This 3rd Week of March 2022 Thoughts
Cooking with aluminum has been linked to dementia and Alzheimer’s, but are there other environmental contaminants you might want to eliminate? This is a terrific replay of a recent Sustainable TulsaFirst Thursday and it is a must-not-miss: The Past, Present and Future of PFAS...bad stuff!
Ford expands its electric ambitions in Europe as it doubles its investments in Germany, installs a battery factory in Turkey and phases out all emissions from its vans by 2035. Its new plan involves making every model fully electric by 2035, extending last year’s promise that all passenger cars and two-thirds of its vans would be electric in continental Europe and the UK by 2030. It is also phasing out its stinky diesel Transit vans and will sell only zero-emission vehicles in developed markets by 2035.
This Week’s Fund Profile: ACES Clean Energy ETF. Aces Clean Energy
Sustainable Advisors Alliance (SAA) was founded on sustainable, impact investing: Environmental, Social, and Governance (ESG) metrics. Follow our blog here.
“Inflation affects all aspects of the economy, from consumer spending, business investment and employment rates to government programs, tax policies, and interest rates. Understanding inflation is crucial to investing because inflation can reduce the value of investment returns.”
Look closely at the top left corner of this chart, below: it is a chart of the AGG: the index bond managers measure their performance against. When interest rates go up, bond PRICES go down: there is an inverse relationship between them. This is one of those good-news-bad-news scenarios, as every single client has bonds in their portfolio. You WILL see the value of your bonds decrease throughout this cycle; the value of your portfolio will decline. This kind of decline is not one I want you to worry about, though, as we will keep adding to your bonds every time the fed ratchets interest rates up again.
So, as the FED starts the “stair-step” up interest rates, you must not be overly concerned by a decline in your bonds: check out the 62 year history of interest rates by clicking on this hot link. This interactive chart will show you that from 2008 til today, we spent most of the time at 0%. When you artificially suppress anything, eventually it will have a painful rebound. Here is a terrific article on the Fed Fund Rate History: It’s Highs, Lows and Charts: click this hot link here and you will truly understand that Once rates top, and start to decrease, your bonds will start to increase again!
Remember “FAANG”? Last year I spent a lot of time writing about why the 2021 S & P’s performance was totally skewed by the 5 companies who made up over 25% of the S & P. Value-oriented portfolio managers did not pay up for the over-valued darlings-of-the-day just to get to sit with the cool kids in the cafeteria, so their performance lagged. “FAANG” is an acronym for these 5 technology companies: Meta (FB) (formerly Facebook), Amazon (AMZN), Apple (AAPL), Netflix (NFLX); and Alphabet (GOOG) (formerly Google). Jim Cramer, host of CNBC's Mad Money, coined this name in 2013 because they were such a large part of the market. The 2021 S & P performance was dominated by the gains in these five companies but today, they are back to where they were last February.
Why does this matter to you? A picture is worth a 1,000 words. It is never smart investing to chase stocks after they have experienced multi-year-uber-gains! Both Facebook and Netflix are now down over 50% and we are not done yet. Because of the high cash levels in portfolios, we can decide when to put some of it to work. Follow Cathy Wood’s ARKK if you want to see a fun ride!
😊 Why does this matter to you? Don’t spend a lot of time feeling left out by the oil rally: remember the saying we’ve heard for decades; “Please God, give me another oil rally and I promise not to screw it up again?” Over the last few months, as oil prices rose to historic highs and the world scrambled to replace Russian oil and gas, I am very pleased that U.S. shale producers did not do what they had done in the past: buy up reserves at any price. Key to remember: renewables of all sorts will also increase in value when oil prices rise, as they help hasten the move to renewable energy. You don’t have to own fossil fuel stocks to benefit from oil prices rising: see the ACES Clean Energy Fund reports, attached to this Week’s Thoughts.