We’re talking about climate risk (+ baby jaguar)
Hi Eagle Wealth Community,
Need a distraction from your day? Scroll down to the bottom of this email. There’s a baby jaguar.
But first, let’s talk about climate change.
The wildfires, hurricanes, and floods we’ve seen in 2020 (on top of an already-awful global pandemic) make this an important conversation to have. Think climate change isn't an issue? Well, the market consensus is moving in the other direction.
Insurers, government entities, and large investors are treating climate change as a major systemic risk to financial markets.1 Why? Because many companies and sectors are at risk from the costly heatwaves, wildfires, droughts, floods, and hurricanes that come with a warming planet.2
So, what does climate change mean for investors?
Investors worry that climate risk could cause the prospects of certain companies to drop dramatically and ricochet throughout the financial system (much like what happened during the 2008 financial crisis).
But, unlike a global issue such as the coronavirus, the effects will play out differently around the country and the world. Flood- or wildfire-prone areas could experience disruptions in business or find it difficult to insure homes and structures against damage. Agriculture could be damaged by droughts and heat stress. Already-warm areas could become too hot for comfortable habitation.
But, if the world goes all-in on sustainability too suddenly, there’s also a danger that the “transition risk” caused by new regulations or widespread shifts in energy use could also hurt markets or certain sectors of the economy.3
Well, what’s the good news?
There's hope. Many of the worst effects of climate change will play out over years and decades, not weeks and months. There’s time for people, businesses, and governments to adapt. And humans are infinitely adaptable. And there’s hope that the worst-case scenarios about a hotter world might not come to pass.4
We believe that optimism and pessimism can (and often should) co-exist. We’re pessimistic about the climate path we’re on. We’re optimistic that we will make the changes needed to get on the right path and steer away from the worst effects of climate change.
As your financial professionals, we’re staying on top of the growing body of risk models and research to help you chart a path through an increasingly uncertain world. You’ve heard us say it time and time again, when there’s volatility in the markets we have to remember what we can control…ourselves. You already have a financial plan, tailored to your goals, now it’s time to stay the course.
Ok, enough about climate change. Here are the distractions we promised.
Listen, we know distractions can only last so long. So, if you have worries (whether they be climate change, social issues, political or personal) and are wondering how they may impact your financial plan, let’s talk.
Your Eagle Wealth Team
Give a man a fish and you feed him for a day, teach him how to fish and you feed him for a lifetime – and they also have a whole bunch of fun while they’re at it!
Last week our favorite financial dynamic duo, Mat & Ian, headed to the Lower Deschutes River for their annual fishing trip. Mat’s catch of the day included a whopping 18lb wild steelhead (the average fish in the Lower Deschutes is 8-10lbs)!