investment fads

ESG & You: Investing in Worthy Ways

photo shows sun shining through tree branches

We’re all about the long term at 228 Main. And we’re interested in companies that are oriented to the long term… like the ones trying to take care of the environment, operating in ways that are sustainable for employees and clients and suppliers, removing barriers to entry—these are all long-term processes.

And in our opinion, we believe companies like this happen to do better, too.

Maybe you’ve heard about ESG investing—the practice of putting money into those investments that address environmental, social, and governance issues.

We’re not interested in fads, but this style is all about the long term.

Any human endeavor will have its flaws, but we’re figuring out how to bring the best qualities of ESG into our work with you.

First, we can keep certain kinds of companies off our buy list. Those businesses that deal in tobacco, alcohol, and gambling, for example, don’t align with many people’s beliefs about individual wellbeing.

Second, we can add certain companies that meet sustainability criteria, like environmental benchmarks or diversity among corporate leadership.

Trying to grow your bucket is always at the heart of our work. But we shouldn’t have to choose between performance and other worthy results. Let us know if ESG goals are a priority for you.


Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.


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The Tactical Bubble

© Can Stock Photo / fullempty

Our long-time friends know that avoiding stampedes is one of our fundamental principles. We human beings know how to take things too far, history suggests. So we are always on the lookout for trends that may have become too popular.

A year or two ago, in the investment product market, “unconstrained bond managers” were all the rage. With interest rates near all-time low points and risk high, these magicians would own only the smart parts of the somewhat risky bond market. It turns out that all the money that poured into this idea would not fit into just the smart stuff.

We see a new trend today. Solicitations and information about investment concepts and products comes at us all day long, every day. Organizations would like us to send your money to them; human nature being what it is, they usually emphasize popular ideas, or ones that sound great. One term dominates these pitches nowadays.

You know we are contrarian—if everyone else likes something, we believe that alone is a reason to be cautious.

The trendy term is “tactical.” One of the dictionary definitions is “adroit in planning or maneuvering to accomplish a purpose.”

It is out of fashion to simply acknowledge (as we do) that the markets are volatile and fluctuate, an inherent feature that long term investors must face. The popular delusion is to pretend that a “tactical” manager can own stocks while they go up, then sell out to avoid the damage from the inevitable downturn.

It is a great story. Unfortunately, as a wise person noted a very long time ago, “They do not ring a bell at the top.” Is a 1% decline the first step of a 20% bear market? Or is it just the typical volatility that jerks the market around every week or month? No one ever knows.

The risk is that a small decline shakes the tactical investor out of the market, right before it turns around and makes new highs.

We have no issue in being ‘adroit in maneuvering.’ We think our work over the past couple of years shows that we are, hopefully, more adroit than ever. But it stretches credulity to believe that vast amounts of money can all be adroit at the same time.

Investors who have been fooled into believing that volatility can be sharply reduced or eliminated with no adverse effects on performance are likely to be disappointed. We are studying the potential impact if and when the “tactical” fad unwinds. Clients, if you would like to discuss this or any other matter, please email us or call.


Stock investing involves risk including loss of principal.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Tactical allocation may involve more frequent buying and selling of assets and will tend to generate higher transaction cost. Investors should consider the tax consequences of moving positions more frequently.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.