As the chart below shows, long-term investors in coal companies will be hurting unless they actually like losing money, which is highly doubtful.
In the last five years, controversial coal company Whitehaven Coal (ASX: WHC) is down 71%, and New Hope Corporation (ASX: NHC) is down 56%, leaving long-suffering shareholders substantially worse off than the Liberal Party, to which the company has donated hundreds of thousands of dollars in the same period.
But the killer blow is that if those same investors had invested in an S&P ASX 200 (INDEXASX: XJO) index fund, they would have earned returns of around 25%!
It certainly looks like the smart money divested some time ago… However, some people are now asking: is this a buying opportunity?
So is now the time to buy?
Well, the Australian Financial Review is reporting today that Australian coal has been turned away from China, due to quality concerns. Now, Australian producers could improve the quality of their coal, but that "could cost up to an additional $US4 a tonne at a time when the industry is immersed in a sea of red ink," according to the AFR.
Hardly a good sign.
The sad thing is, it's already too late for long-term coal investors. While investors in Whitehaven Coal and New Hope Corporation have slowly seen their wealth evaporate, my portfolio of ethical small-cap stocks has solidly beaten the market. In fact, I made returns of over 30% in the 2015 financial year, according to Sharesight.
Now, you could try your luck picking a bottom with these giant, lumbering, down-but-not-yet-out coal companies.
But with troubles in Greece, falling coal prices and concerns about China's growth, why would you risk it?
