“Glory days well they'll pass you by”
My inbox is filled with emails claiming to make 10 or 20 or 100 times on an investment if I would just subscribe to a particular service. These are not spam emails, these are legitimate firms who have picked some sensational winners and focus on those results. The classic is always how to make 20 times your money without taking any additional risk. The world doesn’t work that way nor does the art and science of investing.
Yet I never get an email saying this particular investment will have 20x the impact and provide a sustainable and competitive return, yet I believe that is where we are going.
If you don’t think the world is changing sign into tomorrow’s release in the US of the GM EV Hummer. Nothing silently screams change like this. The original Hummer was the poster child for large SUV/Pickup vehicles but GM halted production following the GFC and despite discussion of a trade sale at the time the brand was discontinued. The original H1 Hummer was based on a military Humvee and produced approximately 10 miles per gallon, fuel efficiency wasn’t high on Hummer buyers list of attributes. Within the next 24 hours GM will release details of two new models, an electric pickup truck and a SUV which are scheduled for release in late 2021, around the same time as many manufacturers are revealing EV “trucks” including the Tesla Cybertruck. The symbolism alone is priceless.
GM thus far is pushing the power, speed and silence the new Hummer generates (can you generate silence?) but any impact assessments must include production data with a focus on the battery production. I doubt GM will mention that in the release tomorrow, but the real impact is the net not just the positive or the negative. This will be the key to the consumer’s impact purchasing decisions and consumers should demand this across all large ticket consumer items. Production impact is important as is output impact and adds to the measure’s credibility.
This is where impact investing and reporting is heading. A measurable and credible impact assessment that will allow for better sustainable decision making. Impact investing is already moving to results based impact returns whether it be on a fund basis or on an individual company. Recent impact bond issuance has included penalty coupon increases if companies don’t meet certain impact targets. This is not tomorrows investment platform it is live and happening today.
Country differentiation is the cornerstone of macro investing and the differing responses to Covid should ensure this continues. Recent election and polling results point to health as the driver of political outcomes but this theory is about to be tested in the most important of any elections, the US Presidential race. The airwaves will be dominated by this race in the next few weeks with everything pointing to a Biden victory although substantial fiscal support is more dependent on a Democratic sweep. The real question is whether a Democratic sweep will lead to structural reform as this will determine the sustainability of returns more than a fiscal spending package.
Other than the Hummer release this week’s brings a Presidential debate and then my highlight, a new Bruce Springsteen album.
Nasdaq - Tech stocks have fallen 4 of the last 6 days and the weakness is accelerating.
I am not sure emails urging 20x the impact of an investment will have any more credibility than those offering 20 baggers currently. Impact measures are however a key element of any investment decision as we believe they are a key component in the sustainability of returns. Those impact measures need to be credible.
Change isn’t coming, its always here.
David "Bushy" Nolan