Responses to Climate Change & Markets

Author: David R. Kotok, Post Date: November 1, 2018

We thank readers for their many comments and criticisms regarding our commentary on climate change and markets. For those who missed the original piece, here is the link: “Climate Change & Markets,”

Market Commentary - Cumberland Advisors - Climate Change & Markets ResponsesThere were diverse responses ranging from total disagreement to full endorsement. No one offered observations about the market section. Many agreed that there is climate change but argued that it is not manmade. Others said it was and is manmade. Still others argued that there has always been climate change, that there is not a lot new happening now, and that this warming is a natural cycle. Still others took the view that the formerly natural cycle ended with manmade rising CO2 levels. The debate is passionately argued on all sides. Readers may examine a compilation of responses that represent the range of views.

We asked our friend Bob Bunting to weigh in after he examined some of the responses. Bob and I are working together on a conference at USFSM that will discuss climate change and hurricanes and their impacts. The tentative date is January 25, 2019. More information will be forthcoming.

Here is Bob’s observation.

“As you know I have been in the camp that the predictions made are being presented in the upper extreme. That being said, every model including the Russian model is predicting more warming. The trend in all models is up, and the trend in observed temperatures is up. I believe the best forecast now is for about a one-inch rise in sea level for every 7 to 8 years in the future to about 2030 and then an acceleration of the sea level rise to about an inch every 4 years by 2070 or so. This would give us 6 to 8 inches of rise in the next 50 years or so. This is precisely the reason I feel we can deal with climate warming impacts while at the same time limiting damage by reducing carbon emissions over the next 25 to 50 years. I don’t agree with the speaker on Fox News (critic) who said that we should ignore most of the other models because they are government-funded. The military is government-funded; education is government-funded; the national parks are government-funded. They are all assets to society in some way and are not diminished in value just because they are government-funded. Big science has been funded by governments for years. The US NASA investment has driven the technological advancement of the US and world for more than 50 years. The Russian model may be correct, but it is an outlier, and we shouldn’t put all our eggs in that basket, nor should we take the most extreme predictions for warming and sea level rise as the ‘answer.’ We need to prepare for the most likely scenarios, those more in the middle, and then adjust as we go along. The models get better, and humankind advances in its efficiency.”

Bob’s mention of Fox News refers to a YouTube clip that was sent by John Wickser II (Amalfi Capital Partners). We will include John’s remarks and YouTube link below. We don’t agree with the Fox report but want readers to see all sides.


…I really do think that this global “climate change” propaganda scare needs to have the proper perspective at a minimum…so that we don’t continue to be hurled headlong into a trillions dollar abyss to prop up corrupt government plutocrats. Please watch this U tube video with an open mind and I will pray that you issue an addendum to this Commentary when you have educated yourself more fully on this issue.

(ED Note: The video was removed from YouTube within 24hrs of this publication, we’ve posted a replacement as of 4:30pm on Nov 1, 2018)

Thanks and all the best,

Dear readers, these types of questions are the substance of real inquiry. We make the world a better place by learning more and engaging in civil discourse, which my Cumberland partners and I are pleased to facilitate. We appreciate that nearly all replies to our climate change piece were civil and polite and free of the maliciousness and acrimony we see in the daily flow of political debate.

And now for the responses.


Here is Loren:


You might want to at least listen to the Live Stream (Ed: YouTube Video) below. I cannot do a better job than these guys. Very informative. Think your readers would benefit from it. Thanks.


The Heartland Institute, the world’s leading think tank pushing back at climate alarmism with scientific data, will be live-streaming two panel discussions of scientists and climate policy experts as “counter programming” of the Global Climate Action Summit this week in San Francisco.


And here is Lawrence:

I don’t think Climate Change triggers are so simple…We only had 1+ Celsius degree change in the Earth’s temperature in the past Century..the Earth’s population was 1.6B in 1900 and now is 7B+…however, with the irrigation of Worldwide Grasslands for Agriculture, there is more vegetation on the Planet now than in 1900 (satellite studies) …even with the fairly recent destruction of Rain Forests…more vegetation, more oxygen..we have succeeded in cleaning our air in USA from lots of carbon monoxide–many parts of World have not–China is one.

You might want to read book by Dr. Patrick Michaels, Cato Institute, Noble Prize Climatologist…he goes into detail about Natural Climate altering factors…when I was in Australia I learned that the Great Barrier Reef was “dry” approx. every 200,000 years for at least the pst 1.2M years due to Climate change…yet it has renewed each time due to Natural occurrences…

We have had minor Climate warming for decades in the 1930’s-1940’s–remember the “Dust Bowl” in the Midwest…then we had a cooling period from the 1950’s-1970’s…now another warming…who really knows why?

“I don’t think the World Scientists are using the best “science” to understand/explain climate issues”, says Dr. Michaels. 32 World Climate Models show same results–only differing Model is Russian Model–and Russian Model has been more accurate according to Dr. Michaels…he says there are too many worldwide economic and other reasons to challenge data input in Models… he was on Mark Levin this past Sunday..his book is interesting and again, he is World renown Climatologist…I agree it would have been nice to have another Climatologist on the Levin show to debate Dr. Michaels science.

My opinion: Climate Change has more to do with Natural occurrences than man made. CO2 is significantly less percentage wise in atmosphere than in past several hundred+ years—Earth’s minor gases like CO2, methane, etc., make up less than 1/10 of 1% of Earth’s atmosphere!

Earth’s population increase from 1.6B in 1900 to 7B+ in less than 125 years is very concerning–Scary!..

And here is Alan.

Hi David,

I am a proud denier. I don’t deny climate change—always has changed, always will—but I do deny that carbon taxes, or any human activity, will be able to alter or change a natural cycle. Martin Armstrong said it best:

“Forecasting that the world was getting colder was not profitable for the academics. However, by blaming humans for it getting warmer was a winner! No government can tax people for the privilege of making the climate actually change regardless if it was true or not. But blame humans and it becomes a justified tax. If it’s nature – governments can’t make anything out of that one.”

For the record, I think we are heading into (if we already have not entered) a global cooling cycle. If I am right, I would rather live in Sarasota than Pittsburgh. Neither one of us is voting on climate change with our feet. Such is the foibles of human nature.



And here is Bill:


I think there is a reasonable consensus among sensible people that climate change is occurring and most likely is a consequence of man (and woman) made increases in greenhouse gases. I do not believe that there is a consensus that extreme weather events such as hurricanes can as yet be reasonably attributed to climate change. We do know that losses are rising but that is a consequence of building in vulnerable places and has nothing to do with climate change.

I challenge you to document the case for more extreme weather events. Some data below, from Wikipedia. (Yes, I know that many do not consider it a respectable source but is sure is convenient for a purpose such at this.)

Please see my comments below the data as well.

RESPONSES TO CLIMATE CHANGE & MARKETS - Number of tropical storm and hurricanes per season



What to do? The theory of externalities provides a powerful case that there is next to nothing high-income countries can do without cooperation from India and China. Research, fine, but CAFÉ is a stupid waste of resources. At the present time, there are only two possibly effective things we can do. One is to further explore options for geo-engineering. If you are unfamiliar with work there, I suggest a bit of reading. Some of the ideas are quite fascinating and even promising. We will also have to raise seawalls in vulnerable areas, such as where you live.

I am an economist and not a so-called climate denier. I am a denier when it comes to wooly headed thinking.


And here is Gregory:

This article you shared “Trump and the End of Smugness” was great btw. I just shared it with some people.

The term “climate denier” is deliberate mischaracterization of those on the right of the political spectrum, much like the term trickle down economics. It’s also a mean-spirited comparison to the word “holocaust denier”. No real thought leader on the right denies the fact that the climate changes and man has some role in it, only that the costs imposed by many proposed regulations governing it outweigh the potential benefits to society. That’s WITH the assumption that other governments, besides the US, would actually be on board with them. In a deal like the Paris Accords, many countries would have growing emissions while the US is put at a tremendous economic disadvantage, leaving the world with an aggregate gain.

I’ll defer to respected economists like Mankiw.

“Even the moral argument is not without critique. With just a 1% real annual rate of growth, global per capita income rises from about $12,000 today to $77,000 by 2200. Even if climate change damages shrink the economy by 13% by 2200, as some have suggested, our distant descendants will be five times richer on average than we are. Are we to sacrifice our relatively modest wealth so they might be six-times richer that us?

And even if we are to value future generations as Stern suggests and morals may dictate, then are we not better off bequeathing them an economy that has grown unencumbered by carbon policy for a century or more?”

Again, the above hinges on a huge assumptions; that the climate models are accurate. But they simply cannot accurately predict how the oceans and atmosphere will interact over long periods of time on a planetary scale. They can’t predict with any accuracy what the climate will be like ten years from now much less 100. It is mainstream, agreed upon science, that there is a reasonable chance we could suddenly reverse course and enter a several hundred year period of global cooling, regardless of human interference, just like we did after Medieval and Roman times.

I’m assuming you’re familiar with the issues of back testing investing models; climate models are similar. According to the site where your Bloomberg article got it’s data “A way to test the accuracy of models is through hindcasting – see whether they successfully predict what has been observed over the past century.” But all that shows is they can fit the model to the history not predict the future.

Maybe 97% of scientists agree that man impacting the climate is real but it gives no indication of magnitude. 100% of scientists agree that if I poor a shot glass filled with water into my pool the water level will rise but rain and evaporation (nature) are going to have a much more meaningful impact. Bear in mind that intellectuals don’t get grant money, book deals, or promoted for being moderate. Being alarmist pays in this field. But even if we ignore that and assume your assumptions are correct, the correct policy prescriptions are debatable. Even if the assumptions were correct, and the policy prescriptions agreed upon; Do you suggest we attack China, and others, and force them to comply or do we allow the US economy to decline relative to theirs? I, like most who have studied international relations, believe the US remaining the lone super power is best for world peace and that more authoritarian states would carve up the world for themselves like they tried in the world wars.

Your choice of language gives away some bias and where you get your opinions from. Using the term “climate denier” suggests being unfamiliar with the opposing side of the debate which is an indicator of being stuck in an ideological echo chamber or experiencing cognitive dissonance. I appreciate the “Trump and the End of Smugness” article but now it almost seems like you just did it for appearances.

And here is Mathew:

I agree with you that climate change is real. The earth has become an ice ball twice and we had dinosaurs living as close to the poles as present day Alaska. Vast deposits of potash exist along the coast of NC where I live and they are far inland from the ocean and filled with oceanic fossils. They were deposited there over the millennia from the sea levels rising and falling. The globe has absolutely been warming ever since the end of the last ice age to put into perspective man’s limited time on the Earth. Approx. 10,000 years.

The debate in my mind and the mind of many is that this phenomenon is not man made. These fluctuations in climate and sea levels have been going on far longer than the presence of man much less the presence of industrial man. The amount of greenhouse gases emitted from one volcanic eruption is equal to decades of manmade gases. I see the climate change push as a coordinated global effort to demand even more government control of the people of this planet. Period… The sky is not falling my friend.

And here is my friend Dennis Gartman excerpted from his daily letter (October 25, 2018):

A PROFESSOR WRITES ON CLIMATE CHANGE: We begin by noting that we are long time believers in climate change and always have been. The climate changes and we have said from time to time that when we played golf in central Florida several years ago we came across sharks’ teeth imbedded in the sand there. It has been several hundred million years since Florida was under water deep enough to have monstrous sharks roaming those waters, but clearly the climate was materially different then… measurably, materially warmer and sufficient to have melted the glaciers to the extent that Florid was indeed under water. To the very best of our knowledge, however, there were very few automobiles roaming the land prior to that climate change several hundred million years ago, but we are open to correction on this fact.

That said and in light of the comment we wrote recently about the fact that we are uncommonly fortunate to live in the safest, least war-torn, healthiest, least dangerous, least travail insistent period of humankind, we note what, Dr. Roger Pielke, a Professor of Environmental Studies at the University of Colorado, recently wrote about global weather disasters in a letter-to-the-editor of The Wall Street Journal.

He wrote in “Some Good News—About Natural Disasters, of All Things“,

“Disasters certainly continue to cause catastrophic damage across the globe. The annual cost of disasters has doubled since reliable accounting of all events world-wide began in 1990, rising from about $100 billion to $200 billion a year in 2017 dollars.

“But it’s deceptive to track disasters primarily in terms of aggregate cost. Since 1990, the global population has increased by more than 2.2 billion, and the global economy has more than doubled in size. This means more lives and wealth are at risk with each successive disaster.

“Despite this increased exposure, disasters are claiming fewer lives. Data tracked by Our World in Data shows that from 2007-17, an average of 70,000 people each year were killed by natural disasters. In the decade 50 years earlier, the annual figure was more than 370,000. Seventy thousand is still far too many, but the reduction represents enormous progress.

“The material cost of disasters also has decreased when considered as a proportion of the global economy. Since 1990, economic losses from disasters have decreased by about 20% as a proportion of world-wide gross domestic product. The trend still holds when the measurement is narrowed to weather-related disasters, which decreased similarly as a share of global GDP even as the dollar cost of disasters increased.

“The decrease in disaster damage isn’t a surprise, because as the world population and economy have grown, the incidence of the most damaging extreme events has hardly changed. The Intergovernmental Panel on Climate Change reported in 2014 that there has been no increase in hurricanes, floods, droughts or tornadoes within the past 30 years. And 2018 is on track to have the lowest losses from disasters as a share of global GDP since 1990.”

(Ed: Full commentary by Roger Pielke Jr. available at the WSJ website)

When we moved to Raleigh, North Carolina to go to graduate school in 1972 and traveled to the Outer Banks for the first time we were struck by the desolate nature of the Banks. Homes were few, small and inexpensive. Now they are many, large and hugely expensive. When the smallest storms hit the Banks far more monetary damage can and will be done to these structures than the worst storms of that far more active time. Oh, and here we are in late October, only a month removed from peak hurricane time here in the US southeast and although we’ve suffered through Florence and Michael and as Mexico has suffered through Willa this week, the number of storms has been far fewer than in recent years. But we still believe in climate change; it’s just that we believe that man has had little if anything to do with it and that Mother Nature continues to hold the reins.

We are also certain that the fears stirred up by the eco-radicals are fears engendered by the Left to entice the public into adopting anti-business philosophies, hoping that in the end they can usurp political control yet again. Indeed, there is our great concern in this regard; that this is all a great charade with political rather than environmental intentions at the core.

And here is Richard from the Sierra Club:


I hope you and your friends can bring some sanity to the politicians. I know you’re doing everything you can.

Maybe if enough investors stop contributing to climate deniers, they’ll get the message. Right now we have to overcome a major donor base that makes lots of money from fossil fuels and is reluctant to allow any regulations that affect profitability.

Two weekends ago, I attended the ‘Responsible Shale Energy Extraction’ Symposium” sponsored by UT-Arlington CLEAR. The event had over 180 attendees, 40+ companies represented, and over $55,000 being raised for graduate and undergraduate research.

The symposium featured many papers about how the fracking industry can now recycle wastewater and save money. There were also papers by Dr Anne Epstein about health considerations and by Professor Katherine Hayhoe about climate change.

When I asked two questions about what the industry was doing to slow down climate change, the response was complete denial of any responsibility. It was depressing. They just don’t get it.

And here is Bob:

Dear Mr. Kotok

Why the pejorative “Climate Change Deniers?” The climate debate was that CO2 into the atmosphere caused global warming. Everybody knows the climate is changing, as it has for the last billions of years. I think the people opposed to drastic government plans are thinking what if we do something that may help a little, while Russia, China, India, Africa and South America etc go their merry way? Seems like a plan by some to punish the evil United States with no benefit to the global warming scenario. I don’t deny the climate is changing, but I doubt all the hysteria and self appointed gurus are going to make any difference.

And a couple of side observations:
1) Remember the big scare of the coming ice age? What happened to that?
2) In Madison, WI where we lived the glacier was supposedly a mile thick. Then without Al Gore or automobiles or cars it melted. How did that happen?
3) Who is going to step up and shut down all airports, shipping, and coal power plants everywhere, including China and Russia and India?
4) Maybe the earth has a self correcting mechanism we don’t know about. Like the extinction of people??

William asked:

I agree with most of what you have said because we have facts. Do we know if we impose a carbon tax what will that do to our economy? Also even if we maintained all of Obama’s regulations would our weather be any different? Lastly, playing devils advocate why do you still transact business in the State of Florida?

And Donald noted:

You are the first person/entity that I know of to make the point about electric cars getting juiced up from coal fired plants. I have always argued that electric cars, per se, are not the answer. It depends upon how we reform our grid. Thank you for point this out!

And Lindsey Added:


The unfortunate reality is until the masses put matters like global warming far above just making a profit. the influences of a few will drive policy over the good of the whole. The haves and have-not is widening and thus a critical mass of the have-nots feel left behind; left or right of center. This then results in the cyclical nature of our political policies. Mark when Obama became president some of his policies were directed under misleading or at best half baked assumptions on energy/environmental R&D.

Having a very long career in R&D I have seen first-hand how science can be manipulated to present a very biased not yet confirmed result.

Climate change is real yet I know there are many, yet to be proven assumptions.

I’ll leave on that note.

We again thank all readers for their responses.
David R. Kotok
Chairman and Chief Investment Officer
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