U.S. Investing

Burning Down the House, Volume II

“My home state is in a stranglehold of flames.”

That’s how I described the fires raging in the Golden State, not last week, but some 11 months ago in this column. And if you’ve been following the news over the past several weeks, you know that the raging wildfires aren’t just in California, but also in Oregon and Washington, where dozens have died and where tens of thousands of acres have burned.

Now, the blue skies of my beloved Southern California have taken on an eerie, jack-o’-lantern-like glow that not only can be seen, but that also can be felt with every deep breath.

Yet, why does this keep happening, and what is the reason for these increasingly devastating disasters?

Unfortunately, the situation less than a year ago is basically the same as it is today, with the exception of the fact that COVID-19 is compounding the overall ability for our first responders to do what they do best in battling these blazes.

As I thought about this issue once again, I realized that what I wrote 11 months ago was still applicable today. In the article “Burning Down the House,” I wrote the following:

The latest round of fires this season have come after last year’s disastrous fire season, which included the Woolsey fire, one of the most destructive blazes in the state’s history and one that caused devastating damage to property in and around the Malibu area.

Well, add yet another year to that tally, only this one will undoubtedly be much worse. But again, why are the fires getting increasingly worse? I continue:

According to scientists, the main answer is that California is just hotter and drier than it’s ever been. “The temperatures have just been almost inexorably warmer all the time,” said UCLA climate scientist Daniel Swain in a Los Angeles Times interview last year. Fires “burn more intensely if the fuels are extremely dry,” added Swain. The logical combination of hotter and drier weather with fast-moving winds is a prescription for fire danger. Hence, the state is literally burning down.

Now, the hotter climate is one thing, and it certainly has been a very hot summer this year, particularly over the past couple of weeks. Yet, what continues to inflame me is the dysfunctional political climate in the state that has really failed to address this situation properly.

Last year, the political climate was fleshed out beautifully in an op-ed in the Wall Street Journal by Holman Jenkins, titled, “Revolutionary California.”

According to Jenkins, “The wildfire crisis is ultimately the product of state politics controlled by interest groups whose agenda has drifted out of any cognizable relationship with the daily well-being of the state’s average citizen.”

In support of his thesis, Jenkins offers up the following assessment:

“Because California accounts for less than 1% of global emissions, nothing it does will make a difference to climate, but its ratepayers shell out billions for wind and solar that might be better spent on fireproofing. A generation of ill-judged environmental activism has all but ended forest management in favor of letting dead trees and underbrush build up because it’s more ‘natural.’ At the same time, residents resist any natural or planned fires that would consume this tinder before it gives rise to conflagrations…”

As I wrote last year:

I am not surprised that poor government policy is partially responsible for exacerbating the damage caused by the fires. Government nearly always makes things worse. Yet I am also aware that when you add hotter temperatures, drier vegetation and high winds into a biome, well, nature gives you fires — and nature really doesn’t care about government policies.

In my opinion, if we want to ameliorate the destructive damage done by the increasingly devastating seasonal fires in California, Oregon, Washington, Utah and other western states, we must approach the situation with reason applied to reality. We certainly cannot ignore the reality of hotter temperatures, and the pernicious effects that come with it, on our environment.

Does this mean we have to take action to fight climate change?

I am no expert on that complex issue, and it is an issue where, unfortunately, politics render one’s rational vision opaque. Yet, what is all too apparent is we need to better manage fire-prone areas and make sure we remove dry foliage and excess fire fuel. We also need to be more mindful of overbuilding homes and commercial properties that lie in the most dangerous fire areas.

Finally, I think what I wrote on this situation last year as a possible beginning of a resolution to this massive problem is even more applicable right now:

I think that a great way to start tackling this issue is to employ some rational political courage by the state’s citizenry by demanding smarter action. Even better, if that action can be undertaken by private enterprise and not impeded by government, it will likely have a more impactful outcome.

I know that this issue is far bigger than just voicing an opinion about the need for more courage and smarter action. However, it only takes a spark to set a wildfire raging — and it only takes the spark of a rational voice to set aflame societal solutions.

*******************************************************************

Embrace the Rub

“If you are irritated by every rub, how will your mirror be polished?”

–Rumi

When I was a lad, I had a martial arts instructor tell me that if it was “easy,” it wouldn’t be worth learning. I’ve never forgotten that lesson. In fact, I’ve consistently engaged in activities that are hard to master (piano, motorcycle racing, horsemanship, etc.) because it is in the struggle that one finds meaning. This sublime skirmish will teach you more about yourself than anything else, because not only will it reveal your character, it also will hone your mind and sharpen your will better than any whetstone. So, don’t be bothered by every rub; it’s part of becoming polished.

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.

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