Broker Check

Green and Some More Green

February 28, 2023

Am I seeing green?

Today’s blog will focus on all things green.  Let’s stay positive as we begin 2023.

The initial market rally of 2023 has cooled slightly.  Fears still linger regarding the amount of additional rate hikes that may be needed before the Fed is comfortable that inflation is under control.  However, we are still positive across all markets.  The S&P, NASDAQ, International indexes and the bond markets are all in the green for the year with the NASDAQ leading the way at more than a 10% increase.  Not much has changed from what I wrote towards the end of last year.  This market is only going to go as far as inflation fears cool.  I’ve gotten plenty of emails and calls with some confusion as to why a good unemployment rate or a strong earnings report would drive the stock market down.  Unfortunately, good news is bad news.  If the labor market remains robust and corporations continue to show healthy profits, then the Fed in their mind has no choice but to continue to raise rates in an effort to cool the overall economy but not tip it into recession.  It’s a delicate balance they are trying to deal with.

There has been a lot of talk regarding ESG investing, particularly as there are some proposals out there that could impact your 401K.  In fact, ESG was a big topic at the World Economic Forum where 2,000 billionaires took their private jets to Davos to tell me I’m ruining the planet by eating steak.  To give you a little background ESG stands for Environmental, Social and Governance.  At it’s core it is well intentioned.  The theory is to buy stock in corporations that adhere to certain standards and/or principles that you believe in.  The problem is that it’s now a political tool that’s trying to be driven into our finances and retirement. 

The DOL already allows ESG funds in your retirement plan.  I’m all for that, however, there has been talk about setting that as the default option when people are automatically enrolled in the plan.  That’s outrageous.  Currently, most plans default to a target date fund.  These funds are well diversified with stock allocation based on retirement “target dates.”  Another issue facing ESG funds is lack of standards or clarity on how a company receives it’s ESG rating.  There are many different ratings agencies who have different criteria. 

It's important to know where and how your money is invested.  If there are funds you see in your plan that you aren’t sure about, please don’t hesitate to call me.  I have plenty of tools that can look under the hood of the funds you are offered to give you more clarity.  The important part is to keep putting your money away on a consistent basis.   

Feel free to share this with anyone you think may benefit.