Month: August 2021

entrepreneurship, risk management

Management Flaws in Corporate America

James Cox

The most recent rounds of corporate earnings reports for retail companies has by and large been very disappointing. Many companies are struggling to survive in an environment dominated by a few large ecommerce companies. (1) Life in an age of COVID has driven many to rely upon online sales.

Disappointing earnings have resulted in lowered outlooks and fallen stock prices of many retail companies. (2)

I recently had the opportunity to talk to several people who work in corporate America, particularly retail. What I learned is scary.

In addition to focusing on closing stores and reducing costs, many companies are resorting to extreme discounting and price matching strategies in order to draw in more traffic and stimulate sales. However, the net impact of this approach has been to alienate the company’s high value core clients (due to impaired customer service) and to attract a clientele that is focused on lower price and discounts. As a result margins are being squeezed even more than before.

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health, risk management

New Employment Realities As Recession Risks Rise

James Cox

“I’VE BEEN LET GO…”

It’s a terrifying experience… being fired or laid off from a job you have done well for a number of years. It seems daily that you see headlines focused on labor, hiring, and the shortage of trained help.

While the monthly jobs numbers are heralded as a sign of a strong economy there are undercurrents of weakness. New weekly unemployment claims continue to run over 375,000. While many businesses are expressing frustration about being unable to find new employees, such an elevated level of layoffs is confusing. (1) For decades more than half of all American’s have little or no savings. In 2020 personal savings rose as people saved much of the money received due to government programs to support the economy through fiscal policy. In 2021 73% of households had saved $1,000 to $5,000. That said, only 5% of households had more than $10,000 in savings. (2) Many companies report a weakening expectation for revenue and growth. The renewed outbreaks of COVID with the Delta variant, no prospect of more fiscal support, and elevated inflation are taking a toll. (3) CEOs are concerned about the effect of oncoming changes in Fed policy and it has caused many companies to delay capital investments and expansion. (4)

Many analysts have already indicated that China is in a recession. Some expect a slowdown or recession in the US within the next 6 to 12 months. Many are looking at the current economic environment and using the term “Stagflation” … a term last used in the 1970s. (5)

With that being the case, it pays to be prepared and understand what unemployment means in this new economic environment.

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Climate change, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

Divestment From Fossil Fuels Gathers Steam

James Cox

As an investor in today’s economy, you have a say in what companies you invest in and support. By investing in a company, you are effectively voting with your dollars.

By the same token, as an investor you also have the right to purposefully refuse to invest in a specific company or industry. Perhaps you disagree with their business model or you oppose the negative impacts they are having on society. This act of withholding investment is at the core of “Divestment”.

Without access to capital markets, fossil fuel companies cannot finance their operations. As fewer buyers come in to buy shares of fossil fuel companies, the potential value of these companies decline.

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AI, risk management

Productivity and Robots

James Cox

With the advent of COVID and the global shutdown of the economy, robotics and Artificial Intelligence (AI) took on an increased importance with how business got done. Businesses invested in technology to assist in the change to work from home and the need to be social distanced. COVID accelerated a process that was already in process.

For decades the US economy has suffered from stagnant wages and stifled productivity. While the economy has grown in GDP since 1970 growing from $1 trillion to $18.5 trillion in 2016 and $20.513 trillion in 2018, the American worker has not enjoyed commensurate benefits. (1) Wages have remained flat for decades. 

In the past, studies have shown that part of the reason for this was the development of the computer and its influence on businesses improving efficiency. 

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Climate change, environment, retirement, risk management, Socially Responsible Investing, SRI

How to Reduce Your Carbon Footprint

James Cox

People are becoming increasingly aware of the consequences of climate change. In October of 2018 the UN Panel on Climate Change stated we have 12 years to halt the growth of CO2 if we hope to avoid the worst possible consequences of global warming. (1) Yet following the shutdown of the global economy in 2020, the release of CO2 has accelerated. “In 2021 global energy-related CO2 emissions are projected to rebound and grow by 4.8% as demand for coal, oil and gas rebounds with the economy. The increase of over 1 500 Mt CO2 would be the largest single increase since the carbon-intensive economic recovery from the global financial crisis more than a decade ago, it leaves global emissions in 2021 around 400 Mt CO2, or 1.2%, below the 2019 peak.” (2)

Atmospheric CO2 in June 2021 stands at 418/ppm. In June 2020 the figure stood at 416/ppm. Ten years ago, in June 2011, the measure stood at 390/ppm. (3)

This awareness that the build-up of atmospheric CO2 is accelerating has led to many projects that are working to effect change. Greta Thunberg has raised the awareness of students and leaders to protest the inaction of adults on Climate. John Lui and others have organized eco-restoration camps to foster regenerative agriculture and to plant many more trees in degraded environments. Many foundations and pensions are pursuing divestment strategies from fossil fuel companies to reduce the capital available to produce carbon intensive projects. More people are turning to socially responsible investing as a way to have their own investments impact what the future will look like.

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Climate change, environment, ESG, Socially Responsible Investing, SRI

Greta Thunberg, David Hume, “State of Nature” and Climate Change

James Cox

The climate crisis is worsening…

In a speech to the Austrian World Summit in June 2021, Greta Thunberg called out global leaders for their inaction. (1)

“During this time, more and more people around the world have woken up to the climate and ecological crisis, putting more and more pressure on you, the people in power. Eventually, the public pressure was too much and you had the world’s eyes on you. So you started to act…

Not acting as in taking climate action, but acting as in role playing, playing politics, playing with words and playing with our future, pretending to take responsibility, acting as saviors as you try to convince us that things are being taken care of.

Meanwhile the gap between your rhetoric and reality keeps growing wider and wider, and since the level of awareness is so low, you almost get away with it.”

Greta Thunberg raises a crucial issue that needs to be addressed for humanity to overcome the climate crisis…

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