Q1 2020 NEWSLETTER
Mindfulness & Your Money
Over the past couple of years I’ve been trying to practice living a more mindful life. Sometimes I succeed. Often I fail. But I’m making progress. Many of you are familiar with the concept of mindfulness. It’s been a hot topic of conversation having become a fully-fledged mainstream movement over the past few years. I can barely walk into my local Whole Foods without seeing at least two or three magazines with splashy headlines about meditation stamped across someone holding a gravity-defying yoga pose. But for those of you who aren’t familiar with the concept, mindfulness is not something that’s reserved for hippy dippy liberals, millennials, and vegans. Mindfulness is an apolitical, non-religious concept that everyone can benefit from regardless of your beliefs, age, political affiliation, or diet. In its most basic form, it’s the practice of being present - of slowing down and simply being in touch with your environment and yourself. Sounds pretty easy, right!? Personally, I find it nearly impossible. Between emails, texts, Facebook/Twitter/Instagram, and the never ending 24-hour news cycle I really struggle to stay connected to myself, to my family, to my friends, and to the world around me. The esteemed Buddhist thought leader Tara Brach talks a lot about our addiction to our thoughts and the trance we can fall into that leads to a loss of creativity and spontaneity (she has an awesome podcast btw if this kind of thing is your jam). Two of the most foundational building blocks to a mindful lifestyle are looking deeply and being purposeful. To look deeply is to look beyond an object to all its causes and effects. A flower is not just a flower. It’s also rain, sun, soil, nutrients, the wind that blew the seed, and the genetic continuation of the thousands of flowers that grew before it. To be purposeful is to give meaning to every action no matter how big or how small. How long has it been since you brushed your teeth without scrolling through headlines / reading social media / thinking about the 10,000 things on your to do list? We’ve all been convinced that if we’re not multi-tasking then we’re failing when truthfully, we’re just creating more stress and less happiness. So what does all of this have to do with money? When it comes to our money, if the goal is a mindful investment strategy, we need to find ways to look deeply and to be purposeful in our decision making. In a way, mindfulness is the backbone of what it means to be a sustainable, responsible investor. Let’s not sidestep that we’re investors and as investors we’re in constant search of great returns. Without returns, it wouldn’t be investing – it would be charity
(also great). We do however want to apply a second layer of analysis to our investments. Looking deeply, we want to analyze our investments for their impact on the environment, society, employees, and consumers. To be purposeful is to respect the power that money holds – power to shape and to change behavior. If we’re purposeful with how we consume and invest, we send a message, casting our vote for the companies and products we value. The crazy thing is when we apply these principals to investing, we support companies that reduce waste, are good environmental stewards, give back to communities, value their employees, provide safe working conditions, and have high ethical governance practices. The bottom line is companies tend to be more profitable, have an easier time retaining top talent, and are less subject to class action lawsuits and regulatory risk. There is ample data to suggest that over time those characteristics translate into better risk adjusted returns (i.e. higher returns with less risk). The Apostle Paul is often quoted as saying “money is the root of all evil.” And while there may be some truth to this, the other side of the coin (pun intended) is that money can be used as a wonderful tool to motivate positive change. In his sermon “The Use of Money,” John Wesley, founder of the Methodist church said, “Earn all you can. Save all you can. Give all you can.” Afterall, it’s not having money that’s evil. It’s how you use it.
NEW!
Enhanced Cash Model Portfolios
We’re adding a new model portfolio to the mix in the coming weeks that will be an Enhanced Cash Strategy. Most of you are probably saying, “Um great. If I only knew what an Enhanced Cash strategy is I might be excited.” Enhanced Cash is a super conservative approach that should yield a bit more than a money market. In practical terms, this is a great place for you to put cash you might need in the next six months. When you put long term money in a checking or savings account, you’re actually losing money because it’s not making enough to keep up with inflation. Our Enhanced Cash portfolio will be made up of ultra-short term bond funds yielding around 2-3% annually. They are low in volatility although they can move around a tiny bit. Because these are relatively low yielding investments, Regatta automatically reduces our fee to 25 bps (.25%) for any funds invested with this strategy. Bottom line - if you have cash sitting in a savings or checking account earning 0-1% this is a great short-term alternative.
MARKET COMMENTARY
What’s Doing Well in the Markets and Why?
2020 has started out with a bang with all the major indices at or near all time highs. The S&P 500 is up 4.5%, the Dow Jones is up 2.7%, and the Nasdaq is up 8.5%. From a sector standpoint, technology continues to lead the pack (up 10.29%) and basic materials (oil, gold, natural gas) continue to be the dog (down 2.77%). The Fed is predicting rates will remain where they are which should keep the markets stable in the near term. Muni bond funds have continued their upward trend and extended their winning streak with our closed-end funds up an average of 3%. Tesla (TSLA) and Virgin Galactic (SPCE) have been big stories after having respectively tripled and doubled since Jan 1. These are a very volatile stocks driven largely by short-squeezes and sentiment. If you’re thinking about jumping in, have a strong stomach, a long time horizon, and be prepared for some big swings. Coronavirus fears continue due to the effects it could have on the global economy, however the market seems to be anticipating a resolution as the infection rates are slowing.
SRI PORTFOLIO
Performance Update as of February 19, 2020
Our most aggressive model, SRIV6, has returned 2.48% year-to-date net of management fees. Similarly, the more conservative SRIV5 and SRIV4 have returned 2.21% YTD and 2.56% YTD net of management fees. On the taxable side, our tax-managed SRI portfolio has returned 3.23% YTD net of management fees.
GOOD READS
Articles
NPR.com – Mindfulness Transforms Culture at High-Needs Elementary School Barron’s – These are the Top 100 Sustainable Companies in America Barron’s – Mutual Funds that Rank High on Sustainability are Outperforming the Market by Leslie P. Norton Morningstar – ESG is a Paradigm Shift by Jon Hale
Medium – Money on my Mind: 3 Ways to Bring Mindfulness Into Your Finances by Lodro Rinzler
GOOD READS
Books/Films/Misc.
For the Mind: THE POWER OF NOW by Eckhart Tolle
For the Soul: BRAVING THE WILDERNESS by Brené Brown
As always, we love digging into your ideas as well so please feel free to reach out with questions, comments, thoughts, ideas, or concerns. We’re all in this together. LC
Lee Clay, CSRIC™ Financial Advisor, ESG & Impact Investing Specialist REGATTA CAPITAL GROUP, LLC 880 Apollo St., Ste. 129 El Segundo, CA 90245 Phone: 310-220-9158 Fax: 310-725-9158 Cell: 310-429-1131 Lee@regattainvest.com www.regattainvest.com
The intent of this newsletter is to inform, inspire, and incite conversation around all things ESG (Environment, Social, and Governance) as it relates to investments and how we can use our money to generate financial returns alongside positive social and environmental returns.