The Arbor Outlook: Responsible Investing, Clean Companies and John Prine

“Then the coal company came with the world’s largest shovel; and they tortured the timber and stripped all the land... “
—from “Paradise,” as performed by John Prine

“Socially responsible investing” is a phrase garnering lots of attention in the financial world. Some investors exhibit great concern over the type of companies in which their money is invested; some do not.

Let’s say you’re an investor who prefers not to place your capital in oil and gas companies or in MLP’s that transport oil or gas, because you are committed to the renewable energy movement. Or perhaps you choose not to invest in companies that produce tobacco or alcohol because you don’t want to support industries that you believe produce harmful products. Your concerns are completely understandable.

Most folks can quickly decide for themselves if tobacco or alcohol-related investments are in their moral wheelhouse. More often than not investors who eschew ownership of these companies have some personal connection to the negative side effects produced by these types of products.

But what about companies that make soft drinks and junk food? If a company knows their products aren’t healthy yet keeps producing them, is that company socially irresponsible? What about household goods companies that produce unnecessarily thick plastic containers for purely aesthetic reasons? Are media companies behaving in a socially irresponsible way when they repeatedly produce violent movies? If they produce a family-friendly movie for every violent one, does that make it more acceptable?

Like everything else in life, it’s complicated.

Take a company that checks almost all your social boxes. They donate generously to causes you support; they pay their employees a living wage even though others in their industry may not; they recycle everything they can and take active measures to reduce their environmental footprint; and they genuinely try to do the right thing based on your definition of “the right thing.” But what if they are extremely aggressive about avoiding taxes legally? They aren’t breaking the law, but does pushing the tax boundary to the very limit of legality fit in your definition of being good? Head hurt yet?

Here’s my take. I admire people who want to support ethical companies. Voting with your pocketbook is one of the truest forms of activism and those interested in a particular cause would naturally like to align their investments with their beliefs if possible. But for the average investor who just wants to enjoy a nice retirement, trying to only invest in companies you agree with socially, environmentally and politically is almost a full time job.

Isolating companies that are good investments is a challenge. Finding ones that are socially responsible is difficult as well. Doing both can sometimes be impossible.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: Gambling, State Coffers and a Paradigm Shift

“Just like the gambler says, ‘Read ’em and weep...”
— from “It Makes No Difference,” as performed by The Band

The only time I ever placed a bet was on the floor of a Las Vegas casino about 15 years ago. I was there for an investment conference and one night when no meetings were scheduled, I wandered down to a hotel lobby and threw a few quarters into a machine. I pulled the arm, saw only two lemons in the display, and strolled back outside into the warm night air. Mostly I remember a large, stuffy, smoky room, awhirl with noise and garish colors. There are those besotted with gambling fever, but I am not one.

That said, the Supreme Court’s recent ruling striking down the ban on sports betting is a fascinating cultural paradigm shift. It recognizes that many people desire to bet on sports. Estimates are that just under $5 billion was bet on the Super Bowl this past February, and only 3 percent of that betting occurred in Nevada. That’s a lot of money. Vermont’s total GDP in 2016 was only a little over five times that amount.

States with lingering financial problems, like my home state of Illinois, could reap significant financial tax revenue from the new law. And in many cases because of this predicament, some states will move faster than others to embrace legalized sports betting.

In New Jersey (which brought the suit against the federal prohibition) and Mississippi, sports betting will probably be approved almost immediately. That the former is one of the most highly taxed states and that the latter is one of our poorest in terms of state tax revenue speaks volumes about the relationship between state financial coffers and the passage of certain gaming legislation.

I don’t attend many sports events, so the idea of fans around me pecking on their phones to place bets on the next play does not bother me. That said, many new “fans” will attend sports events now for the express purpose of placing wagers while watching contests in person. Companies that own sports broadcasting rights will likely be beneficiaries of this new law, which potentially increases the value of sports leagues, franchises and venues. More people betting means more eyeballs on the games, more money for commercials, and bigger profits. Thus, the intersection of publicly traded investments and public policy is very clear.

Like pebbles tossed into a still pond, new laws create ripple effects that touch many walks of life, and the investment world is not immune. Nothing happens in a vacuum. And this legislation proves that.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: Economic Classes, Stereotypes and Sly Stone

“I am no better... and neither are you; We are the same... whatever we do.”
from “I Like Everyday People,” as performed by Sly and the Family Stone

One of the worst byproducts of two emerging economic classes (the very rich and those living near the poverty line) is the recent trend of each blaming and resenting the other. Those in the 1 percent dislike being labeled as entitled, selfish money hoarders. Those without many economic resources resent being labeled as unmotivated and undeserving.

An economic system that features only the truly wealthy and those without any wealth, without much of a middle class in between, is bound to foster disillusionment and anger at the top and the bottom of the food chain. This kind of system can be sad, dispiriting, and dangerous, and pit us against ourselves.

Most wealthy Americans have labored incredibly hard to attain their financial station. Nothing is more irritating to folks who have clawed their way to the top than the inference that they are only successful because they were born into some “rich person’s club” where membership is bestowed at birth. If such a club exists, I haven’t found it. Virtually every client I’ve ever worked with has a story about overcoming adversity while building a decent nest egg. Success still requires enormous drive and energy. The suggestion that wealth is simply handed to our most successful entrepreneurs and business people is laughable.

Then there are those without wealth who are fighting to escape their economic circumstances. Yes, some could try harder, but most are working multiple jobs, scrambling to pay for an education, and generally applying what skills they do have to move up. Many matriculate at less effective public schools than do their wealthier counterparts. Those who strive to lift themselves see few legitimate financial success stories nearby that can serve as role models.

Members of Brazil’s wealthy class, in some cases, fear venturing out beyond gated subdivisions without bulletproof car windows. It’s a country suffering from advanced economic inequality. That kind of distrust and fear is contagious in a society divided by wealth. It’s a scenario we should avoid here at home. Communities of understanding and inclusion are safer and more economically empowering than places of resentment and distrust. It’s just good business sense that we need to sustain a healthy middle class.

Another practical downside of a shrinking middle class is that there are fewer dollars to buy the products being marketed by successful entrepreneurs and business owners. China’s remarkable growth has been built around the concept that a healthy middle class is an economic imperative. Here in the U.S., consumer spending has traditionally accounted for 70 percent of our GDP, and with a shrinking middle class, our national economic health is imperiled.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: Teacher Strikes Are ‘Blowin’ in the Wind’

“There once was a teacher of great renown...”
—from “The Teacher,” as performed by Paul Simon

Teachers in West Virginia have returned to the classroom after a nine-day wage strike. Teachers in Oklahoma staged a walkout earlier this month. At this writing, teacher walkouts in Arizona and Colorado are planned for the next few days. There’s a sense that these public employees have been dissatisfied for some time now. Why these protests are coalescing simultaneously is anyone’s guess. Perhaps, thank you Robert Zimmerman, it’s “Blowin’ in the Wind.”

Oklahoma’s minimum teacher salary starts at $31,600 and can go up to $46,000. Granted, it costs far less to live in rural Oklahoma than in New York, a state whose teachers are compensated better than any other. So, some argue that teachers in states like Oklahoma should be paid far less. But $31,000, even in Oklahoma, doesn’t afford a lavish lifestyle.

How much should we pay those who educate our young people? If we really care about the quality of education our kids are receiving, should we demonstrate that concern by reallocating funds in state budget sessions?

Many people say, “What’s in it for me? I don’t have kids,” or, “My kids are grown. Why do I care about teacher salaries and school funding?” And it’s an understandable stance. But here’s a thought: even if we don’t currently have children in school, we can all appreciate living in better communities. A better educated population saves us money. It’s a good economic decision. Investing in teacher salaries and schools means less unemployment, less crime, more productive taxpayers, more educated decisions being made about health care choices. These are all issues that end up costing us taxpayers a huge amount of money.

So is increasing teacher pay the only answer? No, of course not. Education, like all industries, faces a myriad of challenges beyond compensation. Difficult, complicated issues hound our educational institutions at every level. But one wonders what caliber of instructor could be recruited if starting salaries approached, say, $75,000 a year? How would our young people be impacted? In what ways would it reshape our culture?

In many countries, teachers are widely respected, and it is understood that their calling is an indispensable and valuable one. Here, we ask quite a lot of our teachers, including serving as bullet proof warriors and oftentimes funding their own materials when school supplies aren’t available, but we don’t compensate them particularly well.

As an investment advisor, I work with educators, and I haven’t met one who didn’t go into his or her own pocket countless times to buy needed educational supplies or for students.

Paying teachers more is like funding public libraries. They don’t normally turn a profit. But who wants to live in a community without one?

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: Dwindling Wealth, Middle Classes and Marvin

“Are things really gettin’ better, like the newspapers say? What else is new my friend, besides what I read?”
from “What’s Happening Brother?” as performed by Marvin Gaye

Unemployment has declined steadily since late 2009. Wage growth appears to finally be waking from its decades-long slumber, albeit very slowly for lower-income folks. And some industrial and blue-collar companies are so desperate for employees that they are offering sign-on bonuses to new workers.

The Federal Reserve is no longer artificially stimulating the economy. Their plan to progressively raise interest rates up to four times this year speaks to their confidence in an economy finally rebounding from the Great Recession.

On the surface, things seem to be getting better. In the soft underbelly of our economy, well, not so much. Here’s what we mean.

A recent survey found that a record 30 percent of American households, or almost a third of the population, enjoy no nonhome wealth. That means that if you take away the little equity they carry in their homes, they owe more than they own.

The number of households in this situation has been on a steady rise since the late 1960s, with the exception of the late 1990s, when the tech bubble temporarily inflated the net worth of households. What this means is that millions are one catastrophic illness, one serious accident or a few missed paydays from financial ruin. Forget affording college for kids or putting money away. This is why the housing bubble was so intertwined with the Great Recession; the stock market decline was accompanied by a strong real estate decline. A home equity loan may be a last resort for many in this 30 percent group, and if home values suddenly decline significantly, that option is lost.

Many factors are to blame for America’s relatively new “permanent underclass.” Economists often cite stagnating wages for the inflation-adjusted drop in living standards for lower-income Americans. Some cite the lack of participation in the stock market, with household stock ownership being around 10 percent lower than it was 20 years ago. You can’t benefit from a rising stock market if you don’t have the discretionary income to invest.

Those arguments have merit and are a part of the equation. But if I had to offer a primary reason why many Americans can’t get ahead it would be the cost of healthcare.

In 1960, healthcare costs were only 5 percent of GDP. Two years ago, health care costs were almost 18 percent of our GDP. In 2016, health care costs per person in the U.S. were $10,348; in 1960, they were a paltry $146 per capita. On average, healthcare costs have risen faster than both wages and inflation for decades on end. If we solve this conundrum, our middle class may flourish again.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.