Relative strength is a way of evaluating investments like stocks based upon “the speed and change of price movements.” It measures price momentum. The idea is to pick investments that have more strength in their price potential compared to other investment alternatives. An over simiplified explanation of relative strength is that you want to buy the stocks that are going up, not buy the ones that are going up in price slower than other stocks and sell the ones that are going down.
Relative strength is at the very core of Earth 2017′s economic projection of a global economy in sustainable goods and services with $10 trillion in annual revenues.
The basis for this projection is that the price of unsustainable goods and services are going up. If you need an example, look at today’s pump prices and compare that to what you were paying this time last year, or last month, or last week.
This same type of price escalation is happening at the grocery cash register. Processed or industrial foods that require intense amounts of chemical fertilizer, large quantities of water and a global transportation system are escalating in price due to the higher production costs.
The encouraging news is that the price of sustainable goods and services are falling in price. I have reported on SunRun, a residential solar company. They have a very simple customer value proposition of no money down, guaranteed savings and all maintenance costs covered for 20 years. That is why this company’s has an approximately 100% annual customer growth rate!
Hybrid car sales are booming. They are growing at about a 50% monthly sales growth rate. Why? J.D. Powers just released a study. It found that 75% of potential hybrid car buyers are interested in this type of vehicle to save money on gasoline. 50% said they were interested in a hybrid car to help enhance the environment.
I had the opportunity to talk with a very bright group of MBA students on the topic of sustainability at an event sponsored by the San Francisco chapter of Net Impact. Like their Millennial Generation peers these MBA students viewed sustainability as their future. They want change to protect the environment, an environment that one day will need to serve their future families. I shared an alternative perspective based upon market research documenting that neither consumers nor businesses are going green for reasons tied to saving the planet.
The good news for their business careers and the environment’s future is that going green is accelerating and is a huge business opportunity because of the relative pricing strength that is emerging in behalf of sustainability.
The relative strength of sustainability is a global mega-trend that offers businesses and consumers a path for aligning value with values.
Bill Roth is the founder of Earth 2017 that focuses upon the emerging smart, healthy and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.