Letter to Stakeholders, June 2021
Wednesday, June 9, 4:45 pm EST. Economic news has been flooding the cable channels over the past few weeks. In today’s letter we’ll discuss how shareholder activism, modern monetary theory, monumental technology legislation and bitcoin as a currency for El Salvador matter to you. Okay, there isn’t room for a lot of detail but follow the hyperlinks!
May 26th, 2021 was an historic day. As reported by Politico, a lot happened in the “space of a few hours.” Before I share what, it’s important to underscore how. One of the lesser understood ways to “invest with a conscience” is to participate in proxy voting. For those of you who own individual stocks, you receive an annual proxy in the mail to vote on seemingly mundane things like members of the board of directors. If you’re like most people, you don’t imagine your “vote” will count and you throw away the paperwork. If you’re like active investment firm Engine 1, you purposely buy stock to vote on those proxies and make change. Engine 1, purposely recommended and secured 2 seats on Exxon Mobile Corp’s board of directors. This was to help force a transformation of Exxon’s business away from fossil-fuels. This kind of board member replacement does not happen often. On the same day, Chevron Corporation’s annual meeting suffered a topically similar response from a shareholder resolution to cut greenhouse gases. The measure “passed with 61 percent of the vote.” “Shareholder activism” is also done through large fund families like BlackRock and Vanguard, though typically in secret. Both have vowed to become more transparent. We value their low fees and historical performance but will monitor their activism (or lack thereof) on your behalf.
Bitcoin & El Salvador
Bitcoin was invented by an anonymous person (or persons) in 2009. It is founded on the idea of creating a peer to peer, electronic cash system that could one day be cheaper and avoid the control of a central authority i.e. government. Right now, it isn’t that. Over the past couple of years, there has been a growing intensity around the debate over whether bitcoin is a currency or an asset. The difference of course is whether it is a medium of exchange, like our fiat U.S. dollar or a store of value, like gold. We know it is a digital asset and/or “cryptocurrency” but everything else? Our COO Doug Tees is our resident digital asset expert and he is currently becoming credentialed as a Certified Digital Asset Advisor. He may be able to better explain where the debate stands amongst fellow professionals but El Salvador has taken their position: they are the first country to make bitcoin legal tender. One of the concerns with this cryptocurrency – as if the ominous moniker wasn’t enough – is it’s growing use by criminals who seek to circumvent the law. That didn’t work too well for the Colonial Pipeline hackers but it is typically rare to get bitcoin back. We are learning as much as we can about digital assets with the expectation that it will grow as a reputable asset class over time. Questions? Just ask.
Bipartisan Technology Legislation
Yes, there is something that’s still bipartisan: competition. In this case, it’s competition with the rest of the world (read: China) over semi-conductors, quantum computing, space exploration, artificial intelligence and “innovations yet unseen.” Our U.S Senate passed the Innovation and Competition Act (68-32) to spend nearly $250 billion on tech. Shortages in microchips have spurred inflation on everything from laptops to automobiles. We just don’t make the right chips in the United States anymore. $54 billion of this bill aims to change that. National economics plays a critical role in our investment strategy for your portfolio. Though we have a lower domestic bias than most investment advisors, half of the equity we choose for our models is US-based. Our politicians agreeing on economics is refreshing; and profitable!
Modern Monetary Theory (MMT)
“Every deficit is good for someone,” is a quote directly from one of our advisor trade magazines. New York Times bestselling author, economist and academic Stephanie Kelton has written “the book” (The Deficit Myth) on modern monetary theory. The book argues that deficits can fight the inequality challenges we face just as cutting taxes is a boon for the wealthier among us. We are seeing that theory tested with the Biden Administration’s spending levels. Will it work? Ms. Kelton seems to think so (I’m currently reading her book…among 5 others). One thing the political parties have in common is growing the deficit. So far it has aided the stock market (congrats). We hope it bends the current "K-shaped" recovery.
Last week we hosted Gabe Rissman, a Yale University grad who used his interest in computational astrophysics to explore “dark matter” and build YourStake.org. He’s revolutionizing data use amongst ESG/SRI/Impact investors. See the (Video) here.
Until next time!
Jason J. Howell, CFP®, CPWA®, CSRIC®
Jason Howell Company (JHCo.) is an independent, family wealth management firm run by two owners who consider it their family business. Jason J. Howell, CFP®, CPWA®, CSRIC® and Douglas W. Tees, MBA, CFP® are both married to patient wives and are dedicated to their kids.
The firm owners believe that serving families through a process that supports family harmony, preserves family history and nurtures family values is the key to true wealth. It begins with a sustainable Investment Strategy and continues by equipping client families with three (3) tools for creating sustainable wealth. Most JHCo. clients invest their time, talent and treasure in the community. Jason Howell Company enjoys serving clients who go beyond being stockholders to becoming true "stakeholders." JHCo. calls this work total family governance and it's their specialty. Doug and Jason empower communities, one family at a time.
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