Showing posts with label investing. Show all posts
Showing posts with label investing. Show all posts

Thursday, May 30, 2019

Women and Investing - Tisa Forrest, Johns Hopkins University, Impact Investing Intern

Review of New York Life Investments Webinar: Women & Investing. Lessons for Success: Strengthening Relationships & Transforming Your Business

  • Forbes estimates women control $14 trillion in assets and that this number is increasing. They control 70-80% of the purchasing decisions, have longer life expectancies, but hold a disproportionate percent of life savings in cash.  
  • Women aren’t all the same, but many feel advisors paint them with the same brush. 
  • Women represent a compelling opportunity by increasing their involvement in the financial planning process, helping improve financial literacy, gaining greater financial independence.
Main Takeaways from the NY Life Survey on Women and Investing

1. 62% of woman believe their investment needs are truly unique and feel as though they’re treated differently when working with financial advisors
2. 67% leave their financial advisor for something other than financial reasons: mainly a lack of personal connection and poor service.
3. Investment & financial planning knowledge are just as important and the perceived level of treatment.
4. The problem isn’t solved by being a woman or having women on staff. There are a significant number of women investors who have little preference concerning the sex of their advisor. They opt for a combination of trust, investing knowledge and understanding needs.

Note: Over a lifetime women make 26 financial advisor referrals compared to 11 by male clients. Research also shows that women are moving backwards in terms of financial literacy.

Six Key Learnings

Lesson 1: Breaking Unconscious Exclusion
Four key life stages of your female clients.
1. Suddenly single – A need to feel a sense of immediate security as the shift in their lives have brought sudden chaos.
Be empathetic, follow her lead
Ask how she feels in her new situation. Allow her to talk of personal life before financial
2. Married breadwinner - 42% feel patronized by their Financial Advisor. Most are likely to leave advisors for reasons other than financial.
Check to see if her name is first on the account
Communicate with her
Make space in meetings to ask her questions and address any concerns.
3. married contributor- Can feel like advisors treat her like a supporting roll. Often busy and at risk of checking out of financial relationship.
Ask for her preferred method of communication
Ask how you can include her more
Ask if there are ideas she’d like to share
4. single breadwinner - Most pleased with advisors but require more of a coach and a mentor.
Provide education to her and family
Ask if she wants you to send her relevant articles
Ask if she wants educational resources for her kids

Lesson 2: Rethinking Roles
Include both spouses on an invite
Never schedule a meeting until both parties can attend
Make a strategic plan that highlights times you’ll switch focus between spouses
Acknowledge her when she’s in the meeting
Address both spouses in the meeting
Clarify how she’d like to be included in the conversation
Post meeting
Communicate to all parties
Create a follow up plan
Can you share materials to help educate

Lesson 3: Rescuing Relationships
Do you have women clients whom you haven’t spoken with in the past year? Do some regularly blow off meetings or calls? Do you have women clients who haven’t introduced their kids to you? Do you have women clients who used to refer friends and family to you but no longer do?
Questions you can ask to diagnose your relationships
1. When it comes to your personal finances what’s the main emotion that comes to mind?
2. How can I help improve the way we work?
3. Would you recommend me to your friends or colleagues?

Lesson 4: Education is a Passport
Training the next generation - Encourage female clients to bring kids, close friends, or disinterested spouse.
Building networks – Host and convene women through training or social functions to build sense of community.
Crowdsourcing topics - Host AMAs (Ask Me Anything) sessions where you can answer these questions. Financial Advisor Empowerment - Encourage younger advisors in your practice to brainstorm and lead female-investor initiatives

Lesson 5 : Operating on her terms
Ideas to operate on her terms
Align her needs with your business
Make small tweaks to how you operation
Does she was to jump int discussing facts or would she prefer to discuss life before financial goals and financial standing
Does she prefer to ask questions now or take info and come back with follow ups later
1. What can you do if you know she’s busy with work, hobbies and family obligations?
Follow her communication preference: Calls, in-person, online. Weekends or evenings if she works full-time.
2. How can you respond if she’s a visual learner?
Use worksheets, checklists, highlighters
3. How can you use technology to better engage?
Connect on social media depending on her level of comfort

Lesson 6: Results with Relationships
  • Are there ways your firm can make reports more visual? 
  • Could you craft the numbers into a story for her? 
  • Do you show the connection between the reports and her goals?
  • Celebration
  • Do you track goals for her? 
  • Do you congratulate her when she reaches goals? 
  • Are there ways you can better celebrate results with her to show your partnership? 

Sunday, April 12, 2015

Effective Investing: How to minimize fees and maximize potential return

We coined the term "Effective Investing" to reflect a style of investing that does several things. First, it minimizes fees and costs. Your money should go toward your future, not to a broker or mutual fund company. There are only two ways to accomplish this, one in stock investing and the other in bond investing. Your money should be safe and effective investing means being able to sleep at night.

This means managing and minimizing risk. There are a limited number of ways to accomplish this, too. Risk is a feature of investing. It is how you get to return. Still, you can rationally minimize risk by taking a few constructive steps. 
In the bond or fixed income world, investing in US Government securities is the only way to accomplish this. 
In the stock market, the strategy is the polar opposite and can be summarized as "don't put all of your eggs in one basket," in fact, put them in the biggest basket you can find. This means investing in an Index Fund comprised of shares of stock in 500 or more companies. The S&P 500 Index is the tool we suggest (although we have had issues with S&P, their Index is solid.)
Finally, effective investing means being at peace with your conscience. This means not investing in companies that are, or may do bad things with your money. (Now, we understand that this may be difficult for some investing in US Government securities or investing in an Index, but we show you a way around this, in fact the ONLY way around this...) This means looking for and investing in responsible companies. In summary, Effective Investing:
  1. Minimizes fees.
  2. Minimizes risk.
  3. Maximizes potential financial AND social return.

We tell you how to do this online in: Stock, Bond and Mutual Fund Investing We cover the following topics:
  • What is Investing?
  • Why Invest?
  • How to minimize fees and maximize potential returns.
  • Risk and Reward
  • What Is a Stock?
  • What Is a Bond?
  • What Is a Mutual Fund?
  • What is a return?
  • What is Ethical/Socially Responsible/Environmental Social and Governance and Corporate Social Responsibility Investing?
  • What is screening? exclusion? shareholder activism? positive investing?
  • How can you invest effectively, meaning with minimum fees and maximum potential for return?
  • For a preview, see:

Saturday, March 30, 2013

Diversity Index Portfolio Outperforms S and P 500

Creative Investment Research, Inc. announced today that it's Diversity Index Portfolio returned 35.13% from April 19, 2011 to March 30, 2013. The Diversity Index is an investment portfolio containing stocks of the largest companies in the U.S. These companies have been selected because they have outstanding investment characteristics and are top performers with respect to four key measures of inclusion and diversity: Human capital, CEO commitment, corporate communications, and supplier diversity.

By comparison, the S and P 500, or the Standard and Poor's 500, returned 18.14% over the same time period. According to Wikipedia, "The S and P 500 is a stock market index based on the market capitalizations of 500 leading companies publicly traded in the U.S. stock market, as determined by Standard and Poor's. It is one of the most commonly followed equity indices and many consider it the best representation of the market as well as a bellwether for the U.S. economy."

The chart at left shows this performance graphically.

NOTE: "All references to performance in the text, data and spreadsheet refer to an analysis of market indexes or hypothetical portfolios using historical data from April 19, 2011 to March 30, 2013, and not for any actual accounts, either past or present. Static performance: An implicit assumption about the data is that the diversity related performance of the companies would have remained static from 2011 to 2013. In reality, this may or may not have been the case. The diversity related performance of a company will improve and deteriorate relative to peers over time. This type of bias may or may not be significant for the results of the portfolio, but it would definitely impact the selection of companies to be included in the portfolio. The analysis in no way represents the results of actual trading using client assets, but rather involves hypothetical results obtained by means of the retroactive application of a theoretical study and analysis designed with the benefit of hindsight. Expenses: No consideration was given to expenses, which would normally be included in a real-world scenario, including management fees, commissions, markups or markdowns, other trading costs, taxes, and other fees and costs of all types." SOURCE: Profitable socially responsible investing? An Institutional investor’s guide. By Mark J. Lane, Esq.,, Institutional Investor Books, 2006.

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Sunday, February 28, 2010

Thursday, August 27, 2009

SEC issues investor warning

According to the Chicago Sun Times, "Exchange-traded funds that leverage their holdings could lead to outsized losses, the Securities and Exchange Commission said. It said brokers and financial advisers should warn people away from them unless they plan to hold them for just a day. The problem with leveraged ETFs comes down to the magic and mystery of compounded returns. If you leave your money in a leveraged ETF over time, your return can differ drastically from the fund's stated goal, especially in volatile markets. "

Thursday, July 19, 2007

GS Sustain Focus List

On June 22, 2007, Goldman Sachs launched the GS Sustain Focus List, “companies from established industries, which have been selected by incorporating our proprietary Environmental, Social and Governance (ESG) framework into long-run industry drivers and returns-based analysis and valuation in order to pinpoint structural improvement and sustainable competitive positioning.” The list of stocks is "aimed at long term long only performance with low turnover.."

The creation of the focus list and the required methodology suggest that Goldman, like other firms, has come to see the value of incorporating a “socially responsible” framework into traditional investment analysis. While we applaud Goldman's incorporation of the ten principles of the UN Global Compact into an investment analysis framework and the firms’ tacit recognition of “socially responsible” investing, we feel the firm is ethically and ethnically challenged, and that these factors may negatively influence both the methodology and the composition of the GS Focus list. We explain our reasoning below.

Ethical challenges

We question a central thesis of the report: that Goldman has developed a superior ESG evaluation tool that allows investors, thru the firm, to “pinpoint sustainability and emerging players.”

Major Wall Street investment banks have a history of manipulating financial data in order to support business activities and to maximize short term profits. Consider the following:

On April 28, 2003, every major US investment bank, including Merrill Lynch, Goldman Sachs, Morgan Stanley, Citigroup, Credit Suisse First Boston, Lehman Brothers Holdings, J.P. Morgan Chase, UBS Warburg, and U.S. Bancorp Piper Jaffray, were found to have aided and abetted efforts to defraud investors. The firms were fined a total of $1.4 billion dollars by the SEC, triggering the creation of a Global Research Analyst Settlement Fund.

On September 4, 2003, Goldman Sachs admitted that it had violated anti-fraud laws. Specifically, the firm misused material, nonpublic information that the US Treasury would suspend issuance of the 30-year bond. The firm agreed to “pay over $9.3 million in penalties.”

On April 28, 2003, Goldman Sachs was found to have “issued research reports that were not based on principles of fair dealing and good faith .. contained exaggerated or unwarranted claims.. and/or contained opinions for which there were no reasonable bases.” The firm was fined $110 million dollars.

On January 25, 2005, “the Securities and Exchange Commission announced the filing in federal district court of separate settled civil injunctive actions against Morgan Stanley & Co. Incorporated (Morgan Stanley) and Goldman, Sachs & Co. (Goldman Sachs) relating to the firms' allocations of stock to institutional customers in initial public offerings (IPOs) underwritten by the firms during 1999 and 2000.”

In the report, Goldman notes that “Corporate governance is a key focus of investors, securities regulators and stock exchanges in recent years in the wake of corporate accounting scandals.” No mention is made of the behavior noted above.

The firm, fined $119.3 million by the SEC for various crimes (see: and received a $75 million dollar New Markets Tax Credit (NMTC) award. In the NMTC Program application, firms must attest to the following:

"The Applicant and its officers, directors, owners, partners, and key employees or any other person that Controls the Applicant:

(a) have not within a three-year period preceding the date of this Allocation Application been indicted, charged with or convicted of, or had a civil judgment rendered against them for commission of fraud or a criminal offense;

(b) have not within a three-year period preceding the date of this Allocation Application been indicted, charged with or convicted of, or had a civil judgment rendered against them for violation of Federal or State antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property;

(c) are not presently indicted for or otherwise criminally or civilly charged by a governmental entity (Federal, State, or local) with commission of any of the offenses enumerated in paragraphs 10(a) and 10(b) of this certification;

(d) have not within the three-year period preceding the date of this Allocation Application been the subject of any formal investigation or disciplinary proceeding by a government agency, regulatory body, or professional association in connection with any matter; and

(e) have not within the three-year period preceding the date of this Allocation Application been found liable in any civil legal action involving creditor's claims of greater than $500,000."

We believe GS New Markets Fund - owned by Goldman Sachs Group, Inc., technically violated this certification, and was, therefore, ineligible for a NMTC award. Even if the firm was eligible to receive the award, the allocation of federal tax credits to a firm fined $119.8 million makes a mockery of penalties assessed under the SEC’s "settlement with Goldman Sachs to resolve issues of conflict of interest at brokerage firms."

From an ethical standpoint, the firm has repeatedly engaged in behavior that would cause a prudent person to question its objectivity and fairness. We note that a smaller firm engaging in similar conduct would have been severely sanctioned by the market. Goldman has escaped meaningful sanction, however.

Diversity challenged

The report states that “Employee indicators for pay, productivity and gender diversity are universal. We measure companies’ ability to attract, retain and motivate employees by assessing employee compensation and productivity, health and safety performance and gender diversity.” By measuring only gender diversity, Goldman’s ESG framework reflects a troubling racial bias and lack of true diversity. This, in turn, reflects practices at the firm: according to a study by Chicago United, Goldman has one of the least diverse Boards of any company in the Fortune 100. This lack of racial diversity, we feel, influences methodological matters governing the CS Sustain list. Given demographic trends, gender diversity is a necessary but insufficiently robust, just or fair sole criterion to use as “a proxy for companies’ ability to attach and retain highly skilled staff from all backgrounds.” This is a frankly bigoted approach to the issue that is consistent with the current global trend toward racial animus. The immigration “debate” in the U.S. and the active targeting of racial minorities for fraudulent loans are other indicators of this trend.

Origin of the approach

The report issued announcing the creation of the Focus list states that “..the poor performance of indexes such as Dow Jones Sustainability Index and FTSE4Good (both -10% since 2000) suggests that a simplified approach of picking stocks on an ESG basis alone will not lead to stock market outperformance.” We know of no major SRI/ESG mutual fund that selects stocks based on social, or ESG factors alone.

The report goes onto state that “Analysis of the environmental, social and governance issues facing companies is not new; socially responsible investors (SRI) and NGO’s have assessed companies on ESG metrics alone for the better part of three decades since the early 1970s. However, the integration of ESG with industry analysis and financial returns is a relatively new conceptual approach. SRI indices were originally designed to separate socially responsible and sustainability-focused companies from laggards on the basis of social, environmental and/or ethical screens alone; ESG analysis was separate from industrial and financial analysis.” This is incorrect on two counts. Economic development projects started or managed by Dr. Martin Luther King, like the Montgomery Bus Boycott and the Operation Breadbasket Project in Chicago, established the model for future socially responsible investing efforts. In that project King combined ongoing dialog with boycotts and direct action targeting specific corporations. Thus, assessing companies based on ESG metrics goes back to December 1, 1955, when the modern age of socially responsible investing began.

The second error relates to the integration of financial and social data. We first outlined this approach in 1991, when we created the Fully Adjusted Return™ methodology. Further, in 2001 and 2002 we participated in the SPI-Finance Project, linked to the Global Reporting Initiative and “undertaken by a group of financial institutions from Australia, Germany, the Netherlands, South Africa, Switzerland and the UK. “ We discussed the integration of financial and social performance measures for the financial services industry, based on our work creating the Fully Adjusted Return methodology.

Goldman’s work fall into this approach, first developed to aid in the selection of women and minority-owned banks, and takes it to a broader stage, but the core technique remains the same. Our concern is this: given the ethical and ethnic issues raised above, and based on our fifteen years of experience in the creation and application of SRI/ESG tools and techniques, we feel the application of this technique requires a fully objective third party, with no actual or potential conflicts of interest.

National bias is racial bias

The report discovers “country bias with regards to environmental, social and corporate governance performance.” We believe this is due to Goldman’s narrow and limited perspective on SRI/ESG issues. Excluding South Africa, no African countries are on the list. Excluding Japan, no Asian markets are included. Excluding Brazil, no Latin markets are included. Thus, areas representing the majority of the world’s population are excluded. This makes the report a non-minority (non-people of color) company and country exercise. This is consistent with the flawed diversity framework noted above. Certainly, data and capitalization issues represent a challenge, but given the firm’s reach and resources, these geographic regions could be included. Doing so sets the stage for the future and allows for a more realistic and consistent set of long term (50 year) forecasts, since at some point these regions will join the capital markets of the world.

Constructing the list

The GS Sustain Focus list contains “only companies for which we have completed our ESG analysis and companies under coverage in emergent industries.” While we believe it is important to know which companies on the list Goldman has current investment banking relationships with, a more important metric concerns Goldman’s strategic plan for future relationships. Because many of the industrial sectors and companies featured in the report are new (solar power, biotechnology) the report may be used to curry favor with potential future industries and clients. We note that being on the GS Focus list will have added value as institutional investors come to see the list as valuable. If SRI/ESG and sustainability issues have grown in importance, they have done so because they are critically important to the future of democratic capitalism and despite active opposition by most Wall Street firms, who, ten years ago, considered this type of analysis superfluous.

Action Steps

We have found these behaviors often the prelude to the development of a set of fraudulent business practices. In this specific case, we feel this may include manipulating or misrepresenting data used in ESG/social investing processes.

Security Notice

This communication (including all pages in this document) is for the sole use of the intended recipient and may contain confidential information. Unauthorized use, distribution, disclosure or any action taken or omitted to be taken in reliance on this document is prohibited, and may be unlawful. By inadvertent disclosure of this document Creative Investment Research, Inc. and William Michael Cunningham do not waive confidentiality privilege with respect hereto. This writing/publication is a creative work fully protected by all applicable copyright laws, as well as by misappropriation, trade secret, unfair competition and other applicable laws. The authors of this work have added value to the underlying factual materials herein through one or more of the following: unique and original selection, coordination, expression, arrangement, and classification of the information. No copyright is claimed in the text of statutes, regulations, and any excerpts from others’ reports or articles quoted within this work. Copyright©2007 by William Michael Cunningham and Creative Investment Research, Inc. William Michael Cunningham and Creative Investment Research, Inc. will vigorously defend all of their rights to this writing/publication. All rights reserved – including the right to reproduce in whole or in part in any form. Any reproduction in any form by anyone of the material contained herein without the permission of William Michael Cunningham and Creative Investment Research, Inc. is strictly prohibited. This document is registered with the US Library of Congress.

Wednesday, July 18, 2007

This Week's events and news

Social Investments Forum will be held in Vladivostok

According to the Vladivostok Times, "The goal of the Forum is to promote the idea of social investments through creation of partnerships among local/regional authorities, businesses and non-commercial organizations (NGOs) for successful Territory"s socio-economic development. The New Eurasia Foundation Russian Far East Affiliate Office, in partnership with the Primorsky Territory Administration will hold SOCIAL INVESTMENTS FORUM IN THE RUSSIAN FAR EAST on July 27, 2007 in the framework of the first Pacific Economic Congress "Russia and Asia-Pacific - from cooperation to integration."

St. John’s Endowment Investments Outperform Those of a Majority of Higher Education Institution

According to St. John's University, "A recently released NACUBO study indicates that St. John’s surpassed 90 percent of 700-plus colleges and universities in average annual rate of return on investments in the three-year period ending June 30, 2006. Most impressively, St. John’s outpaced many of the schools with endowments over $1 billion, with a return of 15.6 percent vs. their average return of 15.3 percent. The three-year average return for all schools reporting was 11.9 percent.

Former Investment Committee Chair Peter D’Angelo ‘78MBA, who remains a member of the Committee, points to the University’s Vincentian and Catholic values as drivers of many investment decisions. 'As a Catholic university, St. John’s has also adopted a social investing policy which is provided to the managers in our portfolio,' he says. 'It is our intention to promote the basic moral values of fairness, respect for human life, defense of human rights and social justice.'"

TIAA-CREF Adds 2% Target For Proactive Social Investments In CREF Social Choice Account

TIAA-CREF announced a "two percent target allocation to proactive social investments within the fixed income portion of its CREF Social Choice account (the Account). The two percent target will be based on the Account's total net assets."

Doing well by doing good

According to Philippine, "
Many investors have strong opinions that don’t involve their views on interest rates and stock prices. They want their holdings to reflect their values by avoiding companies that profit from activities they oppose, and supporting those that behave in ways they consider appropriate or responsible. At the same time, they still want to earn a reasonable return on their portfolios.

Socially responsible investing ('SRI') helps investors meet these goals by practicing an investment strategy designed to deliver an acceptable level of performance while excluding companies that don’t meet certain ethical standards."

SEC Enforcement Actions

On July 12, 2007, the Securities and Exchange Commission "filed a civil injunctive action against Michael F. Shanahan, Sr. (Shanahan), the former Chief Executive Officer and Chairman of the Board of Engineered Support Systems, Inc., and his son, Michael F. Shanahan, Jr. (Shanahan Jr.), a former member of Engineered Support's Compensation Committee of its Board of Directors, alleging that they participated in a fraudulent scheme in which they granted undisclosed, in-the-money stock options to themselves and to other Engineered Support officers, employees, and directors. According to the complaint, Engineered Support employees and directors received approximately $20 million in unauthorized and undisclosed compensation as a result of the backdating, $16 million of which was received by top executives and directors. Shanahan personally profited from the backdating scheme by more than $8.9 million."

The Diversity Portfolio

The Creative Investment Research, Inc. Diversity Portfolio contains equity investments in some of the largest U.S. companies. These companies have been selected for inclusion because they have outstanding financial and diversity performance. Diversity performance is calculated by reviewing several key measures: Human capital, CEO commitment, and supplier diversity. From 4/7/06 to 7/17/07, the model portfolio returned 23.93% versus a 22.45% return for the market, as measured by the S&P 500 Index, a major stock market index (without considering dividends. Returns calculated before fees deducted. Past performance is no guarantee of future returns.) See for more information...

Angels Descend on Minority Business Enterprises

Investors gather to consider investments in top minority-owned ventures.

Portsmouth, VA (PRWEB) July 17, 2007 -- Virginia Housing and Community Development Corporation (VHCDC) continues its pioneering initiatives to facilitate the flow of capital to Minority Business Enterprises (MBEs) with the announcement of the 2007 MBE Capital Call Conference, Exhibition, and Venture Forum -- September 20 & 21 in Hampton, Virginia. The MBE Capital Call presents entrepreneurs with innovative and marketable business ideas the opportunity to secure capital, and other essential resources, by "Pitching" their business plans to active, accredited investors. This event invites Entrepreneurs, aspiring entrepreneurs, Investors, aspiring investors, and College/University Students to Hampton, Virginia for a rewarding two day conference aimed at facilitating investment in minority- and women-owned businesses.

VHCDC created the MBE Capital Call to expose and connect MBEs, particularly African-American, Hispanic, and Native American entrepreneurs, to capital (funding) to start and grow or expand their business. This year, twenty-one (21) entrepreneurs will be selected to pitch their business plans to active, accredited investors. A team of active investors and business development professionals will select the presenters from among registrations received thru August 10, 2007. Presenters will be judged on several criteria and may pitch plans for virtually any industry/business sector.

Registration is easy, and there's no additional cost to enter the competition. Business owners, aspiring entrepreneurs, investors, lenders, and students may register by visiting the MBE Capital Call website: now for complete details, registration, and terms and conditions.