The following is in response to Robert Huebscher’s article, The Downside to Socially Responsible Investing, which appeared last week:


Dear Editor,

I suspect there will be plenty of feedback on the article.  Having shared some of the same concerns regarding fees and lack of screening specificity, I too once concluded that it would be easiest to recommend a portfolio of low-fee index funds and encourage my clients to write a check to their favorite causes instead. 

Since Huebscher is on the board of some charitable institutions, I am sure he is aware that his recommended approach isn’t optimal.  The main problem is fees.  I developed a simple approach to get fees below those of a typical index fund for most investors.   For a $9.95 trade (no other fees at all), an investor can purchase a basket of stocks screened for general SRI characteristics, financial stability and political accountability of the company (a new SRI screen in my opinion).  Other portfolios reflecting an investor’s particular worldview can be constructed to provide relative fee alpha and serve a social purpose. 

Some faith-based investors do want to avoid investing in companies that make alcoholic and tobacco products.  Others want to avoid investment in for-profit prisons (two of the largest such companies are in the broad indices and held by many investors).  One can ignore SRI or impact investing if they have no need to put their money where their values are.   But an increasing number of others want to use their financial resources to drive social progress. 

Kindest regards,

Tom Nowak
Quantum Financial Planning
Grayslake, IL 
Mr. Nowak is the author of a book on socially responsible investing.

The following is in response to Robert Huebscher’s article, Lacy Hunt on Our Economic Future, which appeared on November 6:

Dear Editor,

The two examples Huebscher cited – the US and the UK after the onset of World War II – are classic textbook cases of a stealth policy option, specifically so-called financial repression, instead of the more overt, well-known, politically vulnerable traditional policy options of monetary (Fed) and fiscal (Treasury) policies. 

While financial repression, as I understand it through my lay lens, certainly contains/involves monetary and fiscal aspects/machinations, it is a true strategy conception and approach in its own right, and one that essentially involves intentionally and covertly shifting sovereign/public debt burdens over time onto the backs of the sovereign's savers, via the long-term engineering of negative real interest rates.  Because it is tacit policy that can appear as an incidental "result," it doesn't get pushback from those footing the bill.  People don't get rowdy in their opposition to something that is being done to them when they've never even heard of that something.  How many lay people do you know that have even heard of the term "financial repression"?  And it has been used before. 

Rob Arnott's Research Affiliates crew did one of the best pieces I've seen on financial repression.

The purely and overtly politically sensitive approaches are just too arduous, even when we're not experiencing a seemingly unusually stout degree of political and ideological polarization.

Unfortunately for them, the Euro Zone countries, by giving up their respective sovereign currencies, somewhat unwittingly I suspect, gave up their ability to quietly engineer an era of financial repression to deal with excessive sovereign indebtedness.

Happy Thanksgiving!

Guy Cumbie
Cumbie Advisory Services, Inc.
Fort Worth, TX