A lot of people mix their politics with their investing and that’s just dumb. A hot new subset in investing is “ESG investing”. ESG investing stands for environmental, social, and governance, which basically means you choose investments based on the way a company treats the environment, respond to social causes and governs their employees and payment plans along with a lot of other factors. ESG investing might be considered liberal, left-wing investing but I consider it profitable investing. Bank of America, Morgan Stanley, Goldman Sachs, and JUST Capital (a company founded by Paul Tudor Jones) have all done studies that show ESG stocks are more profitable and less volatile long-term, than just picking regular stocks without taking these things into consideration. It seems to me that a good plan would be to go through your regular process and then when you’re down to picking your last few stocks, look for an ESG component and pick the ones that have it. There are no real guidelines as to what ESG is, but there are a couple of ethical ETF’s out there now that you can research. So, don’t hate on these things and get left behind, participate and pad your bank account.
Active Ain’t Dead
Active investing isn’t dead. Money is definitely moving into passive investing and out of active investing but that’s mostly because the market has been going straight up. When the market goes straight down (which it always does, eventually) the opposite happens. Mohamed El-Erian who is the chief economic advisor at Allianz and an ex-Pimco CEO said recently that coronavirus is going to paralyze China and we should not be buying the dips in the stock market. if he’s right, that will affect passive investing much more than active investing, because that would mean a stock market sell-off and in those kinds of conditions active investors wait for markets to turn up. Passive investing models tend to just add to losing positions until it finally does turn around. That’s great if it turns around quickly but it was horrible in 2008. It’s easy to forget that a lot of investors don’t have patience when their account has lost 50% of its value so be careful about jumping on certain trends.
EV Investing
It may seem right now like the only way to invest in the electric car market and make money is to buy Tesla. While shorting Tesla stock looks like just about the dumbest thing anybody can do, it’s not the only good electric car out there. As a matter of fact, US news and World Report just ranked the 15 best electric cars for 2020 and Tesla only had 2 of the Top 5 spots. Spot #1 was held by the Tesla Model S and spot #3 was held by the Tesla Model 3 but #2 was a Kia and #4 and #5 were a Jaguar and an Audi respectively. The Tesla model X dropped all the way down to #12! I have to repeat, this does not mean you short Tesla stock. If any of the parent companies of the other cars on the list could separate their electric vehicle unit into a separate stock offering, they would become immediate buys, but right now it’s the struggle with the carbon vehicles that keeps Tesla stock as the only dog in this fight. Tesla’s issue is meeting the demand for the cars, certainly not filling demand for the buyers of its stock.
5G
Crazy financial news stories come out during crazy times and last week 2 stocks rose after a crazy news story got legs. Nokia stock (NOKIA.HEL) jumped 6.1% and Ericsson stock (ERIC) rose 4.2%. Several financial news outlets reported that US attorney general William Barr said the United States should take financial stakes in one or both of those countries in order to back them financially and catch up with Huawei in terms of 5G production and capacity. Now he did say the following, ““Some propose that these concerns could be met by the United States aligning itself with Nokia and/or Ericsson through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies”. The key words in that quote are “some propose” and “through a consortium of private American and allied companies”. That’s far from government ownership and it’s even farther away from any sort of actual deal. These 2 stocks are currently NOT a buy based on that.
One more thing…
Iowa New Hampshire don’t have a great record on predicting the president an impeachment has pushed the current president’s poll numbers higher. Don’t stare at politics when picking your investments unless it involves trade. The EU trade deal is the next potential bullish spark.