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A Cruelty Free Lifestyle might just be getting cheaper

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Finally, policy makers may be beginning to make the link between meat production and climate change. Will any of them have the bottle to suggest that meat eaters should significantly cut their consumption?  I doubt it, but policy makers have others ways of ‘encouraging’ people to do the right thing.

Taxation may well be the way of achieving a reduction in meat consumption. Making it more expensive to eat meat might wean those in developed countries off their diet of meat at least twice a day. Only 2 generations ago meat was considered a treat and not a staple of every meal.  With exponential increases in factory farmed meat driving down cost (and increasing animal suffering) people considered meat a right rather than a privilege or luxury.

As far as I am concerned, any reduction in the amount of meat being consumed has a directly positive effect on the number of animals that are being exploited. So, I am more than happy to see every increasing taxation of meat, and whilst the policy makers are at it dairy too.  Every single animal that doesn’t have to suffer the horrors of food production is a step in the right direction.

Imagine the win win of constantly reducing animal suffering, reducing climate change and increasing public health? Sounds good doesn’t it?

Read article here: http://www.theguardian.com/environment/2015/nov/24/meat-tax-far-less-unpalatable-than-government-thinks-research-finds?CMP=Share_iOSApp_Other

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Release the Elephants

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There is an unending (in a good sense) call from environmentalists about reducing our impact on climate change by getting out of our cars, using public transport and cutting the amount of miles we fly.  We are also required, rightly, to reduce our use of fossil fuels. All laudable demands but the one thing I find difficult to accept is the number of elephants that environmentalists have.  Herds of them.

These elephants will be cared for, of course, but in my view they shouldn’t be there at all.  They live in the corners of the meeting rooms and homes of committed environmentalists and no one notices them.  So what are all these elephants representing?

These elephants are sitting quietly in the rooms with a little sign around their necks – Stop Eating Meat.  Rather than leaving it to the elephants and animal welfare groups to make the point, it should be environmentalists who are driving the meat-free diet campaign.

According to the United Nations, meat and dairy production now accounts for 51% of greenhouse gas emissions.  That’s staggering and trounces the emissions from private cars and the odd long haul flight.

Logically, therefore, all environmental groups should have vegetarian and vegan lifestyle as the core of their campaign work.  Otherwise, their calls to reduce climate change are going to ring a little hollow when environmentalists are eating meat and adding significantly to greenhouse gas emissions.  There are far too many vested interests trying to play down climate change and giving these groups ammunition to discredit the whole climate change argument is pointless.

So come on everyone who cares about our environment and the future of the planet – acknowledge the elephants, let them out to roam free and spread the word that MEAT = CLIMATE CHANGE.

For the facts and figures, read this article: https://goo.gl/dCbPWL

Posted in Animals, Cruelty Free Money - general, Our Planet, Pensions (UK), SUPERFUNDS (Australia) | Leave a comment

Passive Vs Active Investment and Paris 2015

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The debate over whether active investment is better than passive investment has waged for years. Both camps insist that they offer the best value for investors and in some ways both are right. However, the investment world is about to change given the success of the Climate Change Conference in Paris.

There is a very strong argument in favour of passive when it comes to fees; passive funds are generally very low cost and all they aim to do is produce the same return as the market they track. Active investment managers charge higher fees and have the aim of providing better returns than the index.  If they can’t produce a better return whilst charging fees, then investors may as well pick any old passive fund and save money.

The active fund management industry does have a particular handicap when it comes to justifying fees -the generally low standard of fund managers! Now, I appreciate that this is a rather sweeping statement but the evidence, I’m afraid, supports my view.  There are lots of statistics which consistently show that anywhere between 55% and 75\% of active funds do not beat the index.  In every one of these instances investors would have been better off paying lower fees in an index/tracker fund.  The active managers who didn’t beat the index were overpaid by overcharging customers.  Controversial view?  Perhaps, but happy to hear from active managers who underperform their index to justify the fees.

Right, having provided a really good case for everyone to invest in Passive funds, I am now going to completely demolish the entire passive investment sector. As far as I am concerned passive investment management died when 195 countries ratified the Paris agreement.  Active managers now have to step up and justify their fees.

Why has passive died?

The answer is quite simple. The very thing that provides the simple low cost structure of passive funds is now going to be their downfall – tracking the index.  Unless investment companies start to manually intervene in the way the computers control the passive funds then they will suffer the consequences of the Paris agreement.

Let me explain; passive funds aim to hold the same shares in the same proportions as the index. A tracker fund cannot exclude a share that is in the index – the shares of every company must be bought and held.  If the value of a company falls then a passive fund will reduce the holding in this stock but the fund will still hold it.  If a company’s share price continues to fall, then passive funds will sell these shares to rebalance the overall weighting thus driving the price down leading to further selling.

Normally, a share price will fall to a level where active buyers feel it has gone too low and they see this as an opportunity to buy cheap. If there is more general buying then passive funds will realign by buying, thus driving the price up again. What happens if the active managers don’t come back in and start buying again? Well, the active funds will continue to hold the stock, the prices of the stock will continue to fall over time and they will then sell, sending the price down but still continuing to hold the stock as it falls, realigning the weighting, selling, realigning the weighting………

Even the worst active managers have the ability to get out of a company’s shares once it looks like all of the value has gone. The good ones will have got out much earlier – at a much higher price.  But, the point is that active managers can exit but passive funds are trapped in holding a stock until it disappears from the index.  The funds are trapped into making losses that active managers are not.

Post Paris, then, markets will come to realise that many of the biggest companies we know today will either have to radically change or drift away. The drifting will be as a result of a move away from fossil fuels and into renewable sources of energy.  The next generation of top companies are on the way now and the old guard will have to move out of the way.

Paris has introduced a new paradigm in the investment world; low cost passive funds would remain low cost and at the same time become less and less a credible investment option. Hanging on to the shares of shrinking companies whilst active managers can switch their attention to the new growth companies will be bad for investors.  Looking ahead, the higher fees charged by active managers will pay off, even if some of those managers are still not very good – they won’t have to be to be the passive funds!!

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