I watched The Big Short on Netflix yesterday and enjoyed it immensely. Apart from some minor technicalities, I reckon they did a pretty good job of capturing the 2007/2008 mania and ensuing trades etc. Technicalities like if you have a short swap (ISDA) position with Bear Stearns, and then close out your exposure with UBS because you think Bear is going bankrupt, you've actually doubled your risk i.e. Bear won't pay you if they go bust whilst UBS will still expect payment.
Anyway, in the final credits it mentions Dr. Burry now only invests in one commodity... water. Having been in contact with him he explained his strategy some more to me. He's actually buying up water-rich farmland and planting water-intensive crops such as almonds etc. Reason being that water is rapidly disappearing across the globe, thanks to climate change, and these crops are going to be very rare in future. Many farmers I've spoken with are now saying that the past year has been the worst in terms of our drought. Yes, we've had rain, but thanks to the general temperature increases, the soil is too hot and baked to germinate crops. Plus, any rain just runs off the hard land now, and evaporates too quickly as well. Climate change is real folks and we're on the cusp of the hockey stick. Agriculture is going to get hit hard and I reckon we will soon stop exporting our water in the form of fruits and other crops pretty soon. This will affect everything and the taps will run dry in the next few years if something isn't done soon. Israel is far ahead in this game - they price water accurately, they recycle 90% of their black water for agriculture, they desalinate and they don't waste a single drop in the form of leaks. Plus most homes also all recycle their grey water for domestic, washing use, or for home-grown crops.
With that in mind, other than water-rich land, what investments do you see as being vital in the water sector?
Edit: Water is not actually disappearing. It can't be destroyed. Like energy, it simply transfers form on its ultimate journey from cloud, to river, to sea and back again. But it is being distributed in different ways now. Climatologists refer to this as 'drought and deluge'.
