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economy, income, retirement, risk management

Being Too Fearful Can Hurt Financial Security

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”


― Charles Dickens, A Tale of Two Cities

I have seen many people who are enraptured by the market moves since the COVID recession of 2020. Markets supported by seemingly unlimited aid from central banks around the world, driving equities to higher all-time highs, and rewarding risk taking behavior.

I have seen many people in the past year who are fearful in the current market environment… High market valuation, trade war fears, warnings from pundits, Fed policy moves, volatility… Because of fear, many people have decided to sit in cash or even liquidate their retirement savings.

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economy, entrepreneurship, risk management

Management Flaws in Corporate America

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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economy, health, income, risk management

New Employment Realities As Recession Risks Rise

“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.

Continue reading “New Employment Realities As Recession Risks Rise”
Climate change, economy, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

Divestment From Fossil Fuels Gathers Steam

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, economy, income, risk management

Productivity and Robots

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

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

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…

Continue reading “Greta Thunberg, David Hume, “State of Nature” and Climate Change”
economy, interest rates, retirement, risk management

2021 Inflation and Parallels to the Seventies

My most vivid memory of the Seventies is sitting in the car with my siblings and parents in a mall parking lot the week before Christmas and my mother crying because they couldn’t afford presents and had to file bankruptcy. For a 12 year old it made the challenges of real life… real.

The seventies were a traumatic time for many Americans… the end of the Vietnam war, the political chaos of Watergate and Nixon, the oil embargo, gas rationing throughout the decade, the suffocation of unions, the loss of jobs and industries as Japan and South Korea became exporters. Economic instability was an ever-present cloud.

Moving in waves through the decade, the economy suffered from bouts of inflation and deflation. It made policy decision-making challenging at best… boost the economy to keep it from slowing down, or is the economy running too hot?

When you drill down one sees many similarities between conditions that led to the “stagflation of the 1970s” and the situation we find ourselves in post COVID.

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Climate change, economy, environment, retirement, risk management

Global future growth… and Climate Change

A recent Bloomberg article titled “The Global Growth Hotspots of the Future Are Here” discussed an HSBC report which advises that investors need to focus on the growth of cities in the Emerging Markets. (1)

“While wealthier countries are more urbanized today, the proportion of urban to rural dwellers in emerging markets is expected to climb to 63 percent in 2050 from 50 percent now, according to the study, which draws on research by McKinsey and the United Nations.

Developing nations’ emissions are rising fast and the report predicted that their share of cumulative emissions would reach 51 percent by 2020. (2)

By 2050 some 5 billion people – more than half the world’s population – will live in emerging market cities, and account for more than half of global gross domestic product growth.

Continue reading “Global future growth… and Climate Change”
Climate change, economy, entrepreneurship, environment, ESG, life insurance, new economy, protection, retirement, risk management, Socially Responsible Investing, SRI

Embracing the Future: An Interview with Charlotte Markward

I met Charlotte and her Husband Randy years ago at a Green Drinks in Philadelphia. It was before the days of Tesla, widespread solar power and organic food sections at the grocery store. People got together to share a beer and dream about a future that would be more sustainable. Things have changed a great deal in the past few years.

Charlotte is a graphic designer based in Philadelphia. She has agreed to share some of her experiences and insights so that we all might have an easier path to financial security.

Charlotte has been interested in supporting socially responsible investing for many years. I asked her what it means to her. Charlotte said, “For one thing it’s smart. We have a finite amount of resources and we are running out of them. To continue doing things in the old ways is to set yourself up for failure. Green investment is where the growth will be.”

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economy, income, interest rates, retirement, risk management

“Rising Prices in the Economy”: Inflation Post COVID

In September 2020 Jay Powell announced that the Federal Reserve would adjust how it reacts to inflation, one of its chief mandates, and allow inflation to run hotter for longer. The expectation is that it will be several years before the Fed raises interest rates. Traditionally, elevated rates of inflation indicate the economy is operating at full capacity and may be in danger overheating. Following the COVID recession of 2020 the Fed is trying to create a positive environment for the recovery.

In the Spring of 2021 signs of inflation are abundant. Since the fall of 2020 commodity prices had risen dramatically. Lumber prices had soared as supply constraints limited what was available, especially as housing prices went up and building accelerated. Copper surged to new record highs. Wheat, corn and other food commodities went up as the economy reopened and supply couldn’t keep up with demand.

Among tech businesses a shortage of computer chips affected the building of everything from cars to exercise equipment. “Just in time” supply chains showed increasing strain.

To top things off, a gasoline pipeline was held hostage by a ransomware attack in early May 2021. The result was gasoline shortages and higher prices throughout the east coast US.

Continue reading ““Rising Prices in the Economy”: Inflation Post COVID”
Climate change, economy, environment, risk management

Rising global temperatures can hurt global GDP

A study released by the science journal Nature makes the connection between the rise of global temperatures and the negative impact this can have on GDP around the world. In the study, titled “Global non-linear effect of temperature on economic production”, researchers found that “fundamental productive elements of modern economies, such as workers and crops, exhibit highly non-linear responses to local temperature even in wealthy countries.” Meaning as temperatures rise, the effect is much greater and accelerates in ways that are potentially disastrous. (1)

One of the lead authors, Marshall Burke of Stanford’s Department of Earth System Science, calls their study “the first evidence that economic activity in all regions is coupled to the global climate.”

The study continues, “If future adaptation mimics past adaptation, unmitigated warming is expected to reshape the global economy by reducing average global incomes roughly 23% by 2100 and widening global income inequality.”

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economy, interest rates, retirement, risk management

The Impact of Financial Euphoria

On a recent rereading of John Kenneth Galbraith’s “A Short History of Financial Euphoria”, he outlines common characteristics from past financial bubbles including the Tulip mania of 1637, the South Seas bubble of 1720, the various booms and busts of 19th century America, the market crash of 1929, and the October 1987 market crash. While the financial instruments vary, the behavior of investors has many elements in common. Bubbles in financial markets have several characteristics in common.

One of the elements Galbraith cites in the financial bubbles he analyzes is the introduction of new financial instruments. Such new instruments offer the “investment opportunity rich in imagined prospects…” (p51) Added to these new instruments is the element of leverage. Leverage allows investors to capture more profit than is normally possible. However, leverage also introduces fragility into the financial system when the value of investments start to fall and leverage needs to be unwound. The unwinding of leverage leads to additional sales and additional losses. The collapse of bubbles has an “inevitable and depressive aftereffect.” (p67) Such a depressive aftereffect is manifested in weakened consumer goods demand, shaken business confidence, a fall in business investment, and a rise in business failures. The bursting of bubbles has a “substantial and ultimately devastating economic effect.” (p89)

Another critical element in the development of bubbles is psychological. “Individuals were dangerously captured by belief in their own financial acumen and intelligence and conveyed this error to others.” (p51) In this aspect, bubbles not only develop from financial innovation but especially because of psychological behaviors and characteristics.

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economy, income, interest rates, retirement, risk management

“Data Dependent” Fed Changes Course and Markets React

In the Fall of 2018, equity markets sold off.

What was the cause?

Widespread view among economists was an expectation of slowing economic growth in 2019 and a Federal Reserve led by Chairman Jay Powell that was expected to continue to raise rates three more times in 2019.

As anxiety and stress built up in November and December, markets dropped. Between October 3 and October 29 the SP500 fell 9.7%. Between October 29 and December 7 the market bounced around rising 6.5% only to give it back and to fall .3%. However, in the weeks before Christmas, December 7 to December 24 the market fell another 10.7%. Showing the rapidness of the decline, on Christmas Eve the SP500 fell 2.6%.

On Bloomberg Surveillance on April 4th, Tom Keene asked Jim Paulson “Was December the mother of all cathartic events? It was so traumatic.” Jim Paulson responded, “I don’t ever remember a December like that ever in my entire career. It was original, and I think it shocked all of us, myself included that this happened in December… But it looks increasingly like the oddity, what was incorrect and inappropriate, was the December swoon… and we may be overdid the selling more than we should have.” (2)

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Climate change, economy, environment, risk management

Climate Change, Rising Temperatures and Food Security

Increasing temperatures globally will have an impact on the economy, and especially the supply of food.

“Scientists have high confidence that global temperatures will continue to rise for decades to come, largely due to greenhouse gases produced by human activities. The Intergovernmental Panel on Climate Change (IPCC), which includes more than 1,300 scientists from the United States and other countries, forecasts a temperature rise of 2.5 to 10 degrees Fahrenheit over the next century.” (1)

Temperature is a primary factor affecting the rate of plant development. Warmer temperatures expected with climate change and the potential for more extreme temperature events will impact plant productivity. (2)

Continue reading “Climate Change, Rising Temperatures and Food Security”
economy, entrepreneurship, income

In Memoriam, Alan Krueger and Raising the Minimum Wage

Anyone who knows me, knows I don’t easily shed tears. But I did on Monday March 18th, 2019. For over an hour I wept.

On this day it was announced that Alan Krueger, beloved Princeton economist, had passed away over the weekend. (1)

Michael Mckee of Bloomberg said “He was one of the nicest people in economics, always willing to sit down and explain concepts to you, to talk with you, it’s a real shock…” Peter Coy continued, “If he were just a nice guy it would be one thing, but he was also a deep scholar…” McKee explained, “There are a lot of economists doing important work, but Krueger really had an enormous impact on public policy outcomes.” All concurred, “It’s a tragedy.” (3)

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health, life insurance, protection, risk management

The Benefits to a Healthy Diet: Quality of Life, Financial Security and Legacy

Its no secret that human longevity has been growing due medical advances over the past 30 years. Life expectancy in 1960 was 66 for men and 73 for women; in 2010 the average expectancy was 80 for men and 84 for women. (1)

However, in addition to longevity, one of the issues people have struggled with is a decreased quality of life in a person’s later years. Chronic diseases play a major role in limiting peoples experience and inflicting pain on the elderly and their families… cancer, strokes, dementia, respiratory, Parkinson’s, Alzheimer’s. 

These issues not only reduce a person’s enjoyment of life but affect their financial health as well. The expenses associated with medical care and long-term care are substantial. But baby-boomers are not sitting still…

Continue reading “The Benefits to a Healthy Diet: Quality of Life, Financial Security and Legacy”
economy, interest rates, retirement, risk management

Market Risks and the Wall of Worry

For years, one of the biggest issues facing the economy has been excessive debt and leverage. Yet even with these problems, prior to COVID-19 it was commonplace to see headlines in the financial media that read…

“Current Bull Market Continues To Climb A ‘Wall of Worry’” (1)

The “wall of worry” is one of the phrases frequently used to illustrate the resistance or fear of investors to invest in a stock market that had earlier gone down.  Since the Great Recession of 2008 and the financial crisis many investors have worried about the possibility of another financial crisis.

In a 2018 conversation with clients I was asked about a recent stock market pull back and if a problem in the market… could cause another financial crisis. This was an issue that was on many people’s minds these days.

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economy, entrepreneurship, health, key man insurance, life insurance, protection, risk management

Protecting your business, and your legacy

Most business owners, CEOs and executives are laser focused on driving their business or enterprise towards success. They are responsible for preserving and expanding sales and revenue. They are responsible for hiring and firing. They are responsible to investors and stakeholders to manage risk and ensure success. They handle client relationships, research and development, marketing and IT… As leaders they wear many hats and carry a lot of weight on their shoulders.

But what happens when a CEO or leader within a company passes away? What is the impact on the business and the employees who depend on that business for their livelihood?

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economy, income, interest rates, retirement, risk management

Are Bond Yields Moving Higher?

On October 3rd, 2018 the 10-year yield moved dramatically higher increasing 3.3% in a single day. Pundits have listed many reasons for rates and bond yields to move higher… a strengthening economy, decreasing unemployment, rising oil prices signaling inflation, a Federal Reserve committed to further rate increases into 2019. (3)

These pressures had been building for some time and signaled a good economic environment.

However, there are a few factors that some view as critically important moving forward in deciding how much bond yields could move up as well as how quickly.

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economy, retirement, risk management

Tariffs, Trade Wars, and Risk

“All things being equal, trade is a good thing, although it can also eliminate certain jobs and hurt some firms or workers. On balance, though, trade creates jobs and boosts the overall welfare of a country… Trade can be an engine of increased production, economic growth, development, and poverty reduction.” (1)

–Richard Haas

In 2018 I had several clients ask about what impact the proposed trade tariffs might have on their retirement plans.

On June 19th, 2018 the S&P 500 sank the most in three weeks with industrial companies getting hit hardest after President Donald Trump threatened tariffs on another $200 billion of Chinese goods, and the Asian nation pledged retaliation. (2)

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Climate change, economy, environment, retirement, risk management

Climate Change, Sea Level Rise and Retirement Risk

One of the oft repeated risks from climate change is the threat that comes from rising sea levels. Depending on the forecast, even in the most optimistic ones, seas are projected to rise several feet before the end of the century. With the accelerating build-up of CO2 and the rate of temperature increase (2017 being the hottest year on record), many expect dramatic sea level rise to occur much sooner than most expect. CO2 concentrations in March 2020 was 414.5 ppm, much higher compared to 411.97 ppm in March 2019. (1)

 

While people might want to buy shore property for benefits that include potential rental income, capital appreciation and personal use, they also face potential risks of hurricanes, sea level rise, etc. Some of these risks can be mitigated by purchasing flood insurance.

 

Last summer I explored the question, “if sea levels rise, what will be the impact on a clients’ net worth and portfolio?”

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health, life insurance, protection, risk management

Protecting Your Family’s Financial Future in an Age of COVID

As of August 5th, 2020 COVID-19 has claimed 156,311 American lives. (1)

In a story that is far too common in 2020, a Las Vegas news station reported that a husband and father recently passed away from COVID-19. He was 42 years old and “the picture of good health.” (2)

“He was furloughed from his job so he didn’t have health or life insurance and now medical bills are mounting for his wife and her three young daughters.” 

“Nobody ever anticipates that someone is going to pass at 42 years old so honestly when he was laid off, it never crossed my mind that oh my gosh we’re losing our life insurance,”

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economy, income, interest rates, retirement, risk management

Where to from here? July 2020

It has been a difficult year on many levels. Given the past few months I want to catch up in several areas… with what has transpired since the spring, where things currently stand in the economy, and what I foresee going into the second half of the year and beyond. This may take a while…

As a reminder, the current economic downturn did not occur spontaneously due to COVID. In September of 2019 Repo rates indicated problems in lending markets. For several year’s companies have been borrowing extensively, especially at lower levels of credit quality. In the Fall of 2019 Morgan Stanley noted that over 20% of corporate borrowers were “zombie companies”; companies with no positive cashflow, excessive debt, and borrowing to stay afloat. This was the situation when the economy was “healthy”.

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economy, interest rates, retirement, risk management

Fed Reluctant To Raise Rates While Raising Questions Around The Economy

On July 29th, 2020 the federal reserve committed to keeping interest rates pinned to the zero bound and stated their expectation to maintain this position for years to come.

In his meeting with reporters to discuss fed policy, fed chair Powell stated, “We haven’t even thought about thinking when we plan to raise rates.” The FOMC statement explained why; The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” (1)

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Climate change, economy, new economy, risk management

Energy, Economic Trends, and Effecting Change: A Review of the Economic Superorganism

In his book “The Economic Superorganism”, Carey King outlines a novel system to organize economic decision making and to evaluate outcomes in a Climate Changed world. 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) The fossil fuel industry is the primary driver of CO2 growth.

In January 2020 the World Economic Forum held its annual gathering at Davos, Switzerland… the primary subject discussed by business and economic leaders was the impact of Climate Change and the need to manage the resulting changing economy.

“The debate on climate change is forcing businesses to respond to demands to stop carbon dioxide and other greenhouse gas emissions. While some have been slow in embracing the fight, executives at Davos highlighted that the overall views from within the business community have dramatically changed over the last decade or so, moving from denial and questioning science into complete acceptance.” (2)

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Climate change, environment

First-hand insights on Climate Change impacts in Bangladesh: An interview with Susmita Saha

Climate change continues to accelerate, affecting people’s near term expectations.

A recent World Resources Institute (WRI) study found that “147 million people will be hit by floods from rivers and coasts annually by the end of the decade, compared with 72 million people just 10 years ago.” (1)

Damages to urban property will soar from $174bn to $712bn per year. By 2050 the cost to cities will exceed $1.7 trillion.

Charlie Iceland of WRI said, “Now we’re actually seeing this increase in magnitude of the damages in real time. We’ve never seen these types of floods before.” By 2050, “the numbers will be catastrophic.”

Continue reading “First-hand insights on Climate Change impacts in Bangladesh: An interview with Susmita Saha”
economy, interest rates, retirement, risk management

What is the Long-Term Economic Impact of nCov19?

In the Spring of 2020 the Coronavirus led to the quarantine of 800 million people in China. As the virus spread to other countries, economies were forced to close in order to limit the spread of the virus and protect populations.

As economies implemented social distancing policies and closed down, unemployment skyrocketed and GDP plummeted. The economic impact was faster and more severe then the Great Financial Crisis (GFC); some even compared conditions to the Great Depression of the 1930’s.

In April 2020 PIMCO sponsored a virtual forum with Dr. Ben Bernanke. Bernanke is a senior advisor for PIMCO and a policy advisor at Brookings. Bernanke was chairman of the Federal Reserve during the GFC and is an expert on the Great Depression. His insights during the current crisis are valuable on many levels.

Bernanke was asked how is this crisis different from the GFC?

Continue reading “What is the Long-Term Economic Impact of nCov19?”
diversity, economy, ESG, risk management, Socially Responsible Investing, SRI

Diversity Matters… Especially In Business

Even before the economic crisis wrought by the Coronavirus, the economy is changing at a rapid pace. Companies in many sectors that have been pillars of the economy have fallen on hard times. Companies that were leaders in industrial America have seen their market cap fall by 2/3rds in the past year. Leaders in retail have closed hundreds of stores and laid off thousands of people. Even technology companies that started off strong in the past 10 years have suffered setbacks in the past year due to corporate governance issues.

As technology advances, the challenge for businesses to stay competitive becomes amplified. In the last 3 years, advances in robotics and AI (Artificial Intelligence) have significantly added to the bottom line of companies. That pace of change seems to be accelerating.

A recent Mckinsey & Company report titled Delivering Through Diversity reinforces the business case for diversity. “The statistically significant correlation between a more diverse leadership team and financial outperformance demonstrated three years ago continues to hold true on an updated, enlarged, and global data set.” (1)

Learning how to deal with this change is a crucial issue for businesses.

Continue reading “Diversity Matters… Especially In Business”
Climate change, economy, environment, health, new economy, retirement, risk management, Socially Responsible Investing

How Will COVID19 Potentially Affect the Climate Change Debate?

As the severity of the COVID19 pandemic became clear to leaders in China in early 2020, the CCP announced the quarantine of over 800 million people and effectively closed down the economy of China. One of the effects of this shutdown was a dramatic drop in carbon emissions and air pollution.

Paul Monks, professor of air pollution at the University of Leicester, predicted there will be important lessons to learn. “We are now, inadvertently, conducting the largest-scale experiment ever seen,” he said. “Are we looking at what we might see in the future if we can move to a low-carbon economy? Not to denigrate the loss of life, but this might give us some hope from something terrible. To see what can be achieved.” (1)

“What I think will come out of this is a realization – because we are forced to – that there is considerable potential to change working practices and lifestyles. This challenges us in the future to think, do we really need to drive our car there or burn fuel for that,” said Monk.

Continue reading “How Will COVID19 Potentially Affect the Climate Change Debate?”
Climate change, economy, environment, ESG, risk management, Socially Responsible Investing, SRI

US intelligence agencies warn about managing risks in a climate changed world

A recent report by the US national intelligence agencies raised the issue of Climate Change and the impact they expect it to have on global stability.

“The nation’s intelligence agencies are warning, in the annual Worldwide Threat Assessment, of global instability if climate change continues unabated, according to a report submitted for a hearing Tuesday before the U.S. Senate Select Committee on Intelligence.”

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entrepreneurship, new economy, Socially Responsible Investing, SRI

‘Be the change that you wish to see in the world’: A Speech to Cooperative Impact 2015, Princeton 5/14/2015

Several years ago, I was asked to give an opening keynote speech to a gathering of social innovation entrepreneurs. The message I think is one that continues to be relevant…

We are on the edge of the greatest entrepreneurial revolution in the history of mankind.

The internet, the “cloud”, on-demand shipping, social media, Linked In… All are changing how we relate to each other economically and socially.

As entrepreneurs we are on the cutting edge. We all know entrepreneurs are a special subset of people and “social entrepreneurs” even more so.

Continue reading “‘Be the change that you wish to see in the world’: A Speech to Cooperative Impact 2015, Princeton 5/14/2015”
health, life insurance, protection, risk management

Diet, health, and the financial impact on life insurance

The purpose of life insurance is to manage risk. Individuals and families need protection in the event a primary bread winner passes away.

Several factors drive what life insurance costs for an individual. Women tend to live longer, so their cost for life insurance is lower than it is for men. The healthier a person is, the less expensive it is for them to obtain life insurance. People who smoke pay significantly more for life insurance.

Each person’s health situation is unique. Part of the process of obtaining life insurance is to collect medical samples for testing. The underwriter also reviews records from your doctors over the past 5 years. They also examine driving records.

Once all of the information is collected the underwriter evaluates the data at hand and assign the insured person a health rating. The better the rating, the lower the premium. 

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economy, interest rates, retirement, risk management

The End of the 10 Year Bull Market

There is a Chinese curse… “May you live in interesting times.” (1)

 

Given the past month, we clearly live in interesting times. Twice this week the market has opened down more than 5% triggering circuit breakers. While these breaks helped, the market still declined.

 

As of March 12, 2020 the SP500 is down 26%.

 

On March 3, 2020 the Federal Reserve announced a 50 basis point rate cut and are expected to cut rates another 100 basis points at its March 18th meeting. (2) On March 12, 2020 the Fed announced a $5.5 trillion program to assist in Repo operations. (3)

Yes… $5.5 trillion… The scale of the program is beyond anything ever attempted to stabilize markets.

 

WHAT ARE THE ISSUES THAT ARE FEEDING INTO EACH OTHER? HOW DID WE GET HERE?

Continue reading “The End of the 10 Year Bull Market”

charitable giving, life insurance, protection

A beloved relative has passed away and left me an inheritance… What should I do?

I have had several clients experience the passing of a beloved family member in the past 6 months. All ages, all walks of life. To a person they struggle with the desire to have their father or spouse or daughter back with them again, and how to move forward without them.

I have lost both of my parents; my mother passed away at 42 from lung cancer. I know the pain they suffer. Looking back, her illness and death really hurt my father and younger brother financially. She didn’t have life insurance. Due to the illness many of the family’s assets were exhausted. My father and brother did the best that they could do, but it was a difficult journey.

Continue reading “A beloved relative has passed away and left me an inheritance… What should I do?”
Climate change, economy, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

Climate Concerns Rise, but Energy Sector is Fighting Back…

In the past year Climate Change has become a focus of central concern for people worldwide. Warnings have been issued by IPCC that we need to collectively and drastically reduce our use of fossil fuels within 10 years in order to avoid the worst impacts of a rise in temperatures above 1.5 degrees.

Institutions are joining in the demand for change.

Continue reading “Climate Concerns Rise, but Energy Sector is Fighting Back…”
economy, retirement, risk management

Psychology and the Market

On Monday February 24th 2020 the Dow dropped over 1000 points in a single day.

 

Human behavior is driven two forces, fight or flight. When facing a dramatic event we as individuals are forced to REACT to what happens. 

When looking at the market, if a person is underinvested and it goes up day after day making new highs, that person may experience FOMO… fear of missing out. They might make the decision to invest based on emotion instead of fundamentals.

Continue reading “Psychology and the Market”

income, retirement, Taxes

RMD: What are the Risks and How Can We Address Them?

Several recent studies show peoples number one fear is running out of money during retirement.

To prepare us for retirement the government gives workers the ability to set up qualified accounts in order to save for retirement and get tax deferred growth. By deferring taxes money saved can grow faster. You put money away, not paying taxes now, but paying taxes on the money when you pull it out during retirement.

When you get to retirement, you can start pulling money from your account. In the past it has been considered good practice to not draw more than 4% from an account during retirement in order to make sure you don’t outlive your money. In the past bond yields have been 5-7% and that makes a 4% draw down possible. Now over the past 5 years bond yields have been around 2-3% and because many retirees rely on bonds to deliver income to their portfolio, many economists and advisors have been advising clients to withdraw less from their IRAs; this is so retirees don’t run out of money when they are older.

Now what if I told you there was a government program that requires you to draw more income from your account, without any consideration for how long you or your spouse will live, and without regard for whether you will run out of money or not.

Continue reading “RMD: What are the Risks and How Can We Address Them?”
disability, health, protection, risk management

Deaths of Despair

In recent months companies at the center of the Opioid Crisis have been fighting in court about the roles they played in the epidemic that has affected millions of Americans. The over prescription of highly addictive drugs has had severe impacts on families, businesses, and the economy as a whole. (1) But the Opioid Crisis is only part of a much larger problem facing American Society.

In March of 2017 a landmark study was released connecting opioid abuse, financial security and death rates in the United States. The information is sobering and should be the focus of policy changes at all levels of government.

Continue reading “Deaths of Despair”
disability, economy, health, life insurance, protection, retirement, risk management

Women and Financial Security

In 2018, the government of Iceland passed a law making it illegal to pay women less than men. (1) 

According to a World Economic Forum report, “At the current pace, gender gaps can potentially be closed in 54 years in Western Europe… and in 151 years in North America (reflecting lack of progress in the region this year).” (2)

A recent study by Economic Policy Institute found that women earn 74 cents for every $1 earned by a man with similar education and experience. This wage gap has always existed and is disturbing in a society founded upon equality and justice. (3)

This wage gap has important implications for women and their financial security, especially during retirement. 

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AI, disability, economy, life insurance, new economy, protection, retirement

Jobs at Risk

A recent study by McKinsey Global Institute examined how robotics will affect labor and the economy. The study estimated that 800 million jobs (1/5 of all jobs) will be impacted by advances in robotics. (1)

Among the jobs most impacted include brokers, accountants, office staff, machine operators, and food service. Lower skilled, repetitive tasks are most likely to be replaced.

What does this mean for family finances in the years to come?

Continue reading “Jobs at Risk”
economy, life insurance, new economy, protection, retirement, risk management

How to Deal with Being Laid Off: 5 Strategies To Prepare For Job Change

Each day we read reports that the economy is booming.

“U.S. housing and consumer are strong” (1)

“Factory output is poised to speed up.”

“Stronger global growth expectations and a weaker dollar should help.”

“The stock market hits record highs…”

With that being the case, you might find it surprising that several large corporations have recently announced they will be laying off large numbers of employees, especially managers.

Continue reading “How to Deal with Being Laid Off: 5 Strategies To Prepare For Job Change”
AI, Climate change, economy, new economy, retirement, risk management

The Work of Nations: 30 Years On…

When I first read “The Work of Nations” by Robert Reich in the mid-1990s I had almost no background in macroeconomics. (1) But in reading it, Reich was able to effectively describe how radically the economic system was changing as a result of Globalization. Reich at the time was Bill Clinton’s Secretary of Labor and a key member of his economic team.

As context, China’s economy in 1991 was $400 billion compared to $6,174 billion for the US. China entered the global trade organizations in 1992. Today China’s economy is $14 trillion compared to $21 trillion for the US.

Continue reading “The Work of Nations: 30 Years On…”
income, retirement, Taxes

First Steps to Retirement Planning

Many people are paralyzed into inaction when they start thinking about the challenge of planning for retirement. The truth is there are a few first steps anyone can take on their own to improve their chances for success.

A first step is to determine how much income you can expect to receive from social security. In years past SSA would mail annual statements for people to see their expected benefits. Things have changed… go to google and search for “my social security”. You will create an account and through this account be able to determine your numbers.

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

What is Socially Responsible Investing?

I have recently had several people ask me about SRI. What is it? Why does it matter?

The first thing to understand is SRI means different things to different people. Several years ago I attended a gathering of advisors focused on sustainability at the Bloomberg headquarters in NYC. I talked to many of the 300 attendees and what I found was every single person had a different interpretation of what SRI meant.

Some focused on promoting clean energy, some focused on workers issues and inequality, some focused on climate change, some look to exclude alcohol and tobacco, others focused on micro lending. Each focus is unique and approaches the challenge of investing with different assumptions.

Continue reading “What is Socially Responsible Investing?”
Climate change, economy, environment, ESG, interest rates, retirement, risk management, Socially Responsible Investing, SRI

Mixed Economic Signals, Debt Issues and Fossil Fuel Companies

Several years ago, Bloomberg Businessweek did a bio pic on Hank Paulson, Bush’s Treasury secretary who served during the Financial Crisis of 2008. After reviewing the events that led to the Crisis, connecting the dots, and seeing the impact of what happened, Paulson had this to say at the end of the film…

“The whole reason I’m doing this, is not because I want to look back, but because I have increasingly come to the view that it’s important that there be a historical record for those that come after me, so we don’t replay this movie all over again.” (1)

Fast-forward to November 2019, and we see many positive and negative conditions developing that raise questions about the longevity of the 10-year bull market in stocks and the health of the US economy.

Continue reading “Mixed Economic Signals, Debt Issues and Fossil Fuel Companies”
income, interest rates, protection, retirement

How to Guarantee Retirement?

Several years ago I read a post on LinkedIn which sounded the alarm bells that the “time is running out” for your retirement account.

I found it offensive and in poor taste, playing on the fears of the public at large. Throughout most of 2019 there has been a palatable undercurrent of fear in the market… on the part of investors, on the part of money managers, on the part of economists…

The 20% pullback in 2018 in the market reinforces that fear for some.

There is no doubt that the current environment is challenging when it comes to managing investments and making suitable choices.

Continue reading “How to Guarantee Retirement?”
Climate change, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

Socially Responsible Investing Grows

“Integrity is the essence of everything successful” -Buckminster Fuller

One of the benefits of the information age is the ability to make rational judgements about companies that you invest in. To the degree that a company fails to meet an investors expectations of what is acceptable, a company or industry becomes un-investable.

“Sustainable, responsible and impact investing (SRI) is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.” (1)

A recent study by the US Sustainable Investment Finance Foundation revealed the tremendous growth in sustainable investing.

Continue reading “Socially Responsible Investing Grows”
life insurance, protection, risk management

The Risk To Your Child’s Future

Loss of a parent shatters the life of a child. Period.

Loss of a parent’s love.
Loss of a guide through life’s challenges.
Loss of protection and security.

These are losses that are beyond measure and replacement. But the truth is these losses can be worsened by the financial impact that comes from a lack of planning and losing a parent.

7 in 10 of all households said they would have trouble covering everyday living expenses after several months if the primary wage earner died. (1)

Continue reading “The Risk To Your Child’s Future”
Climate change, economy, environment, income, retirement, risk management, Socially Responsible Investing, SRI

Rising Seas and the Risk to Retirees

Florida has always been considered a favorite retirement destination. The warmer climate attracting older American’s who have health issues ranging from Asthma to Arthritis, from Heart Disease to Parkinson’s. 20% of Florida’s population is over age 65 (compared to only 15% in New Jersey).

An additional challenge facing retirees in both Florida and New Jersey is climate change risk due to rising seas, storm surge and the potential loss of property in coastal communities.

In 2013, hurricane Sandy delivered a wake-up call to many about the danger to real estate as a result of hurricane force winds and storm surge. This past summer it looked to be Florida’s turn. Hurricanes Irma and Maria threatened to make landfall in Florida with devastating force.

Continue reading “Rising Seas and the Risk to Retirees”
income, protection, retirement, risk management

5 Tips to Make Your Retirement Savings Last

The statistics are troubling…
10,000 Americans begin their retirement every day.

The Social Security Administration has said the SS Trust Fund will become exhausted by 2035, unless benefits are reduced, the retirement age is raised, or other solutions are put into action. (1)

76% of Baby Boomers are not confident they have saved enough for retirement. (2)

One third of retirees retire with mortgage debt. (2)

Women live substantially longer then men and yet have much less saved for retirement. (3)

Continue reading “5 Tips to Make Your Retirement Savings Last”
health, life insurance, new economy, protection

Job Change, Group Life Insurance and Russian Roulette

In the United States, there is a huge number of households which are unprotected or under protected by Life Insurance. In a recent LIMRA study 7 in 10 households believe would be in serious financial distress if an adult in the household passed away. (1)

37 million households have no life insurance.
Another 33 million households do not have sufficient life insurance to count themselves as protected.

One vehicle that many people rely upon for protection is Group Life Insurance. When offered as a company benefit, it can inexpensively provide protection for many people… but it only does so while the insured works for the company.

Currently, 1 in 5 people are only covered by Group Life Insurance.

Continue reading “Job Change, Group Life Insurance and Russian Roulette”
economy, income, interest rates, retirement, risk management, Taxes

Trick or Treat? Revisiting The Potential Downside of Tax Reform for Investors

There is an old story that goes “beware what you wish for…” Things don’t always turn out as expected. Two years ago the President proposed and Congress approved a huge tax cut plan… the Tax Cuts and Jobs Act (TCJA). The results have been controversial.

Along those lines I watched a fascinating interview of Tom Lee, head of research at Fundstrat, on Bloomberg two years ago. His insight proved very valuable and accurate. (1)

His feeling is that a Tax cut, as it was being discussed, could be negative for investors long term. “There’s two reasons; First, when cutting tax rate you raise the after tax cost of debt. Leverage becomes a problem for a lot of businesses. Second, because you are cutting tax rates you are effectively giving cash to all businesses, even businesses where you want to reduce allocation.“

Continue reading “Trick or Treat? Revisiting The Potential Downside of Tax Reform for Investors”
economy, income, interest rates, retirement, risk management

Economic Fears and Managing Risks

The economy continues to slow and is having an effect on markets. Incoming ECB President Christine Lagarde stated the US trade war with China has “dented global economic growth.”

“You can’t adjust to the unknown. So, what do you do? You build buffers. You build savings. You wonder what comes next. That’s not propitious to economic development,” said Lagarde.

“It means less investment, less jobs, more unemployment, reduced growth. So of course, it has an impact,” she said.

Continue reading “Economic Fears and Managing Risks”
economy, income, retirement, risk management

Investing with Stocks at Record Levels

I have talked to many clients. I have read and listened to many economists and Chief Investment Officers who are nervous about investing hard earned savings when markets and indexes are making new highs.

Many people feel the market is “due for a correction”; they worry about a “bubble bursting like 2008”; they look at the political environment and feel confused by what is happening in Washington DC.

Continue reading “Investing with Stocks at Record Levels”
economy, income, interest rates, retirement, risk management

Recession Risks Rise

In a recent presentation to investors, Doubleline CEO Jeffery Gunlach stated he sees a 75% chance of a recession by 2020. (1)

Many signs are popping up that point in the same direction.

In August 2019 the yield curve inverted. (2) An inverted yield curve is seen within the financial industry as a reliable leading indicator for recessions.

Continue reading “Recession Risks Rise”
health, life insurance, protection

How will your family survive?

My cousin recently died from a heart attack.

He was 48 years old. He left behind a wife and two teenage children. Their plans for the future were shattered and his family is left to pick up the pieces.

My son was born when I was 30 years old. Honestly, I didn’t get life insurance until I was 36. I had never been taught the importance of using Life Insurance to manage risk and protect your family. Recent studies show that I’m not alone. There is a huge gap in the level of financial literacy in the United States.

Continue reading “How will your family survive?”
charitable giving, life insurance

Creating Social Impact Through Giving

Every day millions are helped to improve their lives due to the generosity of others. As a community we each have a stake in the success of every individual, every family. Many organizations that make massive positive contributions are struggling due to cutbacks in government supports.

We as stakeholders in American society have a responsibility to give back and help those less fortunate. A recent example of this ethos:

Continue reading “Creating Social Impact Through Giving”
economy, entrepreneurship, new economy

“Morning in America…”

I was driving into work today and a Chevy Volt sped by me. Yesterday a Fisker Karma was parked in front of my office. In Q2 of 2019 Tesla produced over 72,000 cars, including the mass production version Model3.

Technology is bringing a renaissance to American manufacturing. (1) New industries and new job descriptions are being created, even as “old economy” jobs become antiquated and outsourced to robots. (2)

Continue reading ““Morning in America…””
economy, new economy, risk management

Management Flaws in Corporate America

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)

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.

Continue reading “Management Flaws in Corporate America”
Climate change, economy, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

Divestment From Fossil Fuels Gathers Steam

As an investor in todays 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 the 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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Climate change, economy, environment, health, new economy, Socially Responsible Investing, SRI

Pending Meat Tax Could Change Economic Behavior

In recent weeks plant-based meat products have made real inroads into many popular restaurant chains. Many plant-based brands have developed models that make them cost competitive and flavor competitive with animal-based meat products.

Animal-based meats have been criticized on several levels. The role that CAFOs (concentrated animal farming operations) play in deforestation, methane release, pollution and accelerating climate change. In addition, several recent studies have shown that meat products have many negative health consequences, including cancer. (1)

Continue reading “Pending Meat Tax Could Change Economic Behavior”
economy, new economy, risk management

New Employment Realities As Recession Risks Rise

“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 of such announcements.

While the monthly jobs numbers are heralded as a sign of a strong economy there are undercurrents of weakness. More than half of all American’s have little or no savings.(1) Many companies report a weakening expectation for revenue and growth.(2) CEOs are concerned about the effects the trade war and it has caused many companies to delay capital investments and expansion.(3)

Many analysts have already indicated that Europe is in a recession. Some expect a recession in the US within the next 6 to 12 months.(4)

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

Continue reading “New Employment Realities As Recession Risks Rise”