In its 28th annual Retirement Confidence Survey, the Employee Benefit Research Institute (EBRI) discovered that 64% of today's workers feel very or somewhat confident in having enough money to retire comfortably, up from 60% in 2017. And although far more retirees are very confident in their retirement prospects than workers, retiree confidence in their ability to meet basic expenses and medical expenses dropped from the previous year. Moreover, both workers and retirees question the role Social Security will play in future retiree income.
SRI investors like electric cars for obvious environmental reasons. Many have flocked to Tesla*, for example, despite some of its current cash flow statistics that might frighten some more conservative non-SRI investors. These Tesla fans might well be motivated by the company’s electric car models, but their investments are also supporting another fast-developing, and proliferating, technology – namely cars that drive themselves.
When Mr. Trump was elected President, I cautioned against panic (although I was feeling some of it myself). I wrote the vibrancy of the global economy and the securities markets that reflect it transcend any U.S. administration and its policies. Privately, I remember thinking that even though that might be true, a Trump administration would almost assuredly create chaos and an increase in short term market volatility.
But that didn’t happen – at least not right away. Instead, the markets focused on an improving economy both in the U.S. and abroad and yielded a banner year in 2017. So far, the narrative for 2018 is different, and yes, Trump is finally causing the economic and market chaos I feared.
In light of continuing gun violence and mass shootings in the U.S. involving semi-automatic assault weapons, the undersigned investors representing US$634BN in assets are calling on gun manufacturers, retailers and distributors, as well as companies with financial ties to these industries, to review their operations, supply chains and policies and take meaningful action on this public safety concern.
The recent shooting incident at a high school in Florida, the latest in a rash of mass killings in the U.S. by a person with a readily available military assault rifle, reinforces my commitments as a financial advisor who specializes in SRI. One of the most important characteristics of socially responsible impact portfolios over the decades has been the avoidance of weapons, that is, of companies that manufacture and distribute weapons - this due in large part to SRI’s historical roots in the progressive religious community, particularly in the sensitivities and values expressed by the Quaker and Mennonite traditions (often referred to as the “peace” churches).
After reaching all-time highs on January 26, 2018, the Dow Jones Industrial Average and the S&P 500 went into a two-week slide that saw both stock indexes drop by more than 10%, a decline that is typically considered a market correction.1
Analysts have been saying for several years that the long, booming bull market was overvalued and due for a correction, so the drop was not a surprise in the big picture.2 And even after the 10% plunge, the Dow was up 19% over the previous 12 months, and the S&P 500 was up 12.5%.3
It's natural to be concerned about this kind of shift, but more important to maintain perspective and focus on your long-term goals. It may be helpful to consider some of the reasons behind the surge of market volatility.
OK, a couple of my clients have wondered why I haven’t bothered to comment on the recent gyrations in the market. I might well have commented around February 7 when it appeared the sky was falling, but as it happened I was on vacation in St. John, one of the Caribbean islands hit hardest by last fall’s hurricanes (and happy to be there spending money, thereby helping the recovery efforts). Internet service on the island is still very sporadic, and we didn’t have any service where we were staying that week. Standing outdoors in St. John, it was nice and warm, and the sky didn’t appear to be falling at all, just blue and beautiful.
Of course, by the time I returned home the market indexes had begun to recover, and the Dow Jones Industrials and the S&P 500 ended last week up 4.3% each, their biggest gains in five years. Stocks are still off their recent record highs, but certainly things appear to have stabilized.
I closed off 2017 with an SRI Investing tradition, making two donations to honor you, my clients, in appreciation of the trust and confidence you place in us. Even more importantly, you care enough to invest your assets to help create a better world. The first donation went to Heifer International (www.heifer.org), helping to create financial opportunities in underserved communities worldwide. The second donation is to purchase carbon offset credits from Native Energy in Vermont (www.nativeenergy.com), to make our professional practice carbon neutral. Native Energy was founded in 2000 (the same year I started my SRI practice) and is now a leading provider of carbon offsets, renewable energy credits, and greenhouse gas consulting.
The new tax law hasn’t been formally ratified by the U.S. House and Senate, but all indications are that the Tax Cuts and Jobs Act of 2017 will be sent to the President’s desk in the next few days. As you probably know, the House and Senate versions were somewhat different. What does the new bill look like?
SRI investors, like virtually all investors, know that over time markets go up and markets go down. When they go up for an extended period of time we call it a bull market – vice versa, it’s a bear market. Well, we’ve had a bull market now for a very extended period of time, more than 7 ½ years. Eventually, a bear market will follow. We know that. We just don’t know when and how severe it could be.
I happen to believe in some unsubstantiated investment “street” wisdom – that more money has been lost trying to avoid market “corrections” and bear markets than has been lost in the events themselves. If that wisdom is true, it is for a simple reason. Investors who bail out of their stock holdings while predicting (i.e. guessing, following a hunch or a chart) a market downturn are very often wrong about the timing. After they pull out, the market continues to go up for a substantial period of time – they miss out on the upside in their anticipation of the downside
Chances are, you’ve heard that tax “reform” is right around the corner—that is, if you can call it “reform” when hundreds or perhaps thousands of new pages are about to be added to the tax code. First, the White House released its tax legislation wish list. Now the Republicans in the House of Representatives have released a proposal called the “Tax Cuts and Jobs Act,” which fleshes out some of the details.
SRI investors can easily have doubts about whether their investment actions are really making a difference. It is, after all, very difficult for each of us to see or discern the impact our actions have in the world. This can be especially true about climate change, a global problem that is already upon us, and the ongoing dangers from which could be catastrophic. When we divest from fossil fuel companies and/or engage them in shareholder advocacy initiatives, are we moving the needle at all?
Protecting our identity, our data, and our assets from online hackers is becoming more important and more challenging every day. When one of the nation’s largest credit bureaus is hacked, we’re doubly reminded of the dangers.
Just in case you haven’t seen the news in the last couple of days, Equifax has experienced a major breach that has compromised company data (Social Security numbers, names and addresses) of an estimated 143 million U.S. consumers. The company has created a web site that is supposed to tell you whether Equifax believes your personal data was part of the breach. The company is also offering free credit monitoring for one year for all Americans, regardless of whether your data has been breached or not.
SRI investors care about people and the world. I know. I work with a whole group of them. They’re my clients. I’ve experienced many instances in my years of professional practice that revealed that my SRI clients care about me as a person, not just as their financial advisor. My favorites are the times one client or another has called me during a down market to ask how I’m holding up!
I care about my clients as people also (that is, not just as clients). Thinking about them, I was reflecting recently on what it might mean to live a socially responsible lifestyle. Your first thought might be, “Oh no, this doesn’t sound like fun – he’s going to get really serious here.” Well, no. What I want to suggest is that having fun, and having it now, is the way to go.
Whether by luck or grace, depending on your viewpoint, I was a healthy baby born on the Fourth of July – so to me it’s not only a special day for the country. On most July 4th weekends in my life I have been proud to be a citizen of the USA.
Not so much this year. Since that fateful election back in November, I’ve felt mostly embarrassed for my country or, to be clear, for my country’s leadership. As David Remnick remarks in a current article for The New Yorker magazine, “Every day, Trump wakes up and erodes the dignity of the Presidency a little more. He tells a lie. He tells another……He trolls the press, bellowing ‘enemy of the people’ and ‘fake news.’” And on and on. It remains hard for me to believe that such a person has become, and is, President of the United States.
If you work with a fee-only financial advisor, you receive portfolio performance reports every three months—a form of transparency that financial professionals introduced at a time when the typical brokerage statement was impossible to decipher. Taken by itself, however, the information you glean from any one quarterly report is virtually useless unless viewed in a larger context. It’s very difficult to know if you’re staying abreast of the market, and for most of us, that’s not really the point anyway.
I’m a life-long fan of the New York Yankees. Among my earliest TV memories as a child is watching Mickey Mantle hit home runs. These days Michael Kay is the TV play-by-play broadcaster of the New York Yankees. He’s well-known for calling home runs. As the ball is leaving the park, he hollers, “There it goes, see ya!”
The World Happiness Report is out, and a group of independent experts have now compiled surveys of people in 156 countries, asking them to evaluate their lives on a scale of 1-10. They then looked at some of the factors that seem to contribute to happiness, and identified five: real GDP per capita (a measure of average wealth); healthy life expectancy at birth; freedom to make life choices; generosity; and whether they perceived their society to have elements of corruption.