5 min read

Food For Thought

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Happy Thursday,

Wow! What a week… With financial headlines blaring everywhere and stock trading screens bathed in red more often than green, it is normal to be jittery. There’s no saying how long the market will swing in response to the Fed’s rate hiking campaign and the many other elements driving the volatility.

When the going gets tough, we often go to the experts, but — to be honest — there isn’t a lot of consensus on where prices are headed, whether the bottom is near, or when inflation will peak. Some are saying that the market is undervalued and suggesting that younger investors “think of this as everything is on sale.” Others say that the Fed’s action came too late and that inflation will continue to push stock prices lower. Making predictions more hazy are the multiple elements at play — from inflation data to gas prices to interest rate hikes to war. As Robert Dent, senior US economist for Nomura Securities, said in a recent interview: “This is a very big change, and the markets are having trouble processing it.”

We hope the well-documented historic benefits of a long-term focus helps you keep a steady hand both when markets go up… and when they come down. While the volatility and ups and (mostly) downs of the stock market are driving the headlines, don’t forget that the basics of investing do not fly out the window during hectic times. Last week we shed some light on what to consider if you think a recession is coming and want you to remember that FWIW has the resources you need as you set your course as an investor.

Some that we’ve found particularly relevant (and grounding) over the past week:

And for when terms and acronyms pop up that make your eyes glaze over: our ever-growing glossary of common terms.

News you can use

Graphic of newspaper with magnifying glass

The market selloff over the past week has been widespread, with few companies or sectors untouched. The S&P 500 dropped below 4,000 for the first time since March 2021 and all broader market indicators were red most of the week, with CNBC reporting that all but 3 of the 53 tech-related companies that went public in 2021 are trading at or below their opening price.
May is mental health awareness month, and Google says that more Americans are looking for mental health resources than ever before. In the wake of Covid, companies like Teladoc and Betterhelp are making help accessible via the internet, and funding and acquisitions of startups in this space jumped last year. But privacy is a major concern and authorities are investigating how these platforms prescribe controlled substances.
ESG and sustainable investing came under fire on a number of fronts this week. Blackrock announced they would support fewer environmental shareholder proposals in 2022 as they are finding them to be “constraining” and “prescriptive.” In addition, former Vice President Mike Pence called for ESG to be “reigned in”, and Congressional Republicans have called for hearings on the SEC’s proposed climate disclosure rules.

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The way to a sustainable investor’s heart…

Food is a basic human need. It’s culture and art, it’s how Grandma shows she loves us, and we’ve been developing new ways of doing it since the beginning of time. It is even how José Andrés and the team at World Central Kitchen respond to disasters: reconnecting people when their lives have been disrupted (and inspiring us). The food system has been under real pressure over the last few years, with prices rising worldwide. The situation has worsened with the war in Ukraine, sanctions on Russia, and drought conditions in many parts of the world. The world eats 11 million pounds of food every minute, and agriculture accounts for 25% of greenhouse gas emissions, 80% of deforestation, 70% of water use, and 78% of ocean and freshwater pollution — so there are few areas where your investment decisions can have as much impact.

Significant sustainable food innovation is being driven forward by many private startup companies aiming to disrupt the traditional agriculture and food sectors. The good news for individual investors: there are a growing number of public companies and funds in this space that you can consider for your own delicious portfolio. (Remember, mentions of firms are only examples and aren’t buy recommendations.)

Technology is being used in different ways to improve the efficiency, sustainability, and yields of food growers. This is commonly known as AgTech, or agriculture technology, and includes cool tools like drones for monitoring, digital crop trading, seed-planting robots, soil DNA testing, and self-driving tractors. Several AgTech firms are now traded publicly, like AppHarvest, Hydrofarm Holdings, GrowGeneration, Kalera, Trimble, and AgEagle Aerial Systems; funds that hold many of them include Global X AgTech & Food Innovation ETF (KROP) and VanEck Future of Food ETF (YUMY).

There are also food companies looking to change what’s in your food. Some focus on organic, natural, GMO-free, or antibiotic-free goods, like United Natural Foods, Hain Celestial Group, and Maple Leaf Foods. The mission-focused salad specialist Sweetgreen is working on making fresh food accessible to underserved communities and schools, and recently announced a pilot for drive-thru convenience. Makers of plant-based alternatives to animal products, like Beyond Meat and Oatly, claim to deliver benefits to people’s health and the environment.

Finally, it is important to remember the role that major ag companies can play in this space. While much of the innovation is being led by startups, larger players like Mars, Kraft Heinz, Tyson Foods — which has its own plant-based brand, Raised & Rooted — and ADM are driving change as well through investments in and acquisitions of startups. Mention of these companies may throw up red flags to some values-aligned investors, but we would be remiss if we did not include them, as the scale they can bring to the industry is breathtaking. Remember, we are fans of progress in these fields and are reluctant to hold out for perfection.

Since the holdings and focus of individual companies can be difficult for values-aligned investors to wade through, ETFs may be a good option. In addition to the funds listed above, some of the larger funds in the space include: Fidelity Agricultural Productivity (FARMX), iShares MSCI Global Agriculture Producers ETF (VEGI), and First Trust NASDAQ Food and Beverage (FTXG). As always, be sure to look into their holdings and philosophies to ensure they are in line with your values.