Happy Labor Day!

I hope you have some fun plans for the long weekend. I’ll be down at Canandaigua Lake all weekend for the Ring of Fire, some end-of-summer lake action, and maybe (probably) some tito’s. I also found part of the Finger Lakes trail that goes from from Gannett Hill and ends at one of my favorite restaurants so I will probably do that run at some point. As an extremely food-motivated individual it’s important to set goals with a meal at the finish line. On to the reading…

George Soros and The Increasing Risks of Investing in China


  • China’s economy has thrived in spite of communist rule. The Communist party benefited from several major trends but these may now be reversing.
    • The workforce was rapidly expanding but has likely hit an inflection point and will shrink in the coming decades.
    • Real estate was a terrific source of wealth generation but this opportunity may be playing out.
    • Investment flows from developed markets helped China modernize but the Communist party is putting this at risk by taking an increasing role in the Chinese economy.
  • As the Communist party takes a much more active role (with Xi at the helm , of course) the risks to China’s economy are increasing. This is coming at a time when the trends that supported China’s economy are concluding or changing.
  • We’re happy to see Soros call-out the BlackRock fund but this sort of thing also scares us. Know what you own!!! We worry many investors rely on cursory due diligence and simply take an ESG label at face value.
    • Goldman’s ESG Emerging Markets Equity Fund (GEBIX) has 11% of its capital in Alibaba and Tencent and significant stakes in some other Chinese banks. In total, China represents 36% of the fund’s capital.
    • Alibaba and Tencent are not independently run for the benefit of shareholders but are clearly under the thumb of Xi Jinping and subject to arbitrary and political pressures. How does this adhere to Goldman’s ESG criteria?

ESG Rating Breakdown


  • Continuing on with Soros’ knock on ESG and the governance of Chinese companies… A solid summary of the different ESG rating systems. It’s not that the factors behind ESG investing don’t work or that ESG-investing is a sham. It’s simply that the definitions behind ESG investing are so undefined it’s impossible to define and measure the performance of “ESG” versus non-ESG.
  • As the author shows, ESG rankings are the wild west.
    • “While a strategic focus on- and investment in- ESG plays a critical role in an enterprise’s long-term financial resilience and performance, our analysis casts doubt on the ability of current ESG ratings to consistently convey this critical information to investors.”
  • The investment management industry is used to bond-ratings which are closely correlated. If Fitch rates something as junk, chances are Moody’s and S&P are going to agree. In ESG investing, this is not the case.
  • Each ESG rating group has its own process, weightings, and methodologies and each ESG manager can use different ESG ratings in different ways.
  • Of the ESG-labeled funds on the market today, the ones we have analyzed are not compelling investments. We are strong believers in the ESG factors but we think these should be uncovered by regular due diligence.

The Founding of Labor Day


  • No one knows who exactly started Labor Day but it has a bloody past…
  • At the height of the Industrial Revolution when capitalists and labor regularly clashed, the first Labor Day parade was held on Sept 5, 1882 in NYC w hen 10,000 workers took unpaid time off.
  • “Congress would not legalize the holiday until 12 years later, when a watershed moment in American labor history brought workers’ rights squarely into the public’s view. On May 11, 1984, employees of the Pullman Palace Car Company in Chicago went on strike to protest wage cuts and the firing of union representatives…. To break the Pullman strike, the federal government dispatched troops to Chicago, unleashing a wave of riots that resulted in the deaths of more than a dozen workers.“
    • Pullman Palace Car Company probably ranks pretty poorly on ESG…

Patriots Cut Cam Newton


First known video of Cam Newton and a young Mac Jones…

September is Ovarian Cancer Awareness Month

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