Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

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Monday, January 18, 2016



Since we moved up here 25 years ago, to the mountains north-west of Melbourne, we've seen major changes in our climate.  In the first 5 years, we used to get snow every winter, sometimes several falls.  The first frosts came in April, and the first warm day in September--after which it would usually go back to being cold!  It only really warmed up in October.

We haven't had snow for years now, barring one very short fall in July last year.  And these days, we don't get the first frosts until June or July.  Meanwhile, the first warm day comes in August.  In summer 25 years ago, we'd get occasional very hot days (35 C) but always it would be just for a day before the temperature dipped back to the mid 20s.  Now we often get day after hot day, and the temperatures are higher.

One should be cautious of anecdote, of local stories.  There might after all be other places, perhaps,  which have got colder.

But what if there is a logical explanation, one which is global? Doesn't the local experience reinforce the statistical record elsewhere?

We know, as a matter of simple physics, and can show by a simple experiment which can be carried out in a high school lab, that carbon dioxide absorbs infra-red radiation. This heats the earth, just like a car left in the sun gets warm. In fact, if all the carbon dioxide in the atmosphere were somehow removed, earth's average temperature would drop 35 C, and the world would become an ice world. This stuff is so basic it is totally accepted by science.

We know, by scientific measurement, that carbon dioxide in the atmosphere has risen from around 280 ppm to over 400 ppm. We know that the higher the concentration the greater the greenhouse effect. We know this.

We know as a result of measurement by a variety of climate institutes (NOAA, Hadcrut, NASA/GISS, Japan Meteorological Agency, BEST, that global temps have risen over the last 130 years, not in a straight line because there are all sorts of short and medium term cycles, but consistently over longer periods. We know this.

So yes, given the cycles, the fact that temps are higher than 25 years ago doesn't by itself prove anything. BUT---the fact that this is happening in the context of a consistent theory is very strong supporting evidence. Just as the rise in sea levels is (the fluctuations in temperature are smoothed out in sea level rises, because of the thermal buffering of the ice caps) is strong supporting evidence, because the sea level can only rise in the long term because of rising temperatures, which expand the volume of the water in the sea and melt the ice caps.

 Now, we could say, we need to wait another X (how many? 25?) years before we're 100 % satisfied, and hope like hell that another 1 or 2 or 3 degrees C rise in temps will not happen, or we can say, it's a very plausible theory, and it makes sense to do something about it. Especially since renewables are now cheaper than fossil fuels, and the switch will cost us nothing in terms of growth and living standards, whereas a 3 degree rise in global temperatures would be catastrophic for our civilisation. Even more scary, we run the risk of melting methane clathrates on continental shelves. Methane is 86 times more potent a greenhouse gas than carbon dioxide over 20 years (it eventually decays into CO2 and water).

I think I am right in saying we have very little time left. And I find my own patience with climate change denialists vanishing as I consider the world we are bequeathing to our grandchildren.

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