thoughts as we finish out this 1st Week of September 2020
Bloomberg -- Investment Giants Urge Texas to End Most Natural Gas Flaring. This headline was sent to me from a client and I am proud to have made frequent trips to Annual Meetings at Devon, Chesapeake, Caterpillar, ONG, Oneok and WPX Pipelines where Larry and I represented institutional investors and pension plan fiduciaries. Every industry has managements that maximized profits, knowing they would be long gone when the repercussions come home to roost. Boards also can approve compensation and bonuses to incentivize behavior that we know will not be good for the well-being of the company, long-term. Shareholder activists have been very effective since the 1970s and many of the positive changes that have benefited consumers have come through years of activist’s meetings and negotiations. Investors managing more than $2 trillion are now calling on Texas regulators to ban the routine burning of natural gas from shale fields, arguing that the energy industry has not moved quickly enough to curb the controversial practice. Alliance Bernstein, California State Teachers’ Retirement System and Legal & General Investment Management said they support eliminating gas flaring by 2025 and this is the first time large institutional investors have taken such a public stance with the Texas regulator. “Actions of leading operators demonstrate the financial and technical viability of ending routine flaring,” the fund managers said in their proposal.
😊Why does this matter to you? Why does this matter to you? Requests for companies to eliminate flaring industry-wide have been ignored and both investors and environmentalists are stepping up efforts to draw attention to flaring because of its wastefulness and contribution to climate change. It is alarming that flaring is a way to deal with gas that producers cannot -- or do not want to -- transport or store. Read more here: https://www.msn.com/en-us/money/companies/investment-giants-urge-texas-to-end-most-natural-gas-flaring/ar-BB18Ig8l
“Tesla rallies as stock split takes effect.” The 5-for-1 split took Tesla from $2,500 per share to $500 but Friday Tesla dropped below $400 before it stabilized today. Why the TSLA share price run-up? One interesting thought…Tesla bulls hoped it would be added to the S & P 500, which would lead to a flood of mutual fund and ETF buy orders, pushing Tesla’s stock even higher. Being added to this index has been the buzz since July and it would mean billions in Tesla stock would need to be bought in every fund that tracks the S & P 500 benchmark. After Tesla was added it would make up 1% to 1.5% of the S&P 500 Index. 😲 Why does this matter to you? Why does this matter to you? There are so many factors that go into making a profitable investment: the fundamentals of the company; traders who love or hate the company…and then factors like being added to one of the major indices! This week showed investors that chasing a stock can be very costly. This is a place where I can add real value, so let me know when you find a stock that interests you: clients love my charts!
We used to hear that the Baby Boomer Generation was the biggest generation ever but somehow, when no one was watching, a bunch of kids were born over the last 40 years! In 2018, the median age of the U.S. was 38.4 years but 2035 is expected to be a turning point and there will be more adults over the age of 65 than children. The aging population will bring mega-trends, investment opportunities and changes to Medicare, Social Security, and spending patterns. The grim reality? There will be fewer workers paying into the system. Yes: the world is getting older. 😲 Why does this matter to you? Not only will there be a “grey wave” but many will live longer: in 2060, there are expected to be 604,000 people 100 and over. Not only do we need to make the right lifestyle decisions, we need to extend our planning horizon: I routinely use 100 as my planning horizon even though clients laugh and say “I’ll never make it that long” or “I don’t want to live that long!” read more here: https://www.statista.com/statistics/241494/median-age-of-the-us-population/
Monday brought alarm to many investors: multiple trading platforms saw outages or slow response times. Clients with Robinhood, TD Ameritrade, Charles Schwab and Vanguard also had similar problems accessing their accounts and firms were scrambling. By later in the afternoon their systems were operating normally. 😲 Why does this matter to you? If you ever try to log on and cannot, or get a similar message, do not, for a second, worry there is ever any risk to your portfolio. What protects you, at the end of the day? Schwab maintains “excess SIPC” insurance protection for securities and cash up to an aggregate claim amount of $600 million. This means in the event of a brokerage firm failure, you are covered.
Why are some companies making new highs while many are struggling to adjust to the Covid landscape? The Fed is delivering a steady stream of stimulus dollars and promising to keep interest rates at zero for as far as the eye can see. Covid has created conditions whereby the largest companies who can issue bonds at ultra-low rates and refinance their existing debt with lower rates and have an unfair advantage. Smaller businesses rely more on sales revenue than borrowing and have seen sales plummet due to forced lockdowns, consumer austerity, worker shortages, and supply disruptions: they cannot turn to Wall Street’s smoke and mirrors to make up for revenue shortfalls! The best performing companies, like Amazon, DocuSign, Zoom or Netflix, have online commerce as the core of their business model and they have benefited when smaller businesses could not transition as effectively. 😲 Why does this matter to you? We have to understand why markets are behaving the way they are: caution…chasing “Covid-Home-Stocks carries a lot of risk!
Fall is coming and there will be much to celebrate this season: don’t hesitate to call to share the little things!
Constancy noun con·stan·cy | \ ˈkän(t)-stən(t)-sē
Steadfastness of mind under duress: fortitude, fidelity, loyalty. A state of being constant or unchanging: steadfastness of mind under duress; dedication and devotion. In short supply.
Synonym - Skye Advisors