Nobody expects the Spanish Inquisition

It’s been an especially brutal week so far in the markets, which reminds us of a classic Monty Python sketch.

Nobody Expects the Spanish Inquisition.

We can’t claim to have seen the new Coronavirus, COVID-19 coming. That’s kind of the point. Outbreaks happen suddenly and without warning. There are no ‘catalysts’ for an event like this, and as investment managers and Financial Advisors, the past few days have been difficult, to say the least. Bob and I have been on the phone with clients constantly, and expect to hear from more in the coming days. There are a few common threads to these conversations:

The Chief Weapon is Surprise… Surprise and Fear. Fear and Surprise

Like the Spanish Inquisition, the COVID-19 virus plays on our fears. As investors, we have to balance what we see and read against the goals we set and our timelines. We’ve been devouring as much information about the current outbreak as we can, attending webinars from our partners at MSCI (based on research they published a few weeks ago), reading the thoughts of managers that specialize in investing in the asian markets, and talking with clients about their goals, their timelines to meeting their goals, and whether our current strategy is still appropriate. I’m thankful that we started having these conversations at the beginning of the year, and that we’ve focused on how much risk is appropriate to take.

The truth is, nobody knows when something like this will hit, how bad it will get, or where the ‘bottom’ will be. All we can do is think through the amount of risk we’re willing to take, and stick with that strategy, having faith that this too shall pass. We invest for a reason, whether that’s saving for a house, college, retirement, travel, or any of the other reasons we save, there is always a reason. I encourage you to think beyond the short term fluctuations of the markets, and evaluate your overall strategy. Are you taking the right amount of risk for you?

We recommend some comedy to get you through the week.

And Bright Red Uniforms:

If you would like to meet with us to review your risk tolerance, here’s our scheduling tool:

 


Ways to Green your Business

Our blog has been dark for the past few months because we’ve been deep into what we call “disclosure season”. At the beginning of the year, we’re asked to ‘show our work’ and verify that we are who we say we are by the two main sustainability organizations we belong to: the United Nations-supported Principles for Responsible Investment, and B Lab, which certifies B Corps. We’re now approaching the end of that cycle, and ahead of sharing the results from these efforts, we wanted to give you an idea of what we go through to be a sustainable company, and how you can do the same for yours.

We discovered this series of infographics created by companydebt.com, who urged us to share them with the world. These track pretty closely (although not exactly) with the processes we’ve used to become a more sustainable company, so we thought we’d share!

We’ve prepared for extreme weather by instituting a work-from-home policy to maintain service during natural disasters. Our phones are cloud-hosted and should remain active even during an emergency.

Supply chain risk is critical, and understanding this is one of the major trends to watch this year!

 

Check this out: we’ve done most of this already, and reported back on it in our recent Impact Report. 

Did you know that the single biggest hidden cost to most employers is turnover? The “S” in ESG stands for “Social”, which is supposed to measure exactly these risks.

Businesses that haven’t thought this through will be more at risk. This forms the basis of our investment philosophy (read the bit under the SDGs)

 

Thanks again to the folks at companydebt.com for putting this together!

Safer Internet Day 2020

Safer Internet Day was this week, and as we do every year, we like to use this event to highlight our commitment to protecting our clients’ privacy and keeping data secure.

Our way of helping is to highlight a few of the tools we employ to help protect ourselves in the wilderness that is the internet. This post won’t cover antivirus software, but we’ll be looking at the free tools we use to help prevent tracking and reduce (not eliminate) your vulnerability online.

  • The first line of defense is an adblocker. These tools are designed to prevent you from seeing advertising online. We HIGHLY recommend that all of our clients and friends install one and keep it up to date. Our preferred adblocker is Ublock origin, which is available for Chrome here, and Firefox here.
  • Here’s another reason to install this RIGHT NOW: once you’ve visited our website, our advertising will take over your devices for the next three months if you’re signed in to chrome. While we make it extremely easy to opt out of our advertising, most people don’t realize that you have to visit our privacy policy page to disable this, and that it only works for our website. An adblocker will remove all of the ads from the internet, including ours!

  • After this, we like to look at a pair of tools from the Electronic Frontier Foundation. This group is one of the strongest advocates for privacy and an open internet, and we support their work whenever possible. The first tool we recommend, especially for laptops or other computers that you travel with, is called HTTPS Everywhere (you can install it from that page). This tool helps force your connection to a website over a more secure connection, which can help protect your data and especially any login credentials that you use. It’s not perfect, but it’s better than nothing.

  • The second tool by the EFF is called Privacy Badger. This tool blocks invisible trackers, including the ones that the big tech companies use to track you across the internet. Privacy comes at a price however, as you’ll quickly learn just how much the web relies on these tools – this one WILL break certain websites, especially those that are pulling services from multiple sources. However, it can be incredibly illuminating to see just how much you’re being tracked across the web.
  • Finally, we recommend a VPN, especially when travelling, and ESPECIALLY when travelling internationally. A VPN (or Virtual Private Network) is a tool that allows you to create a secure connection to another server before going out on the wider internet. We recommend using a tool like this whenever you’re connected to a WiFi network you don’t control, as they will prevent the owner of the WiFi network from snooping on your connection. Of course, this merely shifts who you trust from the person running your local WiFi hotspot to the VPN provider you’ve chosen to work with. We recommend doing due diligence on any VPN provider you choose to work with. We’re not going to disclose the firm we’ve chosen for security reasons, but we will be more than happy to recommend a few if you contact us.

This year, we’re adding one new item to our recommendations. Facebook recently added a new ability for you to see and manage what data they collect about you when you’re not using Facebook. Here’s their guide to understanding this, and here’s their guide to deleting your off-platform activity.

Continuing our Holiday Donation Tradition in 2019

Watch the Official Selections of the ESG & Impact Film Festival!

As a member of the advisory board for the InvestmentNews ESG & Impact Forum, I helped to judge the film festival we presented at the event. We’re proud to present the films we selected below.

The Bee Rescuer This film won the Judges Choice award!
Directed by: Bidit Roy. Amit Godse, otherwise known as The Bee Man, founded a social enterprise, Bee Basket, which rescues bee colonies from urban areas.

I have a personal connection to this one. My family keeps bees in partnership with friends who live in Lancaster County, PA. We’ve lost a number of Bee Hives over the years for various reasons, and bee conservation is a subject near and dear to my heart.

>

The Story of TRU Colors This film won the Audience’s Choice award!
Directed by: Meagen Verdi & Akeem Grady. How one company is driving change in Wilmington, NC by hiring a workforce composed of only active gang members.

After this film was shown, we had the privilege of hearing from the filmmakers and one of the gang members in this film. It was one of the most powerful experiences I’ve had, and it reinforced to me the impact that investments can make. The Audience Choice award was well deserved!

>

POKO’S STORY
Directed by: Michael Schmidt-Olsen. Poko, a farmer in northern Ghana, learns new farming techniques to combat the devastating droughts and brushfires caused by climate change that are ravaging the region.

>

Lever
Directed by: Stephen Lamb. ESG investing strategies are a way to align values with investments, but don’t necessarily effect change. A look inside the powerful force of shareholder activism.

>

One Island
Directed by: Mitra K. Bolouri Rasmussen. A look inside a small Danish island that is run 100% with renewable energy.

>

Cesar’s Workshop
Directed by: Robin Pogorzelski. An army veteran from Rwanda who lost his leg to the civil war now makes his living by serving others.

>

BIOME – Harvesting Rain
Directed by: Travelling Tripod Films. This film showcases the positive impact of BIOME Environmental Trusts’ work in government schools struggling with water availability in rural Bangalore, Karnataka, India. The project is funded by Wipro Cares.

>

Leafy Greens
Directed by: Stephen Lamb. An exploration of impact enterprise. Can businesses succeed with the dual motives of profit and purpose?

>

Grow Your House
Directed by: Andrés Klimek & Sergio Donis. This film shows how bamboo can be used to construct houses in a low-cost and dignified way for people living in poverty.

>

The Soapmakers of Samabogo
Directed by: Hannah Stanton-Jones & Tadg O’Keeffe. In the southern plains of Mali, a group of intrepid women entrepreneurs has come together to form a collective of soapmakers, enhancing the lives of themselves and their families.

>

Igniting Impact Trailer
Directed by: Akira Chan. Igniting Impact is a short documentary featuring entrepreneurs who are creating impact by aligning with the United Nations’ Sustainable Development Goals (SDGs).

>

InvestmentNews also has these videos on their website as well, with more information about the event.

Hear from Common Interests in the news

As part of the InvestmentNews ESG & Impact Forum, Max was selected as one of 3 advisors who were asked to share some advice with other Financial Advisors who are considering using ESG Analysis in their practices. Hear from Max and his colleagues here:


You can view this on the InvestmentNews website here.


You can view this on the InvestmentNews website here.

We’ll have more on this event in the coming days. Check back soon!

Our Industry Needs To Do Better.

Bob and I are about to head out to the SRI Conference in Colorado Springs, and we both wanted to take this opportunity to discuss the state of our industry, and highlight an issue that’s become more and more prominent in the past few years: The way our colleagues are treated, both in general, and specifically at conferences.

First, some background: a few weeks ago, a fairly major figure in our industry made a number of morally reprehensible comments about women at a major financial services conference. In the wake of this event, major investors, including pension funds and others, have pulled almost 3 Billion dollars in assets out of his firm. This is the first time we’ve seen real consequences for behavior like this, and we hope that the industry will stand up and take notice.

But more needs to be done. Our friend Sonya Dreizler, who runs a consulting service for advisers that are trying to incorporate Sustainable, Responsible and Impact Investing into their practices, was at the conference in question, and has taken a leadership role to try to change our industry. We’ve been reading and following her “Do Better” series, where she’s been collecting stories from women in the financial services industry. These stories can be difficult to read, but we believe it’s important for us to confront the reality of the industry we work in.

Yesterday (as of this writing), Sonya put out a call on Linkedin:

We’re proud to answer this call. This blog is our firm’s public facing voice, and I can think of no better way to use our platform than to boost the stories that Sonya is telling. So I’ll stop now, and let her words speak for themselves:

In the wake of the #MeToo movement, we’ve seen many articles about why there are so few women in financial services, as well as surveys and statistics about sexual harassment and discrimination. While statistics and surveys are helpful for measuring the issue, I want to share real stories from real women about their experiences with sexual harassment and gender discrimination.

Please click here to visit her website and read the stories there

Sonya also gave a great keynote at last year’s SRI Conference where she touched on these topics. Here’s what she said on the topic:

I’m proud to serve with Sonya on the Advisory Board for the InvestmentNews ESG & Impact Forum. If you’re a financial professional, I hope you’ll join us there. We’re trying to make this an open and inclusive event.

My Wonderful New Car Is Powered By Wind (mostly)!

That is actually a true statement!  My Prius Plug-In Hybrid gets charged nightly when I plug it into my garage outlet.  However, the power to my house is generated by Wind Power, thanks to my supplier Arcadia Power. So, I can truthfully say that, for the first 20-25 miles each day, it is a Wind Powered vehicle!  As a Financial Advisor, I’m always looking for little tricks to keep my costs down.  In this case,  I’ve set the charging cycle to start at 10:00pm, so I receive the ‘Off Peak’ electrical rates which are close to 50% of the ‘Peak’ rates; roughly $ 0.15 per KWH!

However, this is only the beginning of this car’s economics…it gets even better!  The car has essentially two batteries; a smallish one that is charged manually, and powers the first 20-25 miles, and then the big battery that is used by the Hybrid System. Following the ‘driven by wind power’ theme, my daily commute is roughly 10 miles each way.  Therefore, my daily commute is done USING NO GASOLINE – “wind” electricity only!  

Here are some important numbers to consider.  I last filled the tank on 9/21/2019.  In that time I have driven 651 miles, used ⅛ of the tank of gas, so by-the-numbers, I have an average of 330 miles per gallon!  These numbers make me a happy man!

Think Hybrid

It gets even better than that!  Consider the “Full Hybrid” part of the equation. Full Hybrid means that there is an engine and a battery and they work together to make the car go. At times the engine makes the wheels go around, at other times the battery makes the wheels go around, and at still other times they both work at making the wheels go.  Basically, this all happens as needed. In the middle of all of this the engine will also keep the big battery charged so it will never run out. This means tremendous efficiency! On our first long trip we drove over 600 miles on one tank of gas! Check out this interactive graphic to learn more about how the systems play together while I’m driving, and compare my Full Hybrid to other “hybrids”:

Global climate change is a very serious issue as evidenced by some very dangerous scientific studies and the rapid rate of the changes happening. I am a strong proponent of Sustainability.  My car is an important player in my desire to do my part to fix this problem. Wind Power from Arcadia provides electricity to both my office and home, and I have contracted to add solar panels on my home roof. I hope to have them installed sometime this month.

Actions Matter

My car is a symbol, as is the wind power at the office and the solar power at the house. I care about our planet and the people who live on it and these steps are part of my commitment to the UN Sustainable Development Goals. I am proud that my personal and professional work is aligned, as my firm is a signatory of the Principles for Responsible Investing, and is a Certified B Corp. This means we use our business to make positive change in the world.  Please join me, and my firm, in making our world a better place for future generations. We are in fact now a “Global Village!” Let’s make it work!

Climate Risk in Passive Investing

We’ve been seeing a lot of articles recently about a “bubble” in passive (index) investing. We haven’t commented much on this trend, as we’re big fans of low cost index funds in our portfolios. However, an article came out yesterday in Forbes that makes a point connected with this debate that we agree with wholeheartedly. Jeff McMahon writes in his article “Index Funds Face Heightened Risk From Climate Change” that Index funds are uniquely exposed to the systematic risks faced by climate change, and specifically to the inevitable policy response to climate change.

The Principles For Responsible Investing (PRI) (of which we are a signatory) has been doing a lot of research on this (see here for more information, or click here to view the slides from a recent event we attended with the PRI). We have incorporated this viewpoint into our portfolios, and the way we’ve done it speaks directly to McMahon’s article from yesterday.

McMahon points to the recent testimony before Congress from Alicia Seiger, the Managing Director of Stanford’s Sustainable Finance Initiative, who argues that investors are less able to manage climate risk because they are less able to monitor it (you can read her entire testimony here). We completely agree with this for the vast majority of index funds on the market today, but in our practice we have discovered that there are a number of ESG approaches that can be used to manage this risk (see this blog post from earlier this year for more information). Further, by looking at the PRI’s research, we believe we can identify the most likely policy responses and manage these risks within our portfolios.

The most likely policy levers to secure an accelerated and just transition Source: UNPRI (https://www.unpri.org/climate-change/what-is-the-inevitable-policy-response/4787.article)

By mindfully choosing investments that incorporate Environmental, Social and Governance data in their investment process, we believe we can manage these risks. However, there are a number of different approaches emerging within the investment community, and they do not all have the same results! If you are interested in what we’re doing to manage these risks in our portfolios, or if you would like us to analyze your investments to see how exposed you are to these risks, click here to schedule an appointment!

President Macron of France addresses PRI In Person 2019

This week marked PRI In Person, the United Nations-Supported Principles for Responsible Investing’s (PRI) annual meeting. We weren’t able to attend since it’s hard to justify a Paris trip, but we wanted to share the remarks that President Macron made to open the meeting. We’re proud to be a signatory of the PRI, and to help our clients align their investments with the issues they want to work on.

If his remarks speak to you, and you want to get involved to add your voice and investments to the global effort to combat climate change, we’re here to help.