Both stock and bond markets finished the quarter with solid gains. Large company stocks in the U.S. were up 3.1%, while smaller companies gained 2.5%. Foreign stocks were in the black as well, up 6.1%. Bonds advanced 1.4%, even as the Fed raised interest rates.
Federal Reserve officials forged ahead with another interest rate hike in June, the third in six months, and maintained their outlook for one more hike this year. The Fed announcement struck a careful balance between showing resolve to continue increasing interest rates toward more historically normal levels, and acknowledging concern over unexpectedly low inflation this year. While we may think of inflation as a bad thing, the Fed sees benefits in it—in the right measure.
With all of the chaos happening in Washington, DC it can be hard to keep up with everything that is changing. While your advisors here at Natural Investments stay up to date on a wide variety of policy issues, we particularly want to highlight a bill that would have a large impact on our industry and our ability to advocate for social change.
Earlier this year Republicans in the House introduced HR10 The “CHOICE” Act. CHOICE stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, but in simple terms this bill is a massive give-away to large Wall Street firms. It destroys much of the regulatory framework put into place under the Dodd-Frank reforms. And, most disruptive to socially engaged investors, it puts limits on the shareholder activism work that is so critical to our ability to impact change at the businesses we invest in on your behalf.
I bought a used bicycle in 2010, for $200. It certainly is not the fanciest, no carbon fiber or titanium, but it’s sturdy and has stood up well for the past seven years. I’ve spent some money on tune-ups, replacing tires, a new helmet, a rack, and gear bags as well. Altogether, I have spent just under $1,000 on it.
Many days I choose to commute to my office on this bike, an eight-mile round trip, which takes me about forty-five minutes total. Having done this for a number of years, that’s about 11,000 miles of travel on this bike on trips where I would otherwise have been driving.
None of us wants to think about the possibility of losing our ability to make sound financial decisions, but many of us eventually will, owing to an accident or illness, especially some form of dementia. What would happen, for example, if in a period of impaired judgment you started taking large amounts of money from your accounts or were enticed to fund a get-rich-quick scheme? Is there anything that can be done to help protect you and your assets?
An easy first-line defense is the NI Sharing of Information Consent Form, which you can file with your advisor. The form gives your advisor and Natural Investments permission to contact designated people if your advisor perceives that a request or behavior is uncharacteristic of you and your goals. An unusual request does not necessarily signal a loss of capacity to make decisions, and in all likelihood the form would never be needed. But should the situation occur, a quick double-check by your adviser with someone whom you trust could prevent a potentially significant mistake. Your advisor can help you choose the best person for this role.
In June I participated in the inaugural Conscious Company Global Leaders Forum, a gathering of about 200 business executives who are interested in evolving themselves as a conscious leaders. They share a goal of bringing deeper awareness to bear inside companies to change how business is done, and to create positive, meaningful ripple effects in the bigger world.
As you might guess, some of the attendees were from recognizable companies like Google, Patagonia, Clif Bar, GoPro, and Seventh Generation. Economic innovators like Kat Taylor from Beneficial State Bank, and mission-oriented CEO Vincent Siciliano with New Resource Bank were there. Game changing leaders from BALLE, Bioneers, Social Ventures Network, Oxfam, B Lab, and American Sustainable Business Council attended as well, along with many chapter heads and members of the Conscious Capitalism national network, NEXUS, and Village Capital.
I struggle with climate change. It’s so hard to come to grips with the enormity and complexity of this global challenge, and even harder to know what to do. It turns out that Project Drawdown is just the thing I was looking for, to help me find some focus and optimism when the challenge is so immense.
Project Drawdown founder Paul Hawken, a well-known environmentalist, entrepreneur, and author, has had his own struggles with climate change. As far back as 2001, he started looking for the best approaches for addressing this central issue of our times. While he found high-minded strategies geared toward action by governments and multinational corporations, what he was after didn’t exist: a compilation of real world solutions that speak to us all.
In 2013, Paul began to assemble a coalition of more than two hundred scientists, researchers, fellows, writers, economists, financial analysts, architects, companies, agencies, NGOs, activists, and other experts. It’s an impressive team, and they’ve produced a book and website that highlights eighty of the most viable ways to “draw down” carbon from the atmosphere. By pursuing a wide array of strategies, we can not only slow the increases, but also begin to reduce the concentration of carbon dioxide and other disruptive chemicals enough to stabilize the climate.
Download NI Newsletter Summer 2017 (pdf)
Last fall, NI Managing Partner Michael Kramer gave a 45-minute talk at a conference in his home state of Hawaii that offers an good introduction to socially responsible investing and our variation on the theme, resilient investing. It catches Michael in a relaxed setting, and it’s recently been posted at the conference website (or click through to see it embedded below). Their teaser includes some of their favorite quotes from Michael’s talk:
“We think investors have a right to know. We want to require the disclosure of political contributions. I won’t use Verizon because I know how much money they contribute to the conservative side of the political equation… Imagine if all companies were required to disclose that publicly then you would know that and could make a decision about whether you want to own that company.” (Timecode 21:40).
“We have not fixed hardly any of the problems that caused that financial meltdown eight years ago… It is still going on because the Republicans in congress want to treat the economy like the Wild West.” (Timecode 22:20).
Natural Investment’s Carrie Van Winkle was recently featured on Forward Radio, a Louisville radio station. This is one of the best overviews of NI’s approach that we’ve heard. The forty-minute conversation covers some of the themes of resilient investing, as well as offering a quick introduction to SRI in general. Topics include fossil-fuel free investing, first steps for millennials, and bees.
Check it out here: Sustainability Now from Forward Radio
What’s Up On Wall Street, 1st Quarter 2017
(written April 2017)
As the first quarter drew to a close, most stock markets had moved higher while bonds overall recovered from a poor prior quarter and nished up as well. Over the quarter the stocks of large U.S. companies rose by 6.1%, U.S. small companies nished This is a continuation of higher by 2.5%, foreign stocks were up 7.2% what was already happening and bonds, broadly measured, rose by 0.7%.
Both the financial and general press were dominated by news out of Washington D.C. as the new President’s term got underway. While action in the capitol does affect the broader economy, the economic and business earnings outlook will normally have more impact on stock market results. Presidents have long received too much credit—or blame for economic conditions on their watch. Still, it is understandable why the markets and media are xated on Washington. The news never seems to stop and it’s increasingly wacky. It feels like rubbernecking on the highway as we pass an accident; it’s hard to look away.
However, the long-term movement of stock prices tends to be more in uenced by interest rates and business earnings. As the stock market has continued to rise since the election, some economists now believe that the rally is more about positive economic data that supports the picture of a normalizing U.S. economy. This is a continuation of what was already happening during the second term of the Obama administration.
Speaking of interest rates,