Friday, June 3, 2016

Bonddad Friday Linkfest

Chile’s solar industry has expanded so quickly that it’s giving electricity away for free.

Spot prices reached zero in parts of the country on 113 days through April, a number that’s on track to beat last year’s total of 192 days, according to Chile’s central grid operator. While that may be good for consumers, it’s bad news for companies that own power plants struggling to generate revenue and developers seeking financing for new facilities.

The main culprit is the northern part of the country, in the Atacama desert. Chile’s increasing energy demand, pushed by booming mine production and economic growth, helped spur the development of 29 solar farms, with another 15 planned, on the country’s central power grid. Now the nation faces slowing demand for energy as copper production slows amid a global glut, and those power plants are oversupplying a region that lacks transmission lines to distribute the electricity elsewhere.

Solar ETF Daily Chart

Hold Your Nose and Buy Europe (WSJ)

Consider price to book value, a measure of corporate net worth. Since 1970, according to data from MSCI, the average price to book value of European stocks has been about 25% below that of U.S. stocks. As of April 30, it is 40% lower. The dividend yield on European stocks, historically about one-third higher than in the U.S., is 69% higher.


The lower prices in emerging markets offer margin for error while investors wait for positive surprises. Larry Swedroe, director of research at Buckingham Asset Management in St. Louis, points out that the average stock in Dimensional Fund Advisors’ Emerging Markets Value Portfolio, a $15 billion fund available only through financial advisors, trades at just 86% of book value. By contrast, U.S. stocks trade at nearly three times their book value.