Author Archive

Scott Secrest

Welcome to my archive of newsletter articles and blog posts. For more information on my service offerings, please go to my advisor webpage.

Solid Market Fundamentals Trump Unstable President

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,

Continue Reading

The next wave of socially responsible investors is here

For years people have saved and invested for important life goals such as education, retirement or simply to growth their financial wealth. At the same time, many have been in a position to make charitable donations to organizations with which they share particular goals and values. Maybe it’s the environment, social justice or women’s issues – good causes abound.

We have always known that we can do good with our money by providing funding to important causes – and thereby we can direct our money to positive uses. But we’ve long been spoon-fed the idea by the financial services industry that we cannot successfully invest our money in ways that are positive as well. Is it really a necessity to sink investment dollars into companies which pollute our environment, stoke global warming, and avoid diversity in their boardrooms and women in executive positions?

To talk with most financial advisors, you would think so. 2014 may be the year in which investing fundamentally evolves. Women and Millennials are the disrupters. The opportunity to express one’s values – be they social, environmental or political – and to amplify one’s impact by expressing those values through investment dollars is becoming the vibrant new investment landscape.

Economists estimate that by 2030, women will control two-thirds of wealth in the United States. About half of affluent women report an interested in environmentally or socially responsible investments, as compared to just one-third of men.

At the same time Millennials are realizing their earning potential in many existing and emerging industries. Ninety percent of today’s MBAs are willing to exchange some financial benefits for a strong commitment to social good, according to And 79 percent of Millennials seek to work at a company that is socially responsible, according to CatchAFire.

Treading lightly on the earth and care for our fellow travelers are becoming meaningful, more widely-held views. Daily buying patterns have been favoring organics, fair-trade products, recycled materials and the like in recent years. People are logically extending their values into their economic behavior.

In the canyons of Wall Street, investing for impact has been eschewed as a niche market, not a pursuit for serious investors. But, there has been no conclusive or even suggestive research to show that investing in companies with positive practices can be expected to diminish returns. In fact, companies can avoid many potential risks by adhering to sound environmental practices and opening their doors to diversity in their ranks and boardrooms.

The next wave of investors is here.

This article was first published in the February 2014 edition of Information Press, San Luis Obispo, CA

Continue Reading

Consumers, Investors Poised for a Renewable Future

A recent Bloomberg national poll has shown that Americans are willing to bear the costs of combating climate change, and most are more likely to support a candidate seeking to address the issue.  By an almost two-to-one margin, 62% to 33%, Americans say they would pay more for energy if it would mean a reduction in pollution from carbon emissions. “It is a rare poll where people responding will stand up and say ‘tax me,’” said Ann Selzer, of Selzer & Co., which conducted the June poll.

Carbon markets are another innovation designed to combat climate change.  California began its Cap-and-Trade market in 2011.  The system is a market-based regulation which sets a limit or “cap” on overall greenhouse gas emissions and allows trading of permits or “credits” to release CO2.  The government requires industries to acquire credits sufficient to equal their emissions. Companies that need credits buy them, either from the government or on a commodity market, with the value set by supply and demand. Over time, the government reduces the cap and the number of credits, driving up their value.  The expense of securing credits creates incentives to reduce CO2 levels through investments in clean technologies and better practices.

Another tool in the effort to fight climate change is the growing fossil fuel divestment campaign championed by Bill McKibben’s  With echoes back to the South Africa apartheid divestment campaign, this approach is gaining traction as more and more individuals and institutions sell their investments in fossil fuel companies, for reinvestment in clean technologies or the broader market.  The goal is to bring pressure to bear on corporations, politicians, and investors to create greater urgency and action on the climate change issue.

Natural Investments began offering fossil fuel free portfolios in January of 2013.  The portfolios have performed competitively and illustrate the viability of our economy moving away from fossil fuels.  We’re now seeing increasing investment options of this kind becoming available, which is further expanding our diversification in these portfolios.

Legendary investor Warren Buffet, whose Berkshire Hathaway investment company owns significant holdings in alternative energy and related companies, recently stated that he would like to double his investment in the sector.  With attention like this, the alternative energy and clean technology sectors are indeed gathering momentum.  At Natural Investments we’ve been pleased with these developments and looking forward to expansion in these sectors.

This commentary first appeared as part of Scott’s quarterly market recap in the Summer 2014 edition of the Natural Investment News

Continue Reading

Climate change: take stock, sell stocks

By Scott Secrest and Michael Kramer

Author and thought leader Bill McKibben of, who has previously spoken to large audiences in San Luis Obispo, toured the nation recently trying to persuade young and old alike that we’re in a climate-change emergency and must immediately reduce carbon use or face threats to humanity and ecosystems not seen in millennia.

The city of San Luis Obispo has taken an enlightened approach to the issue by adopting a Climate Action Plan in 2012, which aims to return greenhouse gas emissions back to their 1990 levels over an eight-year period. At the time, Mayor Jan Marx said the city had a moral imperative on the issue, making inaction a poor choice. The Cal Poly Climate Action Team was an early collaborator in the design of the plan.

However, like Al Gore and others, McKibben faces the primary obstacle of apathy in America regarding humanity’s impact on climate change. After all, our lifestyles have not yet been negatively impacted by rising carbon in the atmosphere. Even in the face of Hurricane Sandy and more severe firestorms, the rapid loss of species, massive deforestation, and the melting glaciers and poles, most people still don’t take climate change seriously enough to believe that these emergent realities ought to change human behavior.

Read the rest of this commentary at New Times SLO: Climate change: take stock, sell stocks—why’s divestment campaign is on the money

Continue ReadingNo Comments

Utility investing without nuclear: Flex Utilities and Infrastructure Fund

By Scott Secrest

Among our goals in managing client accounts is to maintain broad diversification among investment types, since each is expected to perform well during different stages of economic and business cycles.  In investment terms, we say it’s good to include a variety of investments with a “low correlation” to the others.   Utility industries are known to have a fairly low correlation with the broader stock market, so are especially useful in this regard.

Utility industries include water, telecommunications, industrial materials, and energy.  The ways we produce energy have come into painful focus recently as Japan and the world deal with the consequences of the nuclear disaster at the Fukushima Daiichi nuclear plant on Japan’s northeastern coast.

At Natural Investments, we have long eschewed any investment in the nuclear energy and weapons industries.  The risks to human and ecological welfare in this industry are enormous.  Further, we believe that no reasonable business case can be made for investment in nuclear facilities due to the expenses involved in building and maintaining them.  And with so many alternative energy sources gaining in accessibility and efficiency, nuclear simply makes no sense (see Hal’s recent post for more on this).

FlexFunds main

Fortunately, there is an excellent investment vehicle that allows us to provide our clients with exposure to the mainstream Utilities sector with no nuclear investments at all – the Flex Utilities and Infrastructure Fund (until a name change in early 2011, it was called the Flex Total Return Utilities Fund). The fund has outperformed the Russell 3000 Utilities Index over the last 1, 3, 5 and 10 years.
Many Natural Investing clients have investments in one or more alternative or renewable energy funds.

The Flex UI Fund gives clients a stake in more established utilities, such as water systems and electric utilities, as well as its high proportion (about 30%) of holdings in the growing telecommunications and internet infrastructure sector. While like many mutual funds, it’s not totally “pure,” with smaller holdings in oil and gas pipelines and exploration, we feel that it serves a valuable purpose in diversification.

The Flex Utilities and Infrastructure Fund is an example of how we as investors can direct our capital away from dangerous and dated energy technologies such as nuclear, while taking responsible steps to balance our portfolios with a mix of innovative and established industries.

For more info, follow these links to the Flex Funds family of funds and an info sheet on the UI Fund

This article first appeared in the Spring 2011 Natural Investments News

Continue Reading1 Comment

Awareness and opportunity: investing in the next economy

By Scott Secrest

A U.S. economy slowly putting itself back together set the tone for the markets over the past year. While short- term economic indicators continue to be mixed, we are in agreement with the camp of economists focusing on longer term economic fundamentals. There is a growing awareness in the financial world of the implications of an emerging sustainable economy, which supports this longer-term, more holistic thinking.

Heightened awareness is critical during periods of financial uncertainty. Economic risks today exist in at least two key areas: a vanishing middle class, and failing to embrace and benefit from the new economic opportunities in sustainability.

Income inequality in the U.S. has reached astounding levels: not since the Roaring 20’s has the disparity between the top and bottom income tiers in the U.S. been so great. While there is significant ethical hazard to this, it’s really evidence that the middle-class has largely vanished in the U.S. This troublesome situation has been developing for some time as production, and now many service industry jobs, have been relocated to foreign countries.

Perhaps our greatest long-term risk is that of failing to embrace the inevitable shift to an economy geared for low-carbon emissions, clean production-based industries, a viable middle class, and sustainability principles. I say ‘inevitable’ here because this shift will occur one way or the other.

Continue ReadingNo Comments

Mutual Fund Profile: Pax Global Green Fund

By Scott Secrest
This article first appeared in the July 2009 edition of the Natural Investing newsletter

As part of our emphasis on investment in renewable energy businesses and other climate change solution-oriented companies, sometimes generically referred to as “cleantech” companies, we have added the Pax Global Green Fund to our line-up.


This is an exciting new option, as it is a security that really gets to the heart of our common desire to take action in fighting global warming and its dire consequences. Environmentalists are sometimes criticized as doomsayers in regard to the global warming problem, putting forward only negative prognostications. Taking action by supporting companies that are providing real-world solutions to address the problem is a positive and hopeful—and rational—response to the risk. There is no silver bullet to solve the complex and entrenched problem of global warming. Rather there are a thousand small solutions that together can solve the problem, or at least manage it as effectively as possible.

Continue Reading2 Comments