Cramer: ‘Fossil Fuels Are Tobacco’

Jim Cramer’s comments on CNBC are a mainstream acknowledgement of a secular shift which we have noted for some time now. The investment ‘belief’ phase in fossil fuel companies has turned.

As noted by IEEFA analysts last year, the sector valuation has fallen significantly from 29% in 1980 to just 5% of the S&P 500 market cap today, so it is not that difficult for US-focused money managers and fiduciaries to reallocate 5% of their investment portfolio compared with when it was 29%.

Unfortunately, this is not the case for Canadian-based funds and managers, since the oil and gas sector remains more than 16% of the TSX composite weight today, and international divestment flows represent concentrated selling pressure for the overall Canadian stock market.

Disclosure: None.

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