This 2nd Week of March 2023 Thoughts
Log onto your Client Portal here: email me if you have any problems! Desktop Site Client Log-on Desktop Mobile Site Client Logon via Mobile Phone Do you have a question or topic you would like me to write about? My best Thoughts topics come from questions clients ask!
It was a very wild and woolly week in the market. Why? The rapid collapse of the 16th largest bank in America. Thank you "DS" for this terrific article on the Silicon Valley Bank failure SVB Fails The 10-Year Treasury rate hit 4% this week but pulled back to 3.75% today Please let me know if your bank account number has changed so we can update your money-link paperwork.
Take our Impact Assessment! Take our Risk Assessment!
Shock & Awe roils the markets: the speculative stuff will break. We will get through the next year or two and rates will have normalized and moved to more normal levels, historically speaking. Shock & Awe will turn into Normalization. We want to be fully invested before Normalization.
The market turmoil began last year when the FED Fund Rates started going up. The FED Fund Rate is the rate that banks borrow or lend to each other when they have extra cash or don't have the required percentage of their customers' money in reserve. Members of the Federal Open Market Committee determine the federal fund rate: they raise, lower or leave unchanged, rates at monthly meetings. This headline makes the news, as when they raise rates, it's more expensive for everyone to borrow money. Read more here: 75 Years of FED Fund Rates
Why does it matter to you? The market hangs on every word from Chair Powell: above are what FED Fund rates have been since 1955. Really? We hang on pundit’s predictions and rant at the FED for raising rates when they should have done this in 2019? We should be more outraged that our savings accounts and CDs have paid 0% for last 15 years. The next 6 months will be a busy time as FINALLY we can move more of our cash into bonds. I’d love to see your bond allocation earn an 5% average dividend!
Money market mutual funds are one of the most complicated topics of any asset class. This week "K” asked me if money funds could drop below $1. I told her that while I was as “comfortable as I can be / confident and feel good...that SWVXX would not drop below $1…aka “break the buck”…we never say the dirtiest word of investing: GUARANTEE. Almost every client has the cash I’m holding for investing in SWVXX…the Schwab Value Advantage Money Fund. We also have other high yielding options, like the Schwab U.S. Treasury Money Fund. Read more here: Schwab Money Funds We Can Invest In the 2008 Financial Crisis there was a possibility that 78 money market funds were on the verge of breaking the buck but didn’t because they were supported by their sponsors. The reality is that fund companies will do anything they can to protect this $1 price but they can not guarantee this. Study: 78 money market funds were at risk of breaking buck My regular due diligence takes me to the fund’s prospectus and the fund’s quarterly reports: the key is to know what the maturity is for the securities in any money market fund. Below is a pie-chart of what SWVXX owns…and because 78% of SWVXX “rolls over: in 1-7 days there is little risk of default.
Why does it matter to you? Nothing in life is cut and dried and there are times when we decide that we can’t worry about every worst-case scenario happening. I’m going to be updating your risk tolerance questionnaire over the coming months, so this will be something I bring up for us to talk about.
What's in a name? On Wall St., ‘Socially Responsible’ Is Common Sense. In Washington, It’s Political.
In the 1970s, I first knew E.S.G. by another name: socially responsible investing. Back then it largely applied to divesting assets from the apartheid regime in South Africa. These days, SRI is often called ESG, Sustainable Investing or Impact Investing.
Whatever you call it, the idea is that you can’t make intelligent and informed investment choices without understanding how companies deal with issues like equity / diversity and inclusion in the workplace, women’s access to reproductive health care and, of course,climate change. That is especially true for “fiduciaries” — investment advisors like SAA who are legally required to make prudent decisions for their clients.
“There are many approaches within E.S.G. investing,” said Tim Smith, a senior policy adviser and founding staff member at the Interfaith Center for Corporate Responsibility, and Walden Investments. Tim knows…he was present at the creation of the socially responsible investing movement back during apartheid. “It’s now a very big tent" he says.
No matter what we call it, my goal is to help you decide where you stand with respect to the impact of your investments. Why does it matter to you? My job is NOT to inflict my values onto your portfolio…or to do “headline investing.” YOUR values are what matter.
Required Disclosures: Always read the fine print! This content reflects the opinions of Julie Skye and is subject to change without notice. This content is for informational and entertainment purposes, and it is not a recommendation regarding the purchase or sale of any security. There is no guarantee that any statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Securities investing involves risk, including the potential for loss of principal. There is no assurance any investment plan or strategy will be successful.
Julie is an Investment Advisor Representative of Sustainable Advisors Alliance, LLC (SAA, LLC): Advisory services are provided by SAA, LLC.
Registration with the SEC does not imply a certain level of skill or training.