The Rude Awakening
Wall Street, New York
Monday, June 19, 2006 ------------------------- - It is responsible for filling half of the world's
hospital beds,
- It is a crisis far greater than any other resource
shortage on earth,
- And investors are just now paying attention...
------------------------- A few blocks from the charming, but non-potable East River,
Joel Bowman reports... "Water, water, every where,
And all the boards did shrink;
Water, water, every where,
Nor any drop to drink." ~ Samuel Taylor Coleridge "The Rime of the Ancient Mariner To you left is a vast expanse of ocean, to your right, a
river system so mismanaged that its water supply is
contaminated beyond permissible levels...and you and your
family are dying of thirst... This is a horror that millions of human beings face each
and every day. They are the workforce of industrial giants
like China and India, the nomads of Africa and the city
dwellers around Asia and Central America. If present trends
continue, they could be your neighbors. Today, Eric explores the alarming and very real threat that
lack of clean water poses to mankind. As the final edits
are being made to the water report, please sate your thirst
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-------------------------
Dirty Water, Clean Profits
By Eric J. Fry Dirty water is a worldwide tragedy. Clean water is a
worldwide investment opportunity. Half of all hospital beds in the world are occupied by
someone suffering from a water-related illness. In the
developing nations, 80% of all diseases stem from
consumption of and exposure to, unsafe water. There is no shortage of water on this big orb of ours, but
there is an acute shortage of CLEAN water...and the human
toll is alarming. Contaminated water is deadlier than any other evil on
earth; deadlier than AIDS; deadlier than cancer; deadlier
than contagious diseases; deadlier even than World Wars.
During the Second World War, one soldier died every 5
seconds. Today, one human being dies every 3.5 seconds from
drinking contaminated water. The scale of this ongoing international tragedy boggles the
mind. More than a third of the earth's population lacks
access to effective sanitation, which is why more than a
billion people contract water-related diseases every year. The UN estimates that in less than 25 years, if present
water consumption trends continue, 5 billion people will be
living in areas where it will be impossible – or nearly
impossible – to meet basic water needs for sanitation,
cooking and drinking. But present trends simply cannot
continue. The human toll is already horrifying, and the
economic toll is rising rapidly. Although 70% of the world's surface is covered by water,
only 2.5% of it is potable, and most of that is trapped in
the polar ice caps. According to the World Health
Organization, less than 1% of the world's freshwater, or
0.007% of all the water on Earth, is readily available for
human consumption. Pollution and water-supply abuse are
rapidly reducing these precious supplies. The problem is; there's no substitute for fresh water. "Water is the most basic and necessary commodity," observes
Summit Global Management, "and it is the only element in
the world that has no substitute at any price. One can
substitute wheat for oats, coal for natural gas, corn oil
for soybean oil and hydro-electricity for fossil-fuel
generated power, but...water has no substitute regardless
of price, the only element in the world of which this is
true: This most fundaments of facts is another key to the
inexorable and intractable demand for water that will not
abate with time." Without question, therefore, clean water is the earth's
most precious resource. But this essential truth has not
prevented decades of water mismanagement. Throughout the
world, clean water is underappreciated and woefully
abused...except by the billions of people who struggle to
find it each day...or die trying. Only 20% of the world's
population currently enjoys the benefits of running water.
The other 80% have to find it whenever and wherever they
can. In some parts of the world, people spend as much as
six hours a day fetching water. No country has a more acute water problem than China...
With over a fifth of the world's total population sharing
only 7% of the fresh water on earth, it is no wonder China
has been listed by the United Nations as one of the 13
countries with the lowest water per capita in the world.
But scarcity is just the beginning of China's water
problem's. Most of the country's waters are so polluted
they cannot support aquatic life, much less human life. Half of China's population consumes drinking water
contaminated with animal and human waste that exceeds
permissible levels...which is why China has the highest
liver and stomach cancer death rates in the world. Clean
water, therefore, is the ultimate China play. But clean
water is also the ultimate world play. No economy can
flourish for long by polluting the water that sustains its
workforce. Now that unclean water has become a serious ECONOMIC issue
in many developing nations, government agencies and private
corporations worldwide are springing into action. Indeed,
every populous country in the world will be spending
billions of dollars – if not trillions – over the next 20
years to install and upgrade its water and wastewater
infrastructure. The U.S., alone, will spend $1 trillion
over the next two decades to upgrade its decrepit water
infrastructure. Unlike other commodities, the demand for water is
unwavering and certain. What's more, water does not suffer
the threat of the discovery of an "alternative" source. No
"alternative" water will present itself in the future.
Clearly, therefore, investing in water is an investment in
a certain future. That's why companies like General Electric are getting
involved in a big way. GE has gone on a shopping spree for
water-focused companies, in the process amassing an
impressive portfolio of clean water products and
technologies. These water operations are part of GE's new
push into environmentally friendly product offerings.
Sales of GE's "green" products last year jumped 63% to $10
billion, while orders doubled. Clearly, there is a lot of money to be made selling "green"
products to an energy-hungry world, and GE will capture a
large share. Unfortunately, from the standpoint of an
individual investor, GE's green products contribute less
than 6% of the company's revenues. Water products
contribute less than 2%. In other words, GE may do great things for the world's
water supply, but its stock might not do much for water-
focused investors. Unfortunately, pure-plays on the global
boom in water purification are few and far between, which
is why many investors simply buy a U.S.-based proxy for the
water sector, like Aqua America (NYSE: WTR) or the water-
stock ETF, PHO. But your editors here at the Rude Awakening believe that
many of the best water-focused investments trade in out-of-
the way, foreign markets. After a months-long research
effort, conducted in cooperation with Christopher Mayer,
editor of Capital and Crisis, we've located several
compelling water stocks that trade overseas. We've
completed our research and will be publishing our findings
very soon. In the meantime, however, we'd love to hear from the Rude
faithful on this topic. To initiate our newest Rude
Awakening "Group Research Project," we would solicit the
following: A "pure-play" on water purification that trades anywhere in
the world. The recommendation may be small-cap (but over
$100 million) and may trade on a foreign exchange, or it
may be a big-cap and trade here in the U.S. But it must be
a company that focuses on some facet of the water industry.
Send us your ideas and we'll present a sampling of them in
upcoming Rude columns. Fortune Magazine predicts: "Water promises to be to the
21st century what oil was to the 20th century: the precious
commodity that determines the wealth of nations." Water might also be the precious commodity that determines
the wealth of investment portfolios. [Joel's Note: As a loyal Rude Awakening reader, you will
know the moment this report is available. In the meantime,
you can email us with your water plays at
aussiejoel@the-rude-awakening.com The results will fill
Rude columns in the days leading up to this very exciting
water report launch. Good luck!
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