversed. That is one big question. It is why I wonder about the effects of the conduits on the market over the long term. I did research into a very subtle, similar but interesting problem, which is, is there a difference between a mis-function and a malfunction. It is like changes in brain structure and damaging brain tissue. It is an open question.
© 2010 Guy Barry - All Rights Reserved.
