To celebrate our twenty-five years in socially responsible investing, we are throwing a client appreciation party, and you are invited.  That’s twenty-five years of helping investors use their money to change the world, longer than one-tenth of this nation’s history!  This event will be a presentation/talk by one of the leaders in progressive shareholder engagement, Andy Behar, CEO of As You Sow, preceded by a stand-up dinner provided by “5/Five,” the award-winning restaurant at the Hotel Shattuck Plaza. 

Andy is a fascinating and entertaining speaker and his topic is one of the more exciting and effective elements of SRI.  “Shareholder Advocacy” is the process of engaging with corporations  to encourage them to take greater responsibility for their effects on the world.  This is one of the most important ways in which your money may be used to create real change in corporate behavior and corporate influence.

As You Sow has played a lead role in the struggle to get computer companies to take responsibility for their products at end-of-life, in getting retailers to sell certified wood instead of original growth, in encouraging soda companies to recycle, in removing toxics like BPA from our food stores and the list goes on.   This talk will be fun.

This is where the excitement in SRI takes place and where real change is made.  Please come, listen to a lead advocate tell his stories, and ask questions about past victories (and failures).  I hope you will come help us celebrate our twenty-five years in SRI (since August, 1986). 

Event Info:

Where?  The Hotel Shattuck Plaza in downtown Berkeley at 2086 Allston Way at the corner of Shattuck.  This is one block from the Berkeley BART station.  There are two public garages within one block (on Allston and Kittredge).

When?  TUESDAY, November 15th from 6pm – 8pm.

What?  Food and drink will be served in the courtyard behind “5/Five” Restaurant, and Andy’s talk will be in a conference room behind the courtyard.

Cost:  Our treat – This is a client appreciation event to which everyone on this mailing list is invited.  You are encouraged to bring a guest if you like.

Sponsored by Calvert Group

Space is limited, so please make your reservation early.

Thanks.

Lincoln & Justin

These last few weeks have been a textbook lesson on the problems of market timing. 

Think about it.  If four weeks ago the American stock markets had fallen forty or fifty percent or more, nearly everybody would have said, “I knew it was going to happen.”  The people who took portfolios to cash would be coming out of the woodwork, saying, “I predicted it and sold my clients’ portfolios.”

But instead, the markets have moved essentially sideways, and with huge, historic volatility.  Why?  Because stocks are currently considered to be undervalued, a rare buying opportunity.  Each time the stock market falls three, four or five percent, buyers rush in to pick up bargains at a discount.  This makes the stock markets rise in value, then the pessimists leap in, the bargain hunters take the profits they’ve made and this causes the markets to tumble until stocks are a bargain again and the markets rise once more.  This did not happen in 2008 because then stocks were considered to be overvalued, with few bargains to be found.

Those who sold everything a few weeks ago and  took most of their investments to cash are either hiding or buying or both. 

And, so, what’s it to be now?  A recovery (which is the most common prediction right now) or a market crash and a “double-dip” recession?  Do we “know” what is to happen now?  Do we “know” that the markets are about to crash?   On the before the day of this writing the market was down substantially.  Today it is “up sharply.”

Historically, a sideways, choppy market like the one we have been in for a few months has  eventually broken out steeply either up or down.

The Republicans are willing, even eager, to drive our economy over a cliff to further enrich the most wealthy and to discredit Obama and the Democrats.  The Democrats are inclined to let the Republicans do this so as to discredit  them in 2012.  And these people work for us!!  Mitch McConnell, the Republican leader in the Senate, has stated that his primary goal is to unseat President Obama in 2012.  His oath of office is to the Constitution and to the people of the U.S., (not Grover Norquist) but serving our well being  is not his primary goal.  This may not be illegal, but it is moral and ethical treason.

We are used to planning and managing money in an environment driven by economic reality (which is uncertain and volatile enough!).  But, when the politicians decide to cause downturns for political reasons divorced from business cycles,  then planning becomes much more precarious.  Another way to put this is that it is not the downturns that worry me.  You should all be allocated to take such downturns into account.  But what if, after the downturns, there is no net growth?  That’s where our politicians and bankers have been taking us for the last eleven years.  In this environment the process of trying to use historical norms to manage your money and help you get to your goals, becomes much more difficult.  It requires that we be, at least in the short term,  much more nimble and creative. 

Fortunately, First Affirmative has been in the forefront of developing new tools for us to work with, but in order to navigate the twists and turns for you I am going to need even more of your participation than in the past.

For those of you whose money is being managed under our auspices, let’s get together soon to discuss what choices/changes would be most appropriate.  If you and I have met  a short while ago, let’s at least have a phone meeting right away. 

For all of you reading this, we should probably get together to discuss how your financial plans may need to be re-evaluated.  The assumptions of the past may very well not apply any more.  For the next few years it may be tricky to invest in the traditional ways and still get anything like historical returns.   How will this affect your financial planning?  Let’s talk about it.

Let’s talk about the possible effects on investments of the government game of chicken being played with our economy.

There is very little doubt that if the extremists drive us over a cliff in the first two weeks of August, stock markets around the world may tumble quite far down.  On the other hand, if there is a solution, especially a long-term solution that increases revenue and provides cuts in entitlements, our domestic stock markets may rise quickly and strongly, maybe even forming a brief euphoric bubble.  Markets in other countries may rise, as well.

I’d like to make a distinction here between what’s desirable from a social standpoint and what might raise the value of stocks.  We may decry cuts in Medicare and Social Security, but corporate America is on the other side of that fence.  In fact, the conversation I am having with many of you is largely about how,  for over forty years we have fought, organized and voted against a corporate-controlled government and society.  What is really unprecedented in our lifetimes is the possibility that corporations have lost control of the Republican Party to their idiot fringe.  Recently, organized by the U.S. Chamber of Commerce, the Business Roundtable, the National Association of Manufacturers and other groups, 450 CEOs sent a letter to all members of Congress warning of damage to the economy that would result from the default that would follow a failure to raise the debt limit.

A cut in entitlements and a destruction of union power would be welcomed by corporate America and would probably result in rises in the values of their stocks,

but, it is not in the interest of corporate America that our economy be driven off a cliff.  It is not in their interest that the dollar cease being the international reserve currency.  It will not be good for corporations if interest rates double, along with the costs of their debt.

Corporate executives hold the campaign purse strings for the Republican leaders and even the Tea Party Congressmen.  Are they whispering in Boehner’s and Cantor’s and McConnell’s ears, saying “Bring them down to the wire.  Get every concession you can from these Democrats, then give in and compromise on August 1^st”?

Or, are their voices being drowned out by the din raised by the privatization, anti-government, shift all wealth to the wealthiest Tea Party fanatics?

What about unemployment and the collapse of the consumer?   What about the potential defaults in Europe?  They will likely hold back a run-up in the stock markets, but manufacturing in America has been rising for a year, our dollar is so weak that our exports are at record levels.   With seventeen percent of American workers under and unemployed corporations are enjoying historic productivity.  No wonder their profits are rising.  And this is why there is pent-up demand for higher stock prices now.

Why is unemployment so persistent?  Some of the reason is that the Federal Reserve Banks stimulus is not being loaned out to small businesses (the largest creators of new jobs)  as the Fed intended.  Instead the banks are investing the money for a smaller, but safer profit in Treasury bonds, bills and notes.  Also, about sixty percent of the QE2 reserves sent by the Fed to the banks went to foreign banks instead of U.S. banks.  The fix is in, and it ain’t there for working Americans.

Where do the things we believe in come into this discussion?  Equal opportunity, the right to organize, human rights, environmental sustainability and justice, social and economic equity, fairness, a safety net for the poorest, universal literacy and healthcare, reductions in the size and influence of the military-industrial complex, a peace dividend, etc.?  How about Democracy?  This is a contest between the corporate right and the idiot right.  Our issues have not been on the table since the election of 2008.  We will just have to work on them locally and on our own for a while.  The pendulum swings, and we are the momentum.

Back to our investments:  If the crazies win, investing will be very difficult and will take some agility.  We should probably start talking about this right away.  If the corporations win, the debt ceiling is raised and the Democrats negotiate away substantial entitlements, the U.S. stock markets may thrive and rise quickly and far.

So, how to invest?  Where to hide?  The highest yielding good-credit bonds, those with the longest time to their maturity dates, will likely lose value if the amazingly low current interest rates begin to rise,  if the economy begins to recover or because the government defaults.  Short-term bonds should be safer as to keeping their value, but they are currently yielding less than one percent.

As I have said in nearly every newsletter for the last twenty-five years, if any of your money is aimed at a short or mid-term need, keep it out of the stock market.  Right now keep it in short-time-to-maturity bonds or cash.   You will have to forgo any significant income in order to preserve principal value.

Keep your longer-term money in the stock market.  I think the idiot right is going to finally cave to the people (and corporations) who have the money.  I think that there is a better than fifty-percent chance the stock markets will rise by the middle of August.  But if you are more concerned about losing value in the near term, hold out in cash for the next couple of weeks until we can tell what’s going on with the debt negotiations.  Any new money coming in, hold off investing it until the first week of August.  Then let’s talk.

There is also a huge chance that what will actually come out of all of this government finagling is a band-aid, short-term increase of the debt ceiling with minimal cuts in the deficit and with nothing resolved.  In that case I expect the market may continue to move sideways, going up and down within the same range and with the same kind of volatility we have been experiences for the last three months, perhaps all the way into the 2012 campaign.

EARTHQUAKE FUND

It’s a financial planning truism that everyone should have an emergency fund.  We usually keep such accounts in a money market with a bank or credit union or mutual fund family.  But watching Haiti and New Orleans a few years ago and more recently Japan, I am more inclined to recommend that we all keep a stash of actual cash in a safe, fireproof place in the house.  How much?  How much would you need to maintain a very bare-bones existence for three or four weeks until the banks reopen?  Or until you can even travel to a bank?  Make sure that some of your cash is in small bills, since few will be able to cash them.

Obviously we here in earthquake country should keep water, food, first aid, a wind-up radio, etc., but you don’t need me to tell you about that.  And there are some great East Bay and San Francisco city city-sponsored courses which discuss what’s useful assuming zero outside help of any sort for seven days & then only occasional airlifts of injured, and drops of food and medicines.

Should you keep gold as an emergency currency for real disasters?  Certainly some people are doing just that.  But ask yourselves, in a true, temporary post-earthquake road-warrior existence, what will you find valuable?   Will you want to accept gold as payment for food or water?  How would you value it?  Create change?   I tend to think that in a really hard time, with services discontinued, perhaps for weeks (months?), people will more likely trade things that have value themselves.   Historically, the things that have held value in war zones and areas of devastation have been food, water, alcohol, medical supplies, pain killers, antibiotics, drugs and cigarettes.  And, again, I recommend that you add in a couple of thousand dollars in small bills, $10 and smaller.

Just a thought.

I’ll be following up soon with another newsletter, but for now,

Up the Rebels!!

Lincoln Pain, CFP®/AIF®

Every time you invest, your money is doing two things:

It is working for you financially.

It is capitalizing the corporations that are creating your future in which you, your children and your grandchildren will be spending your investments.

There is no avoiding this fact: all investments are doing both all the time.

Socially Responsible Investing is the process of taking responsibility for both effects of investing.

Socially Responsible Investing has many names: SRI, Sustainable Investing, Green Investing, Environmental/Social/Governance Investing (ESG), Socially Conscious Investing, Socially Responsive Investing, Values Investing, Mission-Based Investing and Religious Investing.

All of them mean investing to change the world, to make the future a better place.

If we invest in companies that pollute, then we are more likely to have a polluted future and our children may end up breathing through filters and wearing lead helmets. If we invest in companies that pay women seventy cents on the dollar our daughters and nieces will need to inherit thirty percent more from us to make up the difference.

Our goal is to provide you with the best available socially responsible investment services. We are committed to assisting individuals, families, groups, foundations, unions and progressive businesses in preparing for their financial security and prosperity while supporting a progressive, just sustainable and peaceful society. If we provide capital to weapons manufacturers, we perpetuate an economic justification for war.

If we capitalize pollution and abuse, how much will the cleanup cost our children?