Word: caps
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Dates: during 2000-2009
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...purely intentional.) The government could simply mandate reduced emissions, or force power plants to install expensive SO2 and NO scrubbers, but that might not be efficient. To Sandor, the answer was clear: markets. He wrote a position paper for a green group arguing for the creation of a cap-and-trade system for acid rain, one that would put a government-mandated limit on the level of pollutants power plants and factories could emit, but allow companies that came in under the limit to trade their excess capacity to companies that exceeded their caps. The market drives companies...
...emissions of SO2 and NO have dropped drastically, as has acid rain. Emissions trading worked because by pricing the air, it helps drive innovation towards pollution control and efficiency, funded in part by the value of the emissions trading market. (Companies that spent to lower their emissions beneath the cap could recoup that investment by selling their excess emissions credits.) Just as importantly, it did so on the cheap, at a cost considerably beneath early estimates...
What should you do? Rebalance, for starters. Any exposure you have to gold, oil and other commodities may have grown too large. Ditto for emerging markets and small-cap stocks. But big-cap U.S. stocks (especially in health care and consumer staples) may have shriveled too far. Real estate may have shrunk as a part of your portfolio too, but because most investors are homeowners, they already have a stake in that game. By all means, stick to your dollar-cost-averaging regimen, whereby market volatility actually boosts returns because you automatically buy while prices are down...
...cash for more than six months. One good option, says Bernstein, is Treasury bonds, which on a total-return basis have outperformed stocks in five of the past eight years--a first since the Depression. He believes that trend will hold this year. Bernstein also likes stocks of large-cap companies and, as a play on the weak dollar, foreign stocks that pay a dividend (in euros or yen). Consider MFS International Diversification, which recently had a 12-month yield of more than 5%, or Wisdom Tree International Dividend, an exchange-traded fund that recently had a net yield...
...global warming, for instance, he and Senator Joe Lieberman introduced a cap-and-trade system to limit carbon emissions 60% below 1990 levels by 2050. McCain's recent body language indicates he would not be nearly as comprehensive as the Democrats; he probably would not, for example, auction off the right to pollute for major corporate spewers - which could raise significant funds for alternative-energy research. But the old McCain-Lieberman plan had the look of a half-a-loaf compromise that could eventually get through Congress - and take the global-warming issue off the table in the election...