In case you missed it, the Business Roundtable announced last month a redefinition of the purpose of a corporation. In short, they stated that rather than a corporation existing solely to provide a financial return to shareholders, other metrics should be taken into account: dealing fairly with suppliers, supporting local communities, delivering value to customers, and investing in employees. You can read the announcement here as well as some commentary on the change.
I believe that this is an affirmation of the trend towards a focus on environmental, social, and governance (ESG) factors in business. It’s something consumers are demanding of companies and many analysts and institutional investors believe that corporations who embrace a more holistic view of their mission will be rewarded and outperform over the long run. It’s also an acknowledgement that increasing income inequality isn’t good for society as a whole and is detrimental to corporations in the long run. While the announcement is certainly a step in the right direction, only time will tell whether corporations will move away from profit as the sole reason for existing and embrace other factors as good business strategy.
Why investing is Hard
I’m a big fan of psychologist and behavioral finance expert, Dr. Daniel Crosby. In this version of his Standard Deviations podcast, he gives some great examples of the behavioral challenges to being a good long-term investor. Highly recommended.
Morningstar’s “Mind the Gap” report discusses data on the gap between fund performance and individual investors’ performance due to poor market timing. The most interesting chart in the article again affirms that fees and expenses are a big driver of fund returns; Ranked by quintile, the least expensive funds, on average, provide better returns than those that are more expensive.
Password manager software is an essential element in securing your computer. This recent NYT article outlines why and how to go about choosing, installing, and implementing a password manager.