I grew up in a “co-op” called Valentine Gardens in South Yonkers (NY). This affordable housing complex featured simple ways to build community – like patios where the adults got some fresh air and chatted while the kids jumped rope, played hand-ball or traded baseball cards a few steps away.
Down a steep staircase was one of the playgrounds. I loved the big slide where we followed the leader, swings where we sailed high, and see-saws where we played kind of rough. (See-saws must have proven dangerous over the years; I don’t remember when I last saw one at a playground.)
Ours see-saws were skinny – with metal handles. They were made of wood, painted green and secured to a metal bar bolted to the cement. Two of us would climb on simultaneously, keeping the see-saw parallel to the ground. One of us would lean back, edging to the ground, while the other would be hoisted high into the air. Then the momentum would change – I enjoyed the back and forth. No ride was too long for me.
I also liked cherry bumps – but hated to be completely surprised by them. A cherry bump is when the person on the ground disembarks unobtrusively, causing the person at the top to catapult to the concrete, and feel shock waves throughout their body. I learned to be on high alert for cherry bumps, and enjoyed finding counter-maneuvers, like dropping my legs firmly onto the ground, thus minimizing the impact and dampening my playmate’s glee.
This image came to mind recently as news of the fossil fuel sector’s risk to stockholders began to leach into the mainstream media. Major banks are beginning to step away from those investments, reports Bloomberg. Alternative energy players are achieving higher than expected goals due to cost reductions for wind and solar, making fossil fuels less competitive in the marketplace.
There’s evidence that fossil fuel investments are headed for the same “unpopular, dangerous” reviews afforded to see-saws. With apologies to Paul Revere, “The Cherry Bumps are coming, the Cherry Bumps are coming.” Brace yourself and plan counter-maneuvers that provide a safe fossil free landing.
Here are some suggestions for avoiding fossil fuel cherry bumps:
- You may want to participate in Divest the World October 23-25
Take a little peek at your mutual funds. (I’ve learned from some readers this is not something they relish doing – a topic for another blog.) You don’t need to study them all at once. My financial advisor recommended I start with a few Large Cap funds, because the big energy companies are likely inhabitants. Maybe you prefer to research funds that appear stagnant and are good bets to dump purely for financial reasons. Or, there’s always eeny, meeny, miney, moe…
- Research the fund’s percentage of “energy” holdings. (Generally they are roughly 4-8%.) You can ask your financial advisor to do this for you. Remember, (s)he get’s a fee for helping you manage your investments. Pre-blog, I did my research using my online Schwab account. Post blog, Fossil Free Fuels is a popular tool in my tool box.
- Funds That Can Put Your Investments on a Low-Carbon Diet – by Tim Gray, NYT, October 13, 2017 is a great resource. A big thank you to Cora Bodkin for recommending this article. It’s filled with great background information, research tips and another Fossil Free Fuels endorsement. Cora’s email timing was spot on. Also a “co-op kid,” Cora frequented the patio and playground closer to her building.
- Gray’s article gives a mutual fund example: Vanguard S & P Index Fund. Its fossil fuel energy load is 4.28%, and includes concerning companies like Exxon and Chevron. Let’s say you have 500 shares. That means you have approximately $214 invested in this fund’s fossil fuels. Now What?
- I recommend creating a “pending folder” that includes the basic information about each fund you’ve been researching, as you ponder holding v. selling. If you’ve researched several funds, there may be one or two that appear to be top prospects to sell. I would also recommend reading my blog post, Are You a Maximizer, Satisficer or New Fangled Hybrid? It’s valuable in thinking about how you approach trading (or holding) stocks.
- One way to get excited about selling a fund with dirty energy holdings, is to discover the many funds in the market place that are fossil free and/or abundant with alternative energy. Gabe Rissman, our guest blogger over the next few weeks will be giving you a great tool to go shopping with, as well as lots of information and a unique perspective. Now’s a good time to hit FOLLOW (below) so you’ll be sure to read what Gabe has to say.
- WARNING: Don’t sell anything until you determine if the mutual fund you want to sell is “unqualified” i.e. not qualified for tax protection. All the funds within your 401K, IRA, or any other retirement account ARE QUALIFIED for tax protection. If you sell something that’s NOT QUALIFIED you could face a big tax bill on the capital gains. This will be the subject of a future blog.
- Good Luck and Stay Tuned….In the meantime, please try to get to know some of the funds in your portfolio. It’s not as awkward as you may think.