This Strategy's Been Beating the Market

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View this email in your browser Welcome to StockUp, the investing newsletter that always draws a capacity crowd. This week, discover one investing strategy that feels good, does good, and still seems to make money. Plus, 10 reasons to expect another possible stock market crash ahead, and Las Vegas gambles that the house still wins against COVID-19. — Nathan Alderman, StockUp Editor INVEST LIKE SUPERMAN 1 Strategy That Might Prevail in a Pandemic Pandemics are, to put it mildly, no fun. The loneliness of isolation, the fear of infection, and the uncertainty we all face about the future can take their toll on anyone. But a recent Rolling Stone article found one approach that can help reverse the measurable physiological and psychological damage that isolation inflicts on the human body. And from the looks of it, what's true for people may also be true for portfolios. Researchers have found that people with eudaimonic well-being — "a sense of purpose and meaning, a sense of a commitment to some kind of self-transcendent goal greater than your own immediate self-gratification," according to UCLA scientist Steve Cole — don't show the same physical and mental strains in isolation. As it turns out, investing has its own sort of eudaimonic well-being. Environmental, social, and governance investing — ESG for short — prioritizes placing your money where it can do the most good for the world. These potential investments might be pursuing renewable energy to fight climate change; treating their workers with kindness and respect, and supporting efforts for equal rights and equal justice for all; or just taking the decidedly Foolish approach of making sure that their actions benefit all their stakeholders, from suppliers to employees to customers to shareholders. While your inner cynic may huff that this sounds like goody-goody wishful thinking, ESG investing has actually beaten the market during this insane up-and-down year for investors and the economy alike. As Fool analyst Brian Feroldi notes, one asset management company looked at the S&P 500 between 2014 and 2018, and found that companies within the index that ranked in the top one-fifth for ESG factors outperformed those in the bottom one-fifth by more than 25 percentage points over that period! And the performance of an ESG-focused ETF versus the S&P 500 suggests that those trends hold true both year to date and since that ETF's inception in late 2018. See that performance for yourself, and learn more about ESG investing, when you read the rest. Already subscribed to a premium service? Click here to view your subscriptions. Not a member yet? Click here to sign up! BRACE YOURSELVES 10 Reasons to Prepare for a Second Stock Market Crash In the five weeks following Feb. 19, the S&P 500 took a roller-coaster 34% drop — the quickest descent into bear market territory ever. Then, with U.S. unemployment worse than at any point since the Great Depression, the market ... surged back toward all-time highs? Fool analyst Sean Williams isn't popping champagne just yet. He's found 10 solid reasons why the market's descent may not be over. Here are the first five to get you started: We still don't know a lot about COVID-19. We're still figuring out how it spreads, among whom, and why, not to mention how best to treat and prevent it. (Handwashing, social distancing, and wearing nose-and-mouth-covering masks around other people — especially indoors — sure don't seem to hurt, though.) The second wave remains likely. Just when you thought it was safe to go back in the water (or to a restaurant, or the mall, or a movie theater)... Countries that have done a lot more than the U.S. to thwart the virus, a lot more successfully, are still struggling with new flare-ups and infections. Here in the U.S., we're not even done with the first wave, with hospitalizations and case counts soaring in states like Texas, Florida, Arizona, and California. Business won't bounce back quickly. Despite recent signs of improvement, retail sales remain way down, and unemployment's still way up. So long, stimulus. The funding from the CARES Act, which helped prop up the economy over the past few months, is starting to expire. Falling earnings ahead. There's no way around it: Most companies aren't going to report strong earnings for their second quarters, and likely not for their third quarters. But wait, there's more! Lest you were feeling too happy or optimistic (at least about the short term), we've got five further reasons for caution when you read the rest. ALEXA, IS DISNEYLAND SAFE YET? Not sure what to ask your smart speaker? Keep up with what's happening in the market by asking your Amazon Alexa or Google Home app to "Play Motley Fool Podcasts." ROLLING THE DICE Why Is the Las Vegas Strip Open Right Now? In Nevada's gambler's paradise, casinos that had stayed closed since March 15 began to reopen June 4. Friend of the Fool Jeff Hwang was one of the first patrons in line to see how the Strip and casinos in surrounding areas had changed in the interim. After combing just about every corner of the state to check on its games of chance, here's what he's concluded: Even before COVID-19, the Strip was in trouble. When it came to visitor and revenue growth, Vegas had been rolling snake eyes for years. Tougher odds on games, hidden fees to squeeze more money out of patrons, and a shift toward pricier hotel rooms that kept nonwealthy potential visitors away all hurt Las Vegas' ability to draw visitors. None of that seems to have changed post-pandemic. A Vegas outbreak's just a matter of time. Inadequate and unevenly applied safety measures don't seem to be working. Case counts and the percentage of positive tests in the area keep rising. Casinos are starting to report infections among employees, and several restaurants within various resorts have had to close after kitchen staff — who work in close quarters that make social distancing all but impossible — tested positive. What infects you in Vegas doesn't stay in Vegas. Reopening without the right procedures in place has left Las Vegas in danger of tarnishing its brand as a carefree place to cut loose. Wagering your money at the roulette wheel or the blackjack table seems a lot more appealing than wagering your health and well-being. What precautions should casinos be taking? And despite the lack of them, what forces have been pushing casinos to reopen anyway? Learn more about Jeff's firsthand experience when you read the rest. SHOP TILL THEY DROP FEATURED PODCAST What the Next Wave of Retail Bankruptcies May Look Like Struggles at the strip mall: Motley Fool contributor Dan Kline joins host Emily Flippen to discuss which consumer-goods sellers may be the next to go belly-up. Subscribe on iTunes I DRINK YOUR MILKSHAKE! Quick Reads The wrong kind of gusher: Expect a torrent of oil bankruptcies. What's with Warren? Why superinvestor Buffett's lagged the market over the last decade. Vote like your retirement depends on it: The next presidential election could decide Social Security's fate. GREAT RECIPE Social Media Post of the Week See all our Tweets! Join the 1,300,000+ people who follow us! We work fervently, fastidiously, and Foolishly to make sure all the facts and figures we publish in our emails are 100% accurate and up to date. Returns as of June 24, 2020. Have a question or topic you'd like to see covered in a future edition of Stock Up? Email us at stockup@fool.com. 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