Recession on the Horizon?

It feels like a recession is coming.

The standard indicators in the stock market don’t seem to agree with each other. The housing market is all over the place. Half the indicators we follow say one thing and the other half say another. And investors are nervous as heck.

From its peak in December 2021, the S&P 500 Index (our stock market benchmark) has fallen 20%.

Many stocks and other investments have fallen further.

The CBOE Volatility Index (which measures how much volatility investors think is on the horizon) has risen steadily so far this year. We usually look to the volatility index to tell us how nervous investors are. It’s not as high as it was during the crash at the start of the pandemic, but those fears are still fresh.

Bear markets like this can have real-world effects. Many investors earmark their accounts for major life events – like retirement, job loss, or home ownership – so a cut into those funds can push plans into uncertainty. And as public companies brace for lower values, they may cut staffing and change their supply chains to shore up their balance sheets. That could mean businesses become less stable as the rout goes on.

The good news is that there’s a wealth of data out there showing that in the long run, your investment account will likely recover. Bear markets tend to last less than a year, and the markets generally come back within the next few. If you have a time horizon going out that far, you will almost definitely come out on top.

At Mangrove Investor, we invest for the long run. We watch our holdings and prune where we see issues. And in the grand scheme, we know the markets tend to move upward.

More importantly, we are lucky to have our eyes on the responsible investing space. According to a report from George Serafeim in the Harvard Business Review:

When [we] looked at data for more than 3,000 firms between late February and late March 2020 – when global financial markets were collapsing – we found that the ones the public perceived as behaving more responsibly had less-negative stock returns than their competitors.

It’s true, we can’t tell you about the future for sure. But we can tell you that when it comes to investing with your values, you’re in good company. No matter what else happens, you can count on us here at Mangrove Investor and at The Grove to keep you up to date.

And if it’s time to take profits or cut one of our positions off, we will make sure that you hear from us as soon as possible. This isn’t a fly-by-night operation going radio silent when the market falls. Long-term investing means that in times like this, our research shines. This is when we have the best opportunities. This is when we want to be paying attention to the market.

Anyone who made smart investments back during the last recession in 2009 could have tripled their money by 2020. Those are the kinds of chances we’re going to see in the near future.

We hope you’re as excited as we are.

– Annie Stevenson

Numbers to Know

54.9 gigawatts (GW) in 2031

Amount of energy expected to be generated by offshore wind farms projected to be installed a decade from now. That’s about double the amount installed in 2021 – 21.1 GW, or roughly enough to power all the households in California.

$504 million

Amount the Department of Energy will be loaning to a project in Utah that plans to capture and store energy using hydrogen. The project, from Magnum Development and Mitsubishi Power Americas, will be one of the largest green hydrogen facilities in the world.

What’s New in Sustainable Investing

ExxonMobil will go to court in Massachusetts over its role in the climate crisis

The state attorney general has accused the company of lying to investors and the public about the impact of burning fossil fuels. It’s one of many lawsuits brewing against fossil fuel companies in the U.S. (The Guardian)

California – one of the largest economies in the U.S. – will require plastics companies to foot recycling costs

Plastics manufacturers will need to stop selling single-use products in the state. The law is expected to eliminate around 20 million pounds of plastics in the next decade. (The New York Times)

Links We Like

• “Is a vegan diet healthy for children? Kamala Thiagarajan investigates what vegan families can learn from India’s ancient tradition of plant-based cooking, coupled with new scientific insights.”(BBC)
• “Regenerative Tourism Invites Travelers to Get Their Hands Dirty: Vacations that allow tourists to participate in conservation activities, such as habitat restoration, are growing in popularity.” (Smithsonian Magazine)
• “Climate change is coming for your pizza sauce: Heat, drought, disease – climate-forced changes are pushing California tomato production into a tough spot. But our future pizzas are not yet lost.” (National Geographic)