Jill Schlesinger, CFP
Jill on money
Last week, I highlighted the best interviews that I conducted with creators in 2022 (Dan Pink, Annie Duke, Spencer Jakab and Abigail Disney).
This week I am highlighting the wonks, who broke through the chatter and helped explain economic and market trends occurring in real time.
• Guy Berger
As the economy reopened after the worst of the pandemic, something very weird happened to the U.S. labor market. All of the sudden, workers of all types were reconsidering their options. As analysts breathlessly recited the stats (the Job Openings and Labor Turnover Survey or “JOLTs” was ready for a closeup!), the term “Great Resignation” took hold.
Early in 2022, I spoke with LinkedIn principal economist, Guy Berger, who posited that millions of Americans were not quitting forever. Rather, they were finding new roles in different industries. He dubbed the trend “The Great Reshuffle.”
As soon as Berger laid out his case, I started hearing from people about the changes that he had described. Americans of all ages and all earning levels were rethinking their relationships with work. Some sought more consistent or fewer hours, others opted for lower levels of stress and quite a few used the pandemic as the springboard to start their own ventures. In addition to transitions among prime work age (25-54), Berger also correctly predicted that the pre-COVID-19 trend of Baby Boomer retirement would accelerate.
• James Mackintosh
Long before (okay, months in this case) politicians made Environmental, Social and Governance (ESG) investing a wedge issue, James Mackintosh penned a stinging series in the Wall Street Journal, which exposed the flaws of ESG investing.
While reports from large firms and the consultants that support them (both of whom often were trying to market and sell ESG funds) touted higher returns and lower downside risk, Mackintosh pointed out that in many instances, time horizon matters. Just think of it this way: If you owned oil and gas companies from 2015-2019, returns were terrible, but amid the surge in commodity prices, these same companies saw profits (and their stock prices) soar.
This is not to say that Mackintosh thinks that environmental, social and governance issues are not worthwhile, but his larger concern is that ESG investing “distracts everyone from the work that really needs to be done.” He adds: “Rather than vainly try to direct the flow of money to the right causes, it is simpler and far more effective to tax or regulate the things we as a society agree are bad and subsidize the things we think are good.”
• Kathy Jones
As the bond market started to tank, I turned to one of the great explainers, Kathy Jones, the chief Fixed Income strategist at the Schwab Center for Financial Research.
Even when I spoke to her in May, Jones underscored that 2022 was likely to be an awful year for bond investors because the pandemic inflationary spike had prompted the Federal Reserve to raise interest rates. Jones explained that as interest rates rise, existing bonds lose some of their value because their yields become less attractive than those offered by new bonds. So, to entice an investor into buying your existing bond, you would need to sell it for less than you paid.
Even though 2022 would likely be the worst year on record for bonds, Jones saw a bright spot: 2022 would also be a watershed year for those who had bemoaned low income producing investment opportunities for the past several years. The steep rise in yields would be a salve in the future for those who were either purchasing new bonds or reinvesting into bond funds at lower levels.
Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at firstname.lastname@example.org.
Check her website at www.jillonmoney.com. (C)2023 Tribune Content Agency, LLC.