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  • Zero interest-rate babies are facing their day of reckoning. It’s time this generation of startups learns how to fly

    Zero interest-rate babies are facing their day of reckoning. It’s time this generation of startups learns how to fly

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    A decade of low interest rates and cheap capital birthed a startup generation of “zero interest-rate babies.” Now that rising interest rates have turned public markets sour on disruptive, high-growth tech companies, investors are pushing these ZIRBs out of the nest.

    In 2024, they must learn how to fly before they hit the ground. The stakes are not limited to these companies. The value of high-growth, disruptive tech companies is equivalent to about 7.3% of the U.S. gross domestic product. There are more than 1,200 unicorns with billion-dollar-plus valuations in the world, according to Pitchbook data. More than half of these (approximately 600) are based in the U.S. Not far behind is an army of soon-to-be unicorns, valued at more than $500 million.

    Even as changing market conditions reveal many of their weak spots, most of these companies have so far been immune to public scrutiny. But these ZIRBs share a troubling trait: they were able to hide severe structural flaws beneath enthusiastic but unsustainable growth conditions.

    To learn how to really fly, ZIRB CEOs, CFOs, and investors need to throw out traditional backward-looking financial analyses and build confidence in the solidity of the company’s economic engine and subsequent paths to growth and profitability. These paths should be clear, well-framed, and consistent with the company’s end goal in terms of financing options. The following fundamental questions can help establish the feasibility of these paths:

    What is the quality of the company’s revenue?

    The key element to look for here is the truly “recurring” nature of the business, including a critical analysis of what is behind Annual Recurring Revenue (ARR). In the case of non-software businesses, this means understanding how much revenue is re-occurring and making sure that high margins are associated with this revenue stream. Quality of revenue also refers to customer base quality and diversification as well as the strength of the user or customer’s own economics.

    What is the quality of the company’s growth?

    It is critical to confirm that growth has a solid foundation, grounded on the existing customer base. For SaaS businesses, this is best measured through net revenue retention (NRR, the percentage of revenue now received from a customer compared to a year ago, taking into account expansion) and gross revenue retention (GRR, the percentage of revenue from a customer that remains after one year). Once a decision is made on the quality of growth for existing customers, it will be key to assess the company’s ability to fuel the new business engine efficiently.

    In marketplace businesses, quality of growth can be reflected in the ability to increase the take rate. For example, Uber’s take rate has risen (29% in 2023 vs. 19% in 2021) as the company improved its value proposition.

    What is the quality of the company’s margins?

    With the end of subsidized growth, only strong gross (or contribution) margins can support a sustainable cost structure that also requires innovation and investment in research and development to remain competitive. At a cash-flow level, strong operating margins are needed to drive growth at scale for these businesses.

    How resilient is the company?

    Once a decision is made on the path to growth and profitability, ZIRBs will also need to be assessed through the lens of their resilience. If financial controls are reviewed as a part of legal audits, governance stands out as perhaps the most critical point here because it can lack a clear framework and should be assessed deeply.

    This must include guardrails to ensure founders don’t cross the line between high confidence and self-belief, which are key to building true industry leaders, and exaggeration–or even fraud. As these companies continue to build our future and transform our societies, their resilience also rests on their ability to comply with essential environmental, social, and governance (ESG) criteria, notably climate and diversity, equity, and inclusion (DEI) considerations.

    Only by answering these questions can investors accurately assess the prospects and viability of a high-growth tech company. Many CEOs and investors will discover weaknesses within the ZIRB universe over the coming months, resulting in some high-profile failures.

    The good news is that there’s still time for most of these babies to course-correct by adapting to the new capital paradigm and raising the probability of reaching a healthy adulthood.

    Raphaelle d’Ornano is the CEO of strategic consultancy D’Ornano+Co.

    More must-read commentary published by Fortune:

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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  • How to navigate market risk from interest rates, the economy and politics in 2024

    How to navigate market risk from interest rates, the economy and politics in 2024

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    As the U.S. Federal Reserve’s three-year reign in the headlines potentially comes to an end, an analysis of this year’s market themes can offer valuable insights for predicting trends and ensuring attractive returns in 2024.

    Beyond the central bank’s actions, pivotal factors shaping the investment landscape this year include fiscal policies, election outcomes, interest rates and earnings prospects.

    Throughout 2023, a prominent theme emerged: that equities are influenced by factors beyond monetary policy. That trend is likely to persist. 

    A decline in interest rates could significantly increase the relative valuations of equities while simultaneously reducing interest expenses, potentially transforming market dynamics. Contrary to consensus estimates, 2023 brought a more robust earnings rebound, leaving analysts optimistic about 2024.

    The 2024 U.S. presidential election, meanwhile, introduces a new element of uncertainty with the potential to cast a shadow over the market during much of the coming year. 

    Choppy trading, modest earnings growth

    Anticipating a choppy first half of the year due to sluggish economic growth, we see a better opportunity for cyclicals and small-cap stocks to rebound in the latter part of the year. As uncertainty around the election and recession fears dissipate, a broad rally that includes previously ignored cyclicals and small-caps should help propel the S&P 500
    SPX
    higher. 

    Broader macroeconomic conditions support mid-single-digit growth in earnings per share throughout 2024. Factors such as moderate economic expansion, controlled inflation and stable interest rates are expected to provide a conducive environment for companies, enabling them to sustain and potentially improve their earnings performance. We estimate EPS growth of 6.5%. This projected growth aligns with the broader market sentiment indicating a steady upward trajectory in earnings for the upcoming year, fostering investor confidence and supporting valuation expectations across various sectors.

    “ If the economy has not been in recession at the time of the first rate cut but enters one within a year, the Dow enters a bear market.”

    When it comes to U.S. stock-market performance around rate cuts, the phase of the economic cycle matters. When there has been no recession, lower rates have juiced the markets, with the Dow Jones Industrial Average
    DJIA
    rallying by an average of 23.8% one year later.

    If the economy has not been in recession at the time of the first cut but enters one within a year, the Dow has entered a bear market every time, declining by an average of 4.9% one year later. Our base case is a soft landing, but history shows how critical avoiding recession is for the bull market as the Fed prepares to ease policy.   

    Big on small-caps

    This past year has posed a hurdle for small-cap stocks due to the absence of a driving force. These stocks typically perform better as the economy emerges from a recession. While they are currently undervalued, their earnings growth has been notably lacking. If concerns about a recession diminish, a normal yield curve could serve as a potential catalyst for small-cap stocks.

    Growth vs. value

    The ongoing outperformance of megacap growth stocks that we saw in 2023 might hinge on their ability to sustain superior earnings growth, validating their current valuations. Defensive sectors in the value category, meanwhile, are notably oversold and might exhibit strong performance, particularly toward the latter part of the first quarter. Should concerns about a recession dissipate, cyclical sectors within the value category could outperform, particularly if broader market conditions turn favorable in the latter half of the year.

    Handling uncertainty

    The Fed’s enduring influence regarding the prospect of a soft landing in 2024 remains a pivotal point in the market’s focus. Considering the themes of the past year and the multifaceted influences on equities beyond monetary policy, investors are advised to navigate through uncertainties stemming from unintended fiscal shifts, upcoming elections and the impact of fluctuating interest rates. While a potentially choppy start to the year is anticipated, it could create opportunities for cyclical and small-cap stocks later in the year.

    Ed Clissold is chief of U.S. strategies at Ned Davis Research.

    Also read: Mortgage rates dip after Fed meeting. Freddie Mac expects rates to decline more.

    More: After the Fed’s comments, grab these CD rates while you still can

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  • Forget the Turing Test. AI needs to pass the Summer Camp Test before it can take over the world

    Forget the Turing Test. AI needs to pass the Summer Camp Test before it can take over the world

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    As I type this, just one browser tab over is a menacing spreadsheet. Impossibly long, it’s crammed with numbers and notes. I’m dreading returning to it–and wondering if I have the resolve to untangle the logic and probability problems within.

    I’m a senior advisor for artificial intelligence (AI) at Mozilla and VP of AI and machine learning at Workday. But this spreadsheet has nothing to do with my day jobs, or even computer science. I’m doing something a bit more difficult: Signing my three kids under 10 up for summer camp.

    It’s an incredibly complicated, convoluted, and time-consuming process. Parents often need to begin six months in advance–when we’re just getting our first snow storms here in Boston. And even then, it’s challenging: Earlier today I was placed in a 47-minute digital queue just to access a registration website. So why don’t I simply outsource this to an AI assistant?

    I can’t. And that should tell you something about the hype you hear about AI–especially the consumer-facing variety.

    About a year ago, when ChatGPT launched, AI came close to passing the Turing Test, the famous thought experiment devised by English mathematician Alan Turing in 1950. If AI could converse in a manner indistinguishable from a human, Turing said, it would truly be “intelligent.”

    Not long after this milestone came the hype. Tech leaders sounded off not only on AI’s unlimited potential but also its existential danger. Now that we have intelligent machines among us, they argued, we are just a few lines of code from utopia–or dystopia.

    In reality, that’s not the case.

    Tools like ChatGPT and the large language models (LLMs) that power them are an impressive feat of computer science. They can be incredibly useful, too. But all-powerful? Just ask any harried parent trying to get a head start on summer camp registration. 

    As many parents know, figuring out a schedule for the eight weeks that school is out is an odyssey. You need to find the right programs, at the right times, in the right places, at the right price. And those are just the basic logistics. Then come the deeper questions: Where are the kids’ friends going? Is the camp’s vibe right? Is admission competitive? Can we carpool? How much sunblock is required?

    Just last week, Boston Globe correspondent Kara Baskin detailed this challenge perfectly in her column titled “Parents, prepare for battle: A memo from your favorite cutthroat Boston summer camps.”

    Right now, this odyssey can’t be outsourced to the AI assistants on the market. It still takes a human being to navigate the quantitative and qualitative complexities of summertime extracurriculars. Even Sissie Hsiao, Google VP and General Manager for Google Assistant and Bard, has lamented AI’s inability to solve the complications of summer camp registration.

    That’s lesson number one: AI isn’t about to take over the world; it can’t even solve summer camp. So take AI futurist doomsday hysteria with a grain of salt. Let’s worry when AI passes the Summer Camp Test, not the Turing Test.

    Often, AI hype claims the tech will level the playing field, eliminating disparities that have long plagued society. Yet AI assistants are being tailored for the people who need them least: professionals ensconced in the corporate realm.

    Growing up, my mom–who had limited English, limited tech literacy, and a job that paid less than minimum wage–could have really benefited from an AI assistant when navigating things like summer camp registration. She didn’t have 47 minutes to wait in a digital queue. But tools like ChatGPT still aren’t advanced enough to untangle the actual, hard problems for people with less means and access.

    The Summer Camp Test hints at what we need more of in AI: Systems built to solve real problems, from the mundane (like summer camp logistics) to the game-changing (like novel pharmaceutical research). What we don’t need? More hype about omnipotent AI.

    Kathy Pham is a computer scientist, senior advisor at Mozilla, VP of AI and Machine Learning at Workday, and a visiting lecturer at Harvard Business School. Opinions here are not representative of any employers, and only of her most critical role as a parent.

    More must-read commentary published by Fortune:

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

    Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.

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  • The markets are starting to realize just how hawkish the Fed is–and reckoning with higher-for-longer interest rates

    The markets are starting to realize just how hawkish the Fed is–and reckoning with higher-for-longer interest rates

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    The first Federal Open Market Committee (FOMC) meeting of 2024 is behind us and the markets no longer seem convinced that we will see an interest rate cut the next time the 12 committee members meet in March. Some 34% of the market expect a rate cut at the next meeting, down from 73% just one month ago. Indeed, I do not expect the Federal Reserve to start cutting rates until the end of the second quarter–at the earliest.

    The economic data suggests there is currently very little justification for a rate cut come March. Inflation came in higher than expected in December, the labor market remains as tight as a drum, and retail sales rose more than projected last month. Granted, much of this was driven by the festive season, and the annual January blues will almost certainly drive inflation and spending lower. However, this will likely be a short hiatus before a rebound later in the quarter. Overall, the economy is still running hot, and it is economic data that drives the FOMC’s monetary policy decisions.

    Sticky core inflation will keep the Fed on its toes

    Inflation in December surprised the market with a rise from 3.1% to 3.4%, while core inflation–the Fed’s preferred measure–rose 0.3% month-over-month (MoM) and 3.9% year-over-year (YoY). Our data reveals that over recent months, inflationary pressures have come primarily from the services sector, though December also saw an uptick in luxury goods purchases.

    In turn, services inflation has been exacerbated by the tight labor market. Despite some talk of a softening of labor conditions, December’s unemployment rate remained ultra-low at 3.7%. Initial jobless claims have averaged just under 210,000 in recent weeks–well below historical averages. Indeed, we have not seen a single monthly decline in jobs since 2020.

    At the same time, wage growth has sped up again, hitting a rate of 6.5% YoY in November, up from 5.7% in October, driven in part by pressure from unions. Higher wages, combined with spending on credit and stronger consumer sentiment, have fuelled consumer spending. U.S. retail sales beat analysts’ expectations in December with a rise of 0.6% MoM and 5.6% YoY.

    A more hawkish FOMC

    Against this economic backdrop, the market seems to have misinterpreted the signals from Fed Chairman Jerome Powell. Though the Chairman said a discussion of rate cuts is coming “into view”, he has also been consistently clear that his primary objective remains the 2% inflation target–even at the expense of an economic slowdown. There is nothing in today’s meeting that would suggest he has had a change of heart.

    Indeed, Powell’s rhetoric throughout most of 2023 was more hawkish than the market gave him credit for, though we have seen his position soften over the last two months. Yet with core inflation at nearly double the Central Bank’s target, there is little reason to believe we will see a cut this quarter.

    If anything, this year’s changing of the guard at the FOMC may lead to an even more hawkish stance. Only one of the four incoming members (San Francisco Fed president Mary Daly) has publicly called for a discussion on rate cuts. Richmond Fed president Tom Barkin wants to see further falls in inflation, Atlanta’s Raphael Bostic predicts cuts in the second half of the year, and Cleveland’s Loretta Mester says the market’s expectations have got “a little bit ahead” of the Fed–a diplomatic understatement if ever we’ve heard one.

    It will also be interesting to see whether the committee can maintain the same level of cohesion in its decisions in 2024. After all, this year’s monetary policy calls are likely to be more contentious than what we saw in 2023. A more divided FOMC could also delay any interest rate cuts.

    A delicate balance

    After a tough 2023, a victory in the Fed’s battle against inflation is now within reach. However, with the economy running hot and an uncertain macroeconomic climate, it is more difficult to predict the course of inflation than it was last year. Several factors, including growing geopolitical unrest, could push inflation higher. However, the effects of monetary tightening also take time to come through, so we may soon begin to see an economic slowdown. As such, balancing its dual mandate will be no easy feat for the Fed this year.

    While the economy remains strong and the threat of sticky inflation lingers, the Fed will likely continue to take a cautious stance on interest rates until the murky backdrop becomes clearer. Even when core inflation finally recedes towards the 2% target, we do not foresee the aggressive cutting cycle that many pundits were forecasting. Higher-for-longer rates are here to stay–and it’s time for the market to accept this new paradigm.

    Oliver Rust is the head of product at independent data aggregator Truflation.

    More must-read commentary published by Fortune:

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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  • When Private Enterprise Fails – Jim Hightower, Humor Times

    When Private Enterprise Fails – Jim Hightower, Humor Times

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    In cities all across America, private enterprise is driving poor and middle-class families out of their own towns.

    In cities all across America, an infiltration of private enterprise wealthy investors, developers and bankers is driving poor and middle-class families out of their own towns.

    What’s at work here is the relentless financial shove of high-dollar gentrification. House by house, block by block, moneyed interests suddenly (and often secretly) buy up properties, bulldozing modest family homes to erect sprawling edifices for the rich. It’s a profiteering money grab that intentionally prices out regular homebuyers. Worse, it also artificially skyrockets property taxes for the area’s longtime homeowners, forcing them to sell out and leave town.

    This financial whirligig is enormously destructive to a community’s crucial sense of fairness and… well, community. For one glaring example, look at who likely does NOT live in your city: schoolteachers, fire fighters, police, nurses, utility crews and others who’re essential to making any city work.

    If the so-called “free market” can’t (or won’t) provide affordable spaces so these families can “come home,” where they belong, then the community itself must step up to meet the need with creative public initiatives.

    The good news is that many cities are doing just that, including where I live. Fed up with losing teachers who endure spirit-sucking, hourlong commutes from distant suburbs, Austin’s school board recently created its own affordable housing arm. It’s starting to build hundreds of rental homes affordable to teachers, cafeteria workers, bus drivers and other school employees. In addition, the district has formed a “public facility corporation” that partners with local developers and groups like Habitat for Humanity to build and sell family homes at prices within reach of the city’s school employees.

    Housing is not only a basic human need but also a community essential that can’t be left to the whims and greed of developers.

    Martin Luther King Jr. Didn’t Just Dream, He Organized!

    It’s time once again for America’s annual sing-along of “We Shall Overcome,” in celebration of Rev. Martin Luther King Jr.’s birthday. As even schoolchildren know, he famously had a dream. His dream was that over the long arc of history, America will someday achieve racial harmony — if Black people will stop being pushy about racial injustice.

    Oh, wait — that’s the right wing’s current whitewashed version of King’s dream, scrubbing out his condemnation of brutally racist white leaders and institutions (which still repress Black progress and foment racial hatred). And far from meekly waiting on “the arc of history,” King rallied people to take immediate action, calling it “the fierce urgency of now.”

    He sought “a grand alliance of Negro and White (to) eradicate social evils (that) oppress both White and Negro.” At the time of his assassination, he was actively forging that populist coalition to battle plutocratic wealth.

    Indeed, King knew the history he sought to revive. The post-Civil War Populist Movement, he said, “began awakening the poor White masses and the former Negro slaves to the fact that (both) were being fleeced by (Southern aristocrat interests).” That movement, he noted, intended to write a black-white voting bloc “to build a great society of justice where none would prey upon the weakness of others; a society of plenty where greed and poverty would be done away.”

    But the unifying, democratic promise of Populism, King rightly explained, so terrified the aristocracy of wealth that its leaders made it “a crime for Negroes and Whites to come together as equals at any level.” Thus moneyed elites effectively killed the people’s Populist party in the 1890s — but not the people’s Populist spirit.

    So rather than merely celebrating a birthday, let’s recommit to King’s real dream of a multiracial, democratic Populism.

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  • Why Donald Trump is unlikely to get his wish for a 2024 U.S. stock-market crash

    Why Donald Trump is unlikely to get his wish for a 2024 U.S. stock-market crash

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    Donald Trump is unlikely to get his wish that a U.S. stock-market crash occurs this year.

    I’m referring to the former U.S. president’s comments last week that he hopes the market crashes in 2024, since if he is elected in November and takes office a year from now, he doesn’t want to be another Herbert Hoover. Hoover was President when the stock market crashed in 1929.

    The stock market did plunge in two of the last four presidential-election years, so it’s understandable why one would worry that 2024 could see a repeat. In 2008, in the middle of the Global Financial Crisis, the S&P 500
    SPX
    lost 38.5% for the year. In 2020, as the economy ground to a halt because of the COVID-19 pandemic, the S&P 500 lost 34% in little more than a month’s time.

    It’s possible that a crash could occur at any time, of course, so a crash this year can’t be ruled out. Nevertheless, the odds of one occurring this year are significantly below average. That’s according to the latest “State Street US Froth Forecasts,” which are derived from research on crashes conducted by Robin Greenwood, Professor of Banking and Finance at Harvard Business School.

    In that research, Greenwood and his co-authors found that it’s possible to identify when there is an elevated probability of a crash. In an interview, Greenwood said that “crash probabilities are low” right now, not only for the market as a whole but “across the board” for individual market sectors as well.

    Greenwood’s model is based on a number of factors, such as performance over the trailing two-year period, volatility, share turnover, IPO activity and the price path of the trailing two-year runup. For example, he and his fellow researchers found that when an industry beats the market by 150 or more percentage points over a two-year period, there’s an 80% probability that it will crash — which they define as a drop of at least 40% over the subsequent two years. As you can see from the accompanying chart, State Street is reporting low crash probabilities for all sectors — in each case well below the average forecasted crash probabilities of the past five years.

    These probabilities don’t mean that stocks will have a great year in 2024. A new bear market could begin this year without the decline satisfying the researchers’ definition of a crash.

    Nevertheless, the takeaway from the State Street US Froth Forecasts is that there are bigger things to worry about this year than the possibility of a crash.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: Trump says he hopes market crashes in 2024 under Biden: ‘I don’t want to be Herbert Hoover

    Also read: Iowa caucuses are make-or-break for Donald Trump

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  • Let's Send All Billionaires to Mars! – Jim Hightower, Humor Times

    Let's Send All Billionaires to Mars! – Jim Hightower, Humor Times

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    Why not just send our “genius” billionaires to Mars, and let them report back?

    Unfortunately, in the short time we homo sapiens have existed on this 4.5-billion-year-old Planet Earth, we have trashed the place. Climate change, deforestation, desertification, plastics in everything, etc.

    Fortunately, though, we large-brained hominids have evolved an almost-magical resource that promises to be our salvation: Billionaires!

    One of the priceless benefits of amassing a multibillion-dollar, self-regenerating pile of wealth is that it automatically establishes you as “a Genius.” Never mind that you’ve most likely acquired your stash through some combination of inheritance, grift, rank exploitation, tax dodging and such; you’re suddenly treated as a savant whose most fanciful nonsense is now taken seriously by the establishment.

    Thus, we presently have two overstuffed money hogs, Elon Musk and Jeff Bezos, preaching that Earth is a lost cause. But, no problem, for they are designing space technologies that will let a cadre of select humans escape doom by colonizing the Moon and Mars. Using untold billions of our tax dollars, the two are in a PR race to land their spaceships first. But — hey, bozos! — what then? You think our blue-green planet is hell, try living with no air, water, soil, little gravity and zero protection from the incessant bombardment of cosmic radiation.

    Well, postulate the billionaire space cadets, “we” (actually meaning us taxpayers) will just geoengineer Mars and the Moon, terraforming them into an Earthlike oasis. But, wait — as astrophysicist Neil DeGrasse Tyson pointed out a decade ago — “If you had the power to terraform Mars into Earth, then you have the power to turn Earth back to Earth.”

    Tyson later said he’d only go to Mars if the designer of the colony “had sent their mother first.” Nice… but I have no doubt Musk and Bezos would gladly sacrifice their moms to advance their egos.

    Forget Millionaires. A Few Billionaires Are Now Stealing Our Country

    In the serious business of politics, a little humor can be your best friend.

    I saw its impact 30 years ago in Austin when a group of young, irreverent democracy activists decided to try limiting corporations that were drowning our local elections in their special-interest campaign cash. The upstart group named their grassroots effort a name that was a bit whimsical, yet pointed: “Austinites for a Little Less Corruption.”

    It caught on. Even though the entire corporate, political and media establishment united in furious opposition to the reform, 70% of voters rather joyously shouted, “YES!”

    Now more than ever, we need to rally grassroots Americans in a high-spirited, openly rebellious campaign to save our people’s historic democratic values. An autocratic coterie of plutocratic supremists with unlimited corporate funding already dominates our elections, public policy, agenda and our highest courts. It’s not a secret conspiracy; they’re quite open about it!

    But forget the days of million-dollar donors; the arsenal of the systemic corruptors has now been nuclearized. For example, Charles Koch has just injected $5 billion in his 2024 political operation. Tim Dunn, an ultra-right-wing Texas oil baron and extremist GOP sugar daddy, has just sold his fracking empire for $12 billion, gaining a new gusher of cash to weaponize his intention to impose laissez-faire rule over America.

    It’s hard to visualize how much more anti-democratic firepower one gets by spending billions instead of mere millions. Think of the difference not in terms of dollars, but time. If you have a million seconds, that’s 11 days. But a billion seconds — that’s more than 31 years!

    We can have no progress — no democracy — without getting corporate money out of America’s political system. For info and action, go to citizen.org.

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  • The U.S. health care system sends women mixed messages about maternal mental health. Change is needed now

    The U.S. health care system sends women mixed messages about maternal mental health. Change is needed now

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    When one thinks about an expecting or new mother, idealized images of a smiling woman cradling her stomach or holding her newborn may come to mind. Unfortunately, for many women, the realities of pregnancy and postpartum are far more complex. For some, it is an unexpected and unsettling trigger for something serious and potentially quite dangerous.

    Postpartum depression (PPD) is a public health crisis that has lived in the shadows of society despite being one of the most common medical complications associated with childbirth. It is estimated that about one in eight women in the U.S. experience symptoms of PPD, with the prevalence reported to be much higher among Black and brown women. PPD is more prevalent than preterm birth, preeclampsia, or gestational diabetes, all of which are commonly screened for and treated urgently. Yet women with PPD often face societal stigma and barriers to treatment access.

    PPD is not the “baby blues,” and the consequences, if left untreated, can be devastating. PPD can have a lasting generational impact, leading to the potential for delayed or impaired long-term developmental, psychological, cognitive, and physical outcomes in children. It is estimated that the types of outcomes associated with perinatal mood and anxiety disorders cost the system nearly $2 billion for all impacted children through the first five years of life. Suicide is a leading cause of maternal mortality and accounts for up to 20% of postpartum deaths. These staggering statistics speak to the urgency to treat maternal mental health conditions.

    As the CEO of a company deeply committed to maternal mental health, with the only two FDA-approved treatments for women with PPD on the market, and as a psychiatrist on the front lines of clinical practice supporting women during this vulnerable period, we have a shared vision for a better path. We believe that an immediate and holistic investment must be made in addressing shortcomings in women’s health care, particularly within disproportionately impacted communities of color and those with social disadvantages. These investments are complementary and necessary for overall well-being. When women are healthier, everyone benefits.

    While mental well-being is quickly being recognized as a critical component of overall health, more work must be done. Awareness and education can be an essential first step. Ensuring resources and support are readily available, before giving birth, will allow new moms to recognize symptoms and seek help instead of feeling ashamed.

    Ease access barriers through integrated care

    Women who seek care for maternal mental health often face barriers to accessing adequate treatment. First, evaluation and treatment routinely fail to include mental health components. Second, psychiatrists are well-trained to treat PPD, but rarely get referrals. Limited availability for timely appointments with a trained mental health care professional can undermine a woman’s ability to get care.

    Integration of care is a promising approach to addressing the provider shortage and may improve early identification and treatment. Ob-gyns, midwives, nurses, primary care physicians, pediatricians, and doulas all play a critical role in identifying and caring for women with untreated maternal mental health conditions. The integration between various health care professionals can better support women, reduce stigma, and improve awareness.

    Standardized educational requirements within medical schools can also help fill the care gap. Despite how common and serious maternal mental health conditions are, medical student exposure to reproductive psychiatry is limited.

    Make screening for mental well-being standard

    Several U.S. health care institutions recommend screening for maternal mental health disorders. In practice, these screenings often occur situationally and only if symptoms or other risk factors are present. Today’s approach has led to approximately 50% of all postpartum depression cases in the U.S. going undiagnosed.

    The American College of Obstetricians and Gynecologists (ACOG) recently updated its perinatal mental health screening and treatment guidelines, marking an important step forward in acknowledging gaps and raising the standard of care. Policy reforms can help accelerate and incentivize the standardization of screening through more consistent maternal mental health reimbursement.

    Follow up and educate on the range of possible treatment options

    Finally, health care providers should review all potential treatment options, including talk therapy, support groups, therapeutic interventions, and inpatient hospitalization when safety or ability to care for oneself is a concern. Education about care optionality can empower women to make more informed decisions about their health care. The weeks following birth are a critical period, setting the stage for long-term health and well-being.   

    We have to do better. Maternal mental health is women’s health. It’s time we raise our collective voices about the urgency to prioritize action. With informed policies and practice frameworks we can better support early intervention and ensure a collaborative focus on new moms. PPD is not a moral failing; it is a serious medical condition that is often the result of biological issues. We owe it to these women, their babies, and their families to treat it as such.

    Barry Greene is CEO of Sage Therapeutics. Dr. Craig Chepke, MD, DFAPA, is a medical director at Excel Psychiatric Associates. Sage is a sponsor of Fortune Brainstorm Health.

    Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.

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    Barry Greene, Dr. Craig Chepke

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  • Top Comments of the week are back and ready to conquer! (60 Photos)

    Top Comments of the week are back and ready to conquer! (60 Photos)

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    Bob

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  • The Russell 2000 Index has soared, but you might be better off looking elsewhere for quality small-cap stocks

    The Russell 2000 Index has soared, but you might be better off looking elsewhere for quality small-cap stocks

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    The Russell 2000 Index soared 12% in December, which might reflect investors’ exuberance about the state of the U.S. economy — it appears the Federal Reserve has won its battle against inflation.

    But if you are looking to broaden your exposure to the stock market beyond the large-cap S&P 500
    SPX,
    buying shares of a fund that tracks the Russell 2000 Index
    RUT
    might not be the best way to do it. This is because the Russell 2000 isn’t selective — it is made up of the smallest 2,000 companies by market capitalization in the Russell 3000 Index
    RUA,
    which itself is designed to capture about 98% of the U.S. public equity market.

    A better choice might be the S&P Small Cap 600 Index
    SML
    because S&P Global requires companies to show four consecutive quarters of profitability to be initially included in the index, among other criteria.

    Below is a screen of analysts’ favorite stocks among the S&P Small Cap 600, along with another for the Russell 2000.

    Watch for a “head fake”

    Much of the small-cap buying in December might have resulted from covering of short positions by hedge-fund managers. This idea is backed by the timing of trading activity immediately following the Federal Open Market Committee’s announcement on Dec. 13 that it wouldn’t change its interest-rate policy, according to MacroTourist blogger Kevin Muir. The Fed’s economic projections released the same day also indicate three cuts to the federal-funds rate in 2024.

    Heading into the end of the year, a fund manager who had shorted small-caps, and then was surprised by the Fed’s interest-rate projections, might have scrambled to buy stocks it had shorted to close-out the positions and hopefully lock in gains, or limit losses.

    That buying activity and resulting pop in small-cap prices could set up a typical “head fake” for investors as the new year begins, according to Muir.

    The long-term case for quality

    Looking at data for companies’ most recently reported fiscal quarters, 58% of the Russell 2000 reported positive earnings per share, according to data provided by FactSet. In other words, hundreds of these companies were losing money. These might include promising companies facing “binary events,” such as make-or-break drug trials in the biotechnology industry.

    In comparison, 78% of companies among the S&P Small Cap 600 were profitable, and 93% of the S&P 500 were in the black.

    Here are long-term performance figures for exchange-traded funds that track all three indexes:

    ETF

    		 Ticker

    		 2023

    		 3 years

    		 5 years

    		 10 years

    		 15 years

    		 20 years
    iShares Russell 2000 ETF

    		 IWM 17%

    		 7%

    		 61%

    		 99%

    		 428%

    		 365%
    iShares Core S&P Small Cap ETF

    		 IJR 16%

    		 25%

    		 69%

    		 129%

    		 540%

    		 515%
    SPDR S&P 500 ETF Trust

    		 SPY 26%

    		 34%

    		 108%

    		 210%

    		 629%

    		 527%
    Source: FactSet

    An approach tracking the S&P Small Cap 600 has outperformed the Russell 2000 for all periods, with margins widening as you go further back.

    Brett Arends: You own the wrong small-cap fund. How to get into a better one.

    Looking ahead for quality… or not

    For the first screen, we began with the S&P Small Cap 600 and narrowed the list to 385 companies covered by at least five analysts polled by FactSet. Then we cut the list to 92 companies with “buy” or equivalent ratings among at least 75% of the covering analysts.

    Here are the 20 remaining stocks among the S&P Small Cap 600 with the highest 12-month upside potential indicated by analysts’ consensus price targets:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 29 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Vir Biotechnology Inc.

    		 VIR,
    +4.47%         		88%

    		 $10.06

    		 $32.00

    		 218%
    Arcus Biosciences Inc.

    		 RCUS,
    +3.04%         		82%

    		 $19.10

    		 $41.00

    		 115%
    Xencor Inc.

    		 XNCR,
    +6.03%         		92%

    		 $21.23

    		 $39.83

    		 88%
    Dynavax Technologies Corp.

    		 DVAX,
    +2.86%         		100%

    		 $13.98

    		 $24.80

    		 77%
    ModivCare Inc.

    		 MODV,
    +0.95%         		100%

    		 $43.99

    		 $75.50

    		 72%
    Xperi Inc

    		 XPER,
    +1.81%         		80%

    		 $11.02

    		 $18.20

    		 65%
    Thryv Holdings Inc.

    		 THRY,
         		100%

    		 $20.35

    		 $32.75

    		 61%
    Ligand Pharmaceuticals Inc.

    		 LGND,
    +1.25%         		100%

    		 $71.42

    		 $114.80

    		 61%
    Green Plains Inc.

    		 GPRE,
    -1.67%         		80%

    		 $25.22

    		 $40.30

    		 60%
    Patterson-UTI Energy Inc.

    		 PTEN,
    +0.28%         		75%

    		 $10.80

    		 $17.00

    		 57%
    Ironwood Pharmaceuticals Inc. Class A

    		 IRWD,
    +8.48%         		83%

    		 $11.44

    		 $17.83

    		 56%
    Catalyst Pharmaceuticals Inc.

    		 CPRX,
    +1.78%         		100%

    		 $16.81

    		 $26.20

    		 56%
    Payoneer Global Inc.

    		 PAYO,
    -3.45%         		100%

    		 $5.21

    		 $8.00

    		 54%
    Helix Energy Solutions Group Inc.

    		 HLX,
    -2.63%         		83%

    		 $10.28

    		 $15.00

    		 46%
    Arlo Technologies Inc.

    		 ARLO,
    -3.05%         		100%

    		 $9.52

    		 $13.80

    		 45%
    Pacira Biosciences Inc.

    		 PCRX,
    -5.16%         		100%

    		 $33.74

    		 $48.40

    		 43%
    Privia Health Group Inc.

    		 PRVA,
    +2.95%         		100%

    		 $23.03

    		 $32.53

    		 41%
    Semtech Corp.

    		 SMTC,
    -1.23%         		92%

    		 $21.91

    		 $30.90

    		 41%
    Talos Energy Inc.

    		 TALO,
    +1.19%         		78%

    		 $14.23

    		 $20.00

    		 41%
    Digi International Inc.

    		 DGII,
    -1.21%         		100%

    		 $26.00

    		 $36.14

    		 39%
    Source: FactSet

    Any stock screen should only be considered a starting point. You should do your own research to form your own opinion before making any investment. one way to begin is by clicking on the tickers for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Moving on to the Russell 2000, when we narrowed this group to stocks covered by at least five analysts polled by FactSet, we were left with 936 companies. Among these, 355 have “buy” or equivalent ratings among at least 75% of the covering analysts.

    Among those 355 stocks in the Russell 2000, these 20 have the highest implied upside over the next year, based on consensus price targets:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 29 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Karyopharm Therapeutics Inc.

    		 KPTI,
    +4.18%         		75%

    		 $0.87

    		 $6.00

    		 594%
    Rallybio Corp.

    		 RLYB,
    +0.42%         		100%

    		 $2.39

    		 $16.50

    		 590%
    Vor Biopharma Inc.

    		 VOR,
    -0.89%         		100%

    		 $2.25

    		 $15.44

    		 586%
    Tenaya Therapeutics Inc.

    		 TNYA,
    -0.62%         		100%

    		 $3.24

    		 $19.14

    		 491%
    Compass Therapeutics Inc.

    		 CMPX,
    -5.13%         		86%

    		 $1.56

    		 $9.17

    		 488%
    Vigil Neuroscience Inc.

    		 VIGL,
    +2.66%         		88%

    		 $3.38

    		 $18.75

    		 455%
    Trevi Therapeutics Inc.

    		 TRVI,
    -2.99%         		100%

    		 $1.34

    		 $7.33

    		 447%
    Inozyme Pharma Inc.

    		 INZY,
    +1.64%         		100%

    		 $4.26

    		 $21.00

    		 393%
    Gritstone bio Inc.

    		 GRTS,
    +6.86%         		100%

    		 $2.04

    		 $10.00

    		 390%
    Actinium Pharmaceuticals Inc.

    		 ATNM,
    +4.72%         		83%

    		 $5.08

    		 $23.36

    		 360%
    Lineage Cell Therapeutics Inc.

    		 LCTX,
         		86%

    		 $1.09

    		 $4.83

    		 343%
    Century Therapeutics Inc.

    		 IPSC,
    +9.64%         		86%

    		 $3.32

    		 $14.67

    		 342%
    Acrivon Therapeutics Inc.

    		 ACRV,
    +1.83%         		100%

    		 $4.92

    		 $21.13

    		 329%
    Avidity Biosciences Inc.

    		 RNA,
    +1.22%         		100%

    		 $9.05

    		 $37.50

    		 314%
    Longboard Pharmaceuticals Inc.

    		 LBPH,
    +316.25%         		100%

    		 $6.03

    		 $24.17

    		 301%
    Omega Therapeutics Inc.

    		 OMGA,
    -1.33%         		100%

    		 $3.01

    		 $12.00

    		 299%
    Allogene Therapeutics Inc.

    		 ALLO,
    +12.77%         		82%

    		 $3.21

    		 $12.79

    		 298%
    X4 Pharmaceuticals Inc.

    		 XFOR,
    +5.21%         		86%

    		 $0.84

    		 $3.26

    		 289%
    Caribou Biosciences Inc.

    		 CRBU,
    -2.79%         		89%

    		 $5.73

    		 $22.25

    		 288%
    Stoke Therapeutics Inc.

    		 STOK,
    +11.41%         		78%

    		 $5.26

    		 $19.33

    		 268%
    Source: FactSet

    That’s right — this Russell 2000 list is all biotech. And in case you are wondering if any companies are on both lists, the answer is no.

    Don’t miss: 11 dividend stocks with high yields expected to be well supported in 2024 per strict criteria

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  • These 20 stocks soared the most in 2023

    These 20 stocks soared the most in 2023

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    (Updated with Friday’s closing prices.)

    The 2023 rally for stocks in the U.S. accelerated as more investors bought the idea that the Federal Reserve succeeded in its effort to bring inflation to heel.

    The S&P 500
    SPX
    ended Friday with a 24.2% gain for 2023, following a 19.4% decline in 2022. (All price changes in this article exclude dividends). Among the 500 stocks, 65% were up for 2023. Below is a list of the year’s 20 best performers in the benchmark index.

    This article focuses on large-cap stocks. MarketWatch Editor in Chief Mark DeCambre took a broader look at all U.S. stocks of companies with market capitalizations of at least $1 billion, to list 10 with gains ranging from 412% to 1,924%.

    The Fed began raising short-term interest rates and pushing long-term rates higher in March 2022 by allowing its bond portfolio to run off. That explains the poor performance for stocks in 2022, as bonds and even bank accounts because more attractive to investors.

    The central bank hasn’t raised the federal-funds rate since moving it to the current target range of 5.25% to 5.50% in July, and its economic projections point to three rate cuts in 2024.

    Investors are anticipating the return to a low-rate environment by scooping up 10-year U.S. Treasury notes
    BX:TMUBMUSD10Y,
    whose yield ended the year at 3.88%, down from 4.84% on Oct. 27 — the day of the S&P 500’s low for the second half of 2023.

    Read: Treasury yields end mostly higher but little changed on year after wild 2023

    Before looking at the list of best-performing stocks of 2023, here’s a summary of how the 11 sectors of the S&P 500 performed, with the full index and three more broad indexes at the bottom:

    Sector or index

    		 2023 price change

    		 2022 price change

    		 Price change since end of 2021

    		 Forward P/E

    		 Forward P/E at end of 2022

    		 Forward P/E at end of 2023
    Information Technology

    		 56.4%

    		 -28.9%

    		 11.5%

    		 26.7

    		 20.0

    		 28.2
    Communication Services

    		 54.4%

    		 -40.4%

    		 -7.6%

    		 17.4

    		 14.3

    		 21.0
    Consumer Discretionary

    		 41.0%

    		 -37.6%

    		 -11.4%

    		 26.2

    		 21.7

    		 34.7
    Industrials

    		 16.0%

    		 -7.1%

    		 8.0%

    		 20.0

    		 18.7

    		 22.0
    Materials

    		 10.2%

    		 -14.1%

    		 -4.9%

    		 19.5

    		 15.8

    		 16.6
    Financials

    		 9.9%

    		 -12.4%

    		 -3.4%

    		 14.6

    		 13.0

    		 16.3
    Real Estate

    		 8.3%

    		 -28.4%

    		 -21.6%

    		 18.3

    		 16.9

    		 24.7
    Healthcare

    		 0.3%

    		 -3.6%

    		 -3.3%

    		 18.2

    		 17.7

    		 17.3
    Consumer Staples

    		 -2.2%

    		 -3.2%

    		 -5.4%

    		 19.3

    		 20.6

    		 21.4
    Energy

    		 -4.8%

    		 59.0%

    		 51.8%

    		 10.9

    		 9.8

    		 11.1
    Utilities

    		 -10.2%

    		 -1.4%

    		 -11.4%

    		 15.9

    		 18.7

    		 20.4
    S&P 500
    SPX     		24.2%

    		 -19.4%

    		 0.4%

    		 19.7

    		 16.8

    		 21.6
    Dow Jones Industrial Average
    DJIA     		13.7%

    		 -8.8%

    		 3.8%

    		 17.6

    		 16.6

    		 18.9
    Nasdaq Composite
    COMP     		43.4%

    		 -33.1%

    		 -3.5%

    		 26.9

    		 22.6

    		 32.0
    Nasdaq-100
    NDX     		53.8%

    		 -33.0%

    		 3.5%

    		 26.3

    		 20.9

    		 30.3
    Source: FactSet

    A look at 2023 price action really needs to encompass what took place in 2022 for context. The broad indexes haven’t moved much from their levels at the end of 2022 (again, excluding dividends). We have included current forward price-to-earnings ratios along with those at the end of 2021 and 2022. These valuations have declined a bit, which may provide some comfort for investors wondering how likely it is for stocks to continue to rally in 2024.

    Biggest price increases among the S&P 500

    Here are the 20 stocks in the S&P 500 whose prices rose the most in 2023:

    Company

    		 Ticker

    		 2023 price change

    		 2022 price change

    		 Price change since end of 2021

    		 Forward P/E

    		 Forward P/E at end of 2022

    		 Forward P/E at end of 2021
    Nvidia Corp.

    		 NVDA,
         		239%

    		 -50%

    		 68%

    		 24.9

    		 34.4

    		 58.0
    Meta Platforms Inc. Class A

    		 META,
    -1.22%         		194%

    		 -64%

    		 5%

    		 20.2

    		 14.7

    		 23.5
    Royal Caribbean Group

    		 RCL,
    -0.37%         		162%

    		 -36%

    		 68%

    		 14.3

    		 14.9

    		 232.4
    Builders FirstSource Inc.

    		 BLDR,
    -1.02%         		157%

    		 -24%

    		 95%

    		 14.2

    		 10.7

    		 13.3
    Uber Technologies Inc.

    		 UBER,
    -2.49%         		149%

    		 -41%

    		 47%

    		 56.9

    		 N/A

    		 N/A
    Carnival Corp.

    		 CCL,
    -0.70%         		130%

    		 -60%

    		 -8%

    		 18.7

    		 41.3

    		 N/A
    Advanced Micro Devices Inc.

    		 AMD,
    -0.91%         		128%

    		 -55%

    		 2%

    		 39.7

    		 17.7

    		 43.1
    PulteGroup Inc.

    		 PHM,
    -0.26%         		127%

    		 -20%

    		 81%

    		 9.1

    		 6.3

    		 6.2
    Palo Alto Networks Inc.

    		 PANW,
    -0.24%         		111%

    		 -25%

    		 59%

    		 50.2

    		 38.0

    		 70.1
    Tesla Inc.

    		 TSLA,
    -1.86%         		102%

    		 -65%

    		 -29%

    		 66.2

    		 22.3

    		 120.3
    Broadcom Inc.

    		 AVGO,
    -0.55%         		100%

    		 -16%

    		 68%

    		 23.2

    		 13.6

    		 19.8
    Salesforce Inc.

    		 CRM,
    -0.92%         		98%

    		 -48%

    		 4%

    		 28.0

    		 23.8

    		 53.5
    Fair Isaac Corp.

    		 FICO,
    -0.46%         		94%

    		 38%

    		 168%

    		 47.1

    		 29.3

    		 28.7
    Arista Networks Inc.

    		 ANET,
    -0.62%         		94%

    		 -16%

    		 64%

    		 32.7

    		 22.3

    		 41.4
    Intel Corp.

    		 INTC,
    -0.28%         		90%

    		 -49%

    		 -2%

    		 26.6

    		 14.6

    		 13.9
    Jabil Inc.

    		 JBL,
    -0.45%         		87%

    		 -3%

    		 81%

    		 13.5

    		 7.9

    		 10.3
    Lam Research Corp.

    		 LRCX,
    -0.81%         		86%

    		 -42%

    		 9%

    		 25.2

    		 13.5

    		 20.2
    ServiceNow Inc.

    		 NOW,
    +0.57%         		82%

    		 -40%

    		 9%

    		 56.0

    		 42.6

    		 90.1
    Amazon.com Inc.

    		 AMZN,
    -0.94%         		81%

    		 -50%

    		 -9%

    		 42.0

    		 46.7

    		 64.9
    Monolithic Power Systems Inc.

    		 MPWR,
    -0.23%         		78%

    		 -28%

    		 28%

    		 49.1

    		 27.3

    		 57.9
    Source: FactSet

    Click on the tickers for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Don’t miss: Nvidia tops list of Wall Street’s 20 favorite stocks for 2024

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  • Environmental Progress: Kids Lead – Jim Hightower, Humor Times

    Environmental Progress: Kids Lead – Jim Hightower, Humor Times

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    One breakthrough for environmental progress was made recently by young climate activists in deep-red, rural Montana.

    “OK, boomer.” That’s a snarky phrase currently some use to mock 60- and-70-year-olds they consider to be cluelessly out of touch.

    Recently, however, teenagers and 20-somethings have turned that snide sentiment into a positive challenge directed at doomsayers of all ages who claim nothing can be done to stop runaway global warming: “OK, doomer,” these young climate activists respond. It’s their shorthand way of saying to do-nothing fatalists: Give up if you want, but please step aside while we organize and mobilize for climate sanity and environmental progress.

    Our globe’s fast-warming, catastrophe-creating climate is more than just another issue: It has become a generational cause for young people. Indeed, 62% of young voters support totally phasing out fossil fuels, and they’re channeling their anger about official inaction toward both political parties. Such feisty grassroots groups as Gen-Z for Change, Zero Hour, Black Girl Environmentalist and Our Children’s Trust are on the front lines — in the face of power, and on the move.

    As in all progressive struggles — from civil rights to labor to environmental justice — progress comes from sticking with principle, building incrementally on local victories and persevering against moneyed reactionaries.

    Already, one breakthrough by these young climate activists was made this year in deep-red, rural Montana. In a case filed by Our Children’s Trust, 16 children, ages 2-18, charged that a state law took away their right to challenge energy projects that increase global warming. Noting that Montana’s constitution establishes a right to “a clean and healthful environment,” state Judge Kathy Seeley ruled for the children… and for a clean, healthy climate future.

    Progress is not made by spectators and cynics, but by activists. And those who say that activism can’t produce change should not interrupt those who’re doing it.

    The Rattiest Right-Wing Congress Critter

    Vangunu, one of the Solomon Islands, is home to a giant species of rodent called the vika. Astonishingly, this rare and very large rat has jaws so powerful it can bite through a coconut shell!

    That made me think of Rep. Jim Jordan, the GOP’s rattiest far-right-wing Congress critter. There is no documented proof that this extremist partisan was raised on Vangunu, but he sure keeps gnawing on Joe and Hunter Biden, desperately trying to crack open a scandal that simply doesn’t exit. Vikas are powerful, but they’ve not been accused of being smart.

    Jordan, the former coach of a boy’s wrestling team, now has his team of House Republicans in a choke hold, draining national media attention to his goofy obsession with impeaching Joe. Impeach him for what? Well, says Jordan, we’re looking for a reason.

    He has it bass-ackwards — real impeachment proceedings start with specific charges of an official’s “high crimes and misdemeanors.” But Coach Jordan is perverting that constitutional requirement by first accusing Biden of high crimes, then holding hearings in hopes of finding one. But poor Jim — it turns out to be easier for him to bite through a coconut than to fabricate a Biden crime.

    But Jordan keeps gnawing, wasting Congress’ time, staff and credibility (plus millions of taxpayer dollars) scuttling down trails that go nowhere. Meanwhile, as he and the GOP House prioritize their clownish political agenda, they can’t perform the basics of government, which is simply to keep essential public services funded and functioning.

    Unable to govern, Republican leaders abruptly stopped working in the House in early December, saying they’ll get serious next year. But, uh-oh, the vika congressman has just announced he’ll hold more impeachment hearings next year so he can keep gnawing at the Biden coconut.

    Jim HightowerJim Hightower
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  • The green revolution runs on chips–but there is no good way to make the fragile semiconductors ecosystem sustainable in the short term

    The green revolution runs on chips–but there is no good way to make the fragile semiconductors ecosystem sustainable in the short term

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    There is renewed attention on the sustainability of semiconductors. Chorus has been building in recent years to improve the sustainability of chip manufacturing and usage. In 2022, COP27 saw the creation of a Semiconductor Climate Consortium with 60 founding members pledging to reduce emissions to 0% by 2050.

    It is understandable why chips would be a target. They are ubiquitous and their number and usage will just keep increasing. Most stages of their complex supply chain–from the extraction of raw materials to transportation of finished goods to the processing, heating, and cooling required in production, to recycling–produce significant emissions.

    Silicon, the basic material used to build chips, is famously created in furnaces from sand or quartz by burning a mixture of coal and wood chips. Energy and water needs for the industry to function are high–and keep increasing. The manufacturing of advanced 3nm chips may consume almost 8 billion kilowatt-hours annually. In some cases, the impact on communities has been visible. TSMC, the world’s largest chip manufacturer, consumes 6% of Taiwan’s electricity and 10% of its water, leading to water shortages.   And the industry’s contaminants in the Bay Area have rendered a number of sites toxic.

    Despite this, governments and semiconductor companies must be careful about how they approach chip sustainability at this time. We just went through a chip shortage that brought the economies to their knees. The shortage also brought to the fore the potential economic and national security benefits of increasing and localizing chip production. The CHIPS and Science Act passed earlier this year in the U.S. has generated momentum behind chip manufacturing–and sustainability issues must be addressed in a way that does not slow this momentum.

    This won’t have as much cost as one may imagine. Most of the current focus is on emissions–and the chip industry produces only 0.1 to 0.2% of global carbon dioxide equivalent emissions. This is small when considering the outsized economic impact they produce.

    Chips serve as key enablers for smart grids, the transition to renewables, intelligent and electric transportation, low carbon footprint logistics and supply chains, video conferencing, smart agriculture, drug discovery, and energy-efficient manufacturing, each helping make progress toward global sustainability goals. The economic impact of chips also helps greater adoption of sustainable technologies. One could argue that the end-to-end sustainability impact of chips is likely positive–despite their emissions and large energy and water needs.

    What does a careful approach to chip sustainability mean today?

    A conventional regulatory approach may lead to a National Environmental Policy Act (NEPA)-triggered environmental review for each new chip production project before CHIPS Act funds can be disbursed. It may also allow litigation by private citizens at each step of the process. However, this may introduce multi-year delays in a cost-conscious and fast-moving industry. These delays (environmental reviews take more than four years, on average) and the corresponding increase in project costs may defeat the key purpose of the act–outpacing economic and geopolitical competitors and securing chip supplies.   Instead, one-time exceptions should be made that will allow fab constructions and upgrades to start with little delay.

    One could argue that this “free pass” may both be dangerous and set a bad precedent. However, the chip industry has done well with goal setting and self-regulation. TSMC now invests 2% of its annual revenue in green initiatives and recycles over 85% of the water it uses. Intel uses renewable energy for over 80% of its operations and produces more fresh water than it consumes in the US, India, and Costa Rica. Samsung reuses over half of its water. Both the energy and water intensity of chip production have been decreasing fast. The use of renewable energy has been on the upswing. New equipment and processes are considerably more energy efficient.

    One key reason why the chip industry has done so much is that improved sustainability aligns with their economic objectives. Reducing energy, gas, and water requirements reduces their costs and provides them flexibility in terms of location. Chipmakers have enough margins to absorb short-term costs. And their customers often require meeting sustainability targets.

    In addition to one-time NEPA exceptions, regulators should be flexible when considering metrics on which the industry has not done well. Chip production processes have been developed and perfected over decades. Replacing parts of the process with their more sustainable counterparts would require large investments into research and development with no guarantees of success.

    Similarly, today’s semiconductor supply chains are extremely optimized for efficiency and cost.  A careless relocation of supply chain components simply to meet sustainability metrics can impact cost and competitiveness. Special flexibility should be shown with brownfield chip production. The cost of retrofitting older fabs (or replacing their tools, facilities, and processes) that mostly produce low-margin chips may render these fabs uncompetitive. Chip security concerns are causing a restructuring of existing supply chains. Care must be taken that the compliance burden does not produce unreliable or uncompetitive supply chains.

    The chip industry must grow–economic and national security demands it. It is also necessary for this growth to be sustainable. Since the industry is at an inflection point, it will be important to be flexible and pragmatic.

    Rakesh Kumar is a professor in the Electrical and Computer Engineering department at the University of Illinois and the author of Reluctant Technophiles: India’s Complicated Relationship with Technology.

    More must-read commentary published by Fortune:

    • Economic pessimists’ bet on a 2023 recession failed. Why are they doubling down in 2024?
    • COVID-19 v. Flu: A ‘much more serious threat,’ new study into long-term risks concludes
    • ‘Parroting Putin’s propaganda’: The business exodus over Ukraine was no Russian bonanza
    • The U.S.-led digital trade world order is under attack–by the U.S.

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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  • Merriam-Webster’s word of the year 2023 is ‘authentic.’ Here’s how corporate America hacked the consumer cult of authenticity

    Merriam-Webster’s word of the year 2023 is ‘authentic.’ Here’s how corporate America hacked the consumer cult of authenticity

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    “Mass advertising can help build brands,” longtime Starbucks CEO Howard Schultz once prophesized, “but authenticity is what makes them last.” As corporate cheerleading goes, this is an enduring fable. Authenticity has become a central moral framework in society–the subtle yet pervasive value that animates and adjudicates our media, culture, and politics. Merriam-Webster recently announced that “authentic” was its 2023 word of the year, thanks to a surge in online search queries.

    Consumers have long sought authenticity, as it gets stamped on a range of goods and experiences made attractive largely because they appear to lack marketplace motives. The mom-and-pop diner; the vinyl record shop–the local and uncommercialized. Think dive bars, farmers markets, and indie cinemas.

    Studies find that consumers rate independent, family-run outposts more authentic than chains–and even shrug off hygiene code violations if a hole-in-the-wall seems sufficiently off the beaten path. Authenticity also beckons tourists, pointing toward paths less traveled such as Cuba, Bhutan, or Burning Man.

    A quest for the unique

    Scholarly articles about authenticity more than doubled in the 2010s and leading pollster John Zogby found that it topped the list of Americans’ cultural yearnings.

    “You have aspirational positioning from every brand out there to want to make their offering feel bespoke and handcrafted and unique,” one marketing COO quips. “The fact of the matter is that there’s tens of thousands of others of that [product] pumping out every single week.”

    That quest for authenticity is, in short, a quest for uniqueness amidst homogenous mass production. Today’s consumers seek what one philosopher-critic called “aura”–a singular product relative to the readily replicable. Social theorist Andreas Reckwitz diagnoses consumers as in thrall to “singularities”–distinctive objects, spaces, and experiences that fulfill cultural desires rather than functional needs that assembly lines once simply satisfied.

    Franchising, in particular, embodies McWorld alienation as corporations implement formulaic operations that erode local character: nondescript office parks, suburban tract homes, and casual dining chains. Most can’t preserve nuance at the massive scale that profit demands.

    The more sameness is offered, the more consumers go searching for something real to grab onto and discover themselves within. Call this the identity politics of the shopping cart.

    A manufactured ideal

    As a concept, authenticity hatched in response to 18th– and 19th-century industrialization. Humanity’s relationship with machines became disenchanted, not just at work–where efficiency, automation, and quantity dominated values–but also with this logic spilling into consumer experiences.

    Although authenticity cannot be found in Victorian-era vocabulary about merchandise, by 1908 Coca-Cola was already pitching itself as “genuine”–part of manufacturers’ efforts to persuade that their brand was more natural and traditional than fellow factory-line products filling home shelves. This rhetoric intensified in recent years.

    Take Starbucks, which has long tried to reproduce the “aura” of that cute, little indie coffee shop in your neighborhood–some 55,000 times over. Its brand guidebook reportedly mandates five ideals that had to apply to every design choice: handcrafted; artistic; sophisticated; human; and enduring. These seek to convince you that this Starbucks is truly unique and special, unlike the (same) one a block away.

    Hence, the interiors’ aesthetic accentuation–earth hues, wicker baskets, curvy motifs, stained woods, unfinished metals–all to contrast the prepackaged synthetics that envelop fast food. Hence, too, the customer’s name read aloud rather than an automated receipt number–simulating rituals of familiarity and tradition.

    Starbucks doesn’t become globally ubiquitous if it can’t fake authenticity in this fashion, even if being globally ubiquitous inherently invalidates that.

    The authenticity ideal is artisanal craft, romantically conjuring premodern labor untainted by massive machinery. Goods that are “handmade” in “small-batch” as opposed to cash-grab; shelves that are curated, not commercialized.

    Origin stories also authenticate, seeking to make a company genealogically trustworthy by emphasizing a point or person of provenance. Think Ben & Jerry’s here, or the naïve moral authenticity of any amateur startup tinkering in a garage for love rather than money.

    Research suggests that a company’s founding intent matters a great deal to consumers: If seen as “self-transcendent” (i.e., for society or community) rather than for “self-enhancement” (wealth or status), the brand scans authentic. Greed, for lack of a better word, isn’t good at conveying that.

    Authenticity also explains a recent swing toward vintage aesthetics–campaigns, slogans, and logos from yesteryear dusted off and trotted out, from Pizza Hut’s red roof icon to Miller Lite’s throwback font: “Brands want to say, ‘We’re still that same company with humble roots,’” one brand strategist explained. “So [they] reverse-engineer that value to an audience that may not be privy to a backstory.”

    This, then, is the ultimate contrivance: For a century,  corporations have tried to sell us they have a “soul.” As one advertising creative director rhapsodizes, “Brands have to have a voice; they have to have character; they have to have morals.”

    To that end, Dunkin’ Donuts shortened the name on its (11,000-plus) outlets to just “Dunkin’” to “highlight how the brand was now on a first-name basis with fans,” even giving away “handmade friendship bracelets” to commemorate the copyright registry.

    To be sure, there is something understandable, yet lamentable, in that notion. You can’t be friends with an LLC, yet anthropomorphism remains the central delusion of branding. Authenticity is, after all, a nostalgic reflex. We yearn for it most in times of rapid change. Much as industrialization generated a longing for agrarian simplicity a century ago, today’s high-tech landscape–one of AI chatbots and digital deepfakes–generates much the same wistfulness for a world being lost.

    Michael Serazio is an associate professor of communication at Boston College and the author of, most recently, The Authenticity Industries: Keeping it ‘Real’ in Media, Culture & Politics.

    More must-read commentary published by Fortune:

    • Economic pessimists’ bet on a 2023 recession failed. Why are they doubling down in 2024?
    • COVID-19 v. Flu: A ‘much more serious threat,’ new study into long-term risks concludes
    • Access to modern stoves could be a game-changer for Africa’s economic development–and help cut the equivalent of the carbon dioxide emitted by the world’s planes and ships
    • The U.S.-led digital trade world order is under attack–by the U.S.

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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  • Healthy employees equal healthy companies

    Healthy employees equal healthy companies

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    Recently I was talking with a CEO who lamented, “Everyone is trying to solve my $300 million problem, but nobody is helping me solve the $2 billion problem.” He went on to explain that no one is looking at the entirety of his people spend or for ways to help him transform across the board, even now at year-end, when budgets are being closely scrutinized in preparation for the year ahead. This is the area where he needs much greater visibility, he explained, along with a strong strategy.

    This isn’t the first time I’ve had a leader share this frustration. I see and hear stories like this every day as I talk with peers, meet with clients, and look across the market. The reality is, as leaders, we’re up against the wall with new ways of doing business but the same, if not greater, pressures to deliver to the bottom line and shareholder value.

    Over the past few years, companies have invested staggering amounts of money on employee experience programs—about 20% more than in previous years, according to the U.S. Bureau of Labor Statistics. They’ve restructured their working environments and changed their operations. Why? ​To keep employees healthy and productive—and their companies, too. It’s the right thing to do, but employees are still stressed and overwhelmed, and employers are still pressed to drive down costs and maintain a competitive edge, while navigating impactful new technologies, like generative AI. ​

    According to Alight’s 2023 International Workforce and Wellbeing Mindset Study, three-quarters of employees are experiencing moderate to high stress and 15% often feel completely depleted, up 50% since 2020. Job engagement is down, with just over two-thirds (69%) of employees always or almost always feeling productive and 34% dreading the start of their workday. Meanwhile, the uncertain economic environment is taking its toll. To navigate the higher cost of living, more than two-thirds (67%) of employees have reduced their spending, yet 31% say they rarely or never have money left over at the end of the month. More than a third (36%) have taken a second job, primarily to ensure financial security amid the downturn. Only 27% say their total rewards meet their family’s needs, but nearly half (48%) don’t have a good understanding of the rewards available to them. The data is worrying, but there is much leaders can do.

    Begin by transforming the employee experience. But this time, do it in a way that supports the need to reduce costs, while also providing the tools and resources to deliver the kind of experience that ensures people bring their whole, productive selves to work every day. Leaders can start with a core set of actionable steps:

    1. Make it personal by deploying an integrated digital platform that customizes the employee experience to deliver the greatest value. Utilize artificial intelligence (AI), analytics, and data to engage your people with personalized, actionable insights through their channel of choice: mobile, web, virtual chat, or easy-to-access expert support. Provide an easy-to-navigate personalized employee benefits experience. Deliver a flexible, personalized, inclusive approach to well-being.
    2. Adopt a holistic approach. Empower employees to make better health and financial decisions by deploying an integrated, digital employee experience platform that provides access to personal recommendations, partners/vendors, and decision support in a one-stop shop. Give equal consideration and attention to the four pillars of well-being—healthy mind, body, wallet, and life—all intricately interconnected and interdependent.
    3. Support your employees in a manner that is fitting for their needs. Walk the talk with your employees. How you reinforce the employee experience within your culture is—and will continue to be—critical to attracting, retaining, and engaging your people. Be prepared to step out of your comfort zone and talk one-on-one with employees to gain a better understanding of what they and their families truly need.

    When companies prioritize components of the employee experience, such as well-being, good things happen. A carefully crafted well-being strategy strengthens the employee-employer relationship, increasing trust and boosting engagement. When done right, benefits increase employee trust in their employer by 19 points, according to Alight’s Winning With Wellbeing research. Employees are happier, healthier, and more appreciative of the investment their employer is making in them. But that’s not all. Companies that prioritize well-being have a competitive advantage in the marketplace.

    Alight-commissioned research conducted by the Josh Bersin Company revealed that employee well-being boosts financial performance, and organizations leveraging the right employee experience strategies are twice as likely to outperform their peers financially, more than five times as likely to have lower annual health care claim costs, and do three times better at engaging and retaining employees.

    The employee experience has never been more important to company performance. With an integrated digital employee experience platform that listens, learns, and adapts, employees are empowered to make confident decisions through all of life’s moments, big and small. As companies streamline their offerings, minimize their spend, and deliver to their bottom line, it’s important to remember: If your employees are healthy and productive, your company will be too.

    Stephan Scholl is CEO of Alight. Alight is a partner of Fortune’s CEO Initiative.

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  • WeWork’s co-working model was supposed to fix traditional commercial real estate–but both the new idea and the centuries-old industry are failing

    WeWork’s co-working model was supposed to fix traditional commercial real estate–but both the new idea and the centuries-old industry are failing

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    While WeWork’s catastrophic fall from grace may have poor business management written all over it, the latest bankruptcy filing represents an indictment of the coworking business model as a whole. 

    The idea of co-working is more relevant today than ever before as flexible work has cemented its position globally. The future of five-days-a-week, in-person work remains debatable–and companies across the country have maintained hybrid work options post-pandemic. This year, 73% of American workers reported working in-office for three or more days a week, with an average of three to four days in-person, according to a McKinsey study. Fully remote employees now only represent 15% of the workforce, a strong indication that hybrid work, while previously dubbed the “new normal,” is here to stay. 

    WeWork’s inability to take advantage of the paradigm shift in commercial real estate is due to the fact that WeWork’s innovative brand was built on the same traditional terms that commercial real estate has used for centuries. The co-working business model takes on long-term leases at a locked-in rate, placing a huge bet on occupancy rates and rents staying high. This leaves a huge risk imbalance in the committed term lengths between landlords and occupants. As disclosed in WeWork’s infamous S-1 filing in 2019, its average lease term is approximately 15 years. This leaves the company offering clients flexible lease terms, while they remain committed across interest rate cycles and market downturns.

    When rates are low, and companies aren’t rigorous about burn, coworking has product-market fit. When rates are high and wallets are tight, the results can be catastrophic, as evidenced by WeWork’s latest bankruptcy–and that’s regardless of the demand for flexible working environments. 

    As soon as office spaces are not filled, it’s the coworking platforms that lose money, not the landlords. As of Q3 2023, over 20% of American commercial real estate space remained empty, according to JLL. This has created an existential crisis for firms like WeWork, who are struggling to grapple with an outdated model that has provided a valuable product for consumers, but has failed in changing the status quo with landlords. 

    It’s time that we embrace the fact that coworking, while billed as an inventive means to insert energy and collaboration into the workplace, is built on the foundation of the same age-old model that it claims to transform. 

    Coworkers crave building culture and feeling a sense of belonging to their company, which requires privacy instead of a shared floor with outside distractions. Existing research has proved that over 52% of employees prefer private offices over open floor plans, which is a foundational aspect of the coworking model. These employees seek in-person work to feel connected to their company’s mission and culture, not to be a part of WeWork’s culture.

    In today’s flexible office environment, employees are encouraged to reap the benefits of the workspace by being able to interact closely with their counterparts. If these interactions are becoming less meaningful by participating in coworking, then the model’s key value proposition is at best, failing to address the needs of a substantial segment of its customer base. 

    In many ways, WeWork’s collapse is just the tip of the iceberg for a model that failed to live up to its expectations. While the workplace question is clearly a topic that will continue to be iterated on in the coming years, it’s time that we accept that co-working is not the answer.

    Christelle Rohaut is the co-founder and CEO of Codi.

    More must-read commentary published by Fortune:

    • Economic pessimists’ bet on a 2023 recession failed. Why are they doubling down in 2024?
    • COVID-19 v. Flu: A ‘much more serious threat,’ new study into long-term risks concludes
    • Access to modern stoves could be a game-changer for Africa’s economic development–and help cut the equivalent of the carbon dioxide emitted by the world’s planes and ships
    • The U.S.-led digital trade world order is under attack–by the U.S.

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

    Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.

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  • 'Smidcap' companies are becoming a big deal. Here's a look at some of the best.

    'Smidcap' companies are becoming a big deal. Here's a look at some of the best.

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    The stocks of long-neglected small companies are finally showing signs of life as the market rally broadens. But these tiny companies still remain vastly undervalued. So, they are one of the best buys in the stock market right now.

    Small- and medium-cap companies, or smidcaps, have not been this cheap since the Great Financial Crisis 15 years ago. “Smidcaps relative to large caps look very attractive,” says says portfolio manager Aram Green, at the ClearBridge Select Fund LBFIX, which specializes in this space.  “Over the long term you will be rewarded.” 

    Green is worth listening to because he is one of the better fund managers in the smidcap arena. ClearBridge Select beats both its midcap growth category and Morningstar U.S. midcap growth index over the past five- and 10 years, says Morningstar Direct. This is no easy feat, in a mutual fund world where so many funds lag their benchmarks. 

    The timing for smidcap outperformance seems about right, since these stocks do well coming out of recessions. Technically, we have not recently had a recession. But there was an economic slowdown in the first half of the year, and the U.S. did have an earnings recession earlier this year. So that may count. 

    To get smidcap exposure, consider the funds of outperforming managers like Green, and if you want to throw in some individual stocks, Green is a great guide on how to find the best names in this space. 

    I recently caught up with him to see what we can learn about analyzing smidcaps. Below are four tactics that contribute to his fund’s outperformance, with nine company examples to consider.  

    1. Look for an entrepreneurial mindset: Green’s background gives him an edge in investing. He’s an entrepreneur who co-founded a software company called iCollege in 1997. It was bought out by BlackBoard in 2001. He knows how to understand innovative trends, identify a good idea, secure capital and quickly ramp up a business. This experience gives him a “private market mindset” that helps him pick stocks to this day. 

    “Founder-run companies regularly outperform.”

    Green looks for managers with an entrepreneurial mindset. You can glean this from company calls and filings, but it helps a lot to meet management — something most individual investors cannot do. But Green offers a shortcut, one which I regularly use, as well. Look for companies that are run by founders. This will give you exposure to managers with entrepreneurial spirit. 

    Here, Green cites the marketing software company HubSpot
    HUBS,
    +0.79%    ,
    a 1.9% fund position as of the end of the third quarter. It was founded by Massachusetts Institute of Technology college buddies Brian Halligan and Dharmesh Shah. They’re on the company’s board, and Shah is chief technology officer. 

    Academic studies confirm founder-run companies regularly outperform. My guess is this is because many founders never lose the entrepreneurial spirit, no matter how easy it would be to quit and sip Mai Tai’s on a beach after making a bundle.  

    In the private market, Green cites Databricks, a data management and analytics company with an AI angle. This competitor of Snowflake
    SNOW,
    -0.92%
    is likely to go public in 2024. If you feel like an outsider because you lack access to private market investing, note that Green says he typically buys more exposure to private companies on the initial public offering (IPO), and then in the market.  “We like to spend time with them when they are private so we can pounce when they are public,” Green says.

    2. Look for organic growth: When companies make acquisitions their stocks often decline, and for good reason. Managers make mistakes in acquisitions because they overestimate “synergies.” Or they get wrapped up in ego-enhancing empire building. 

    “We favor entrepreneurial management teams that do not make a lot of acquisitions to grow, but use their resources to develop new products to keep extending the runway,” says Green. 

    Here, he cites ServiceNow
    NOW,
    +2.62%    ,
    which has grown by “extending the runway” with new offerings developed internally. It started off supporting information technology service desks, and has expanded into operations management of servers and security, onboarding employees, data analytics, and software that powers 911 emergency call systems. Green obviously thinks there is a lot more upside to come, given that this is an overweight position, at 4.6% of the portfolio (the fund’s biggest holding).

    Green also puts the “Amazon.com of Latin America” MercadoLibre
    MELI,
    +0.17%
    in this category, because it continues to expand geographically and in areas such as logistics and payment systems. “They have really morphed into a fintech company,” Green says. He puts HubSpot and the marketing software company Klaviyo
    KVYO,
    -5.73%
    in this category, too. 

    3. Look for differentiated business models: Green likes companies with offerings that are special and different. That means they’ll take market share, and face minimal competition. They’ll also enjoy pricing power. “This leads to high margins. You don’t have someone beating you up on price,” he says. 

    Green cites the decking company Trex
    TREX,
    +0.10%    ,
    which offers composite decking and railing made from recycled materials. This gives it an eco-friendly allure. Compared to wood, composite material lasts longer and requires less maintenance. It costs more up front but less over the long term. Says Green: “The alternative decking market has taken about 20% of the market and that can get to 50%.”

    Of course, entrepreneurs notice success, and try to imitate it. That’s a risk here. But Trex has an edge in its understanding of how to make the composite material. It has a strong brand. And it is building relationships with big-box retailers Home Depot and Lowe’s. These qualities may keep competitors at bay. 

    4. Put some ballast in your portfolio: Green likes to keep the fund’s portfolio balanced by sector, size, and business dynamic. So the portfolio includes the food distributor Performance Food Group
    PFGC,
    -1.69%    .
    The company is posting mid-single digit sale growth, expanding market share and paying down debt. Energy drinks company Monster
    MNST,
    -0.85%
    also offers ballast. Monster’s popular product line up helps the company to take share and enjoy pricing power, Green says.

    It’s admittedly unusual to see a food companies in a portfolio loaded with high-growth tech innovators. But for Green, it’s all part of the game plan. “Rapid growth, disrupting businesses are not going to work year in year out. There are times they fall out of favor, like 2022. So, having that balance is important because it keeps you invested in the equity market.” 

    In other words, keeping some ballast means you’re less likely to get shaken out by sharp declines in high-growth and high-beta tech innovators when trouble strikes the market.

    Michael Brush is a columnist for MarketWatch. At the time of publication, he owned AMZN, TSLA and MELI. Brush has suggested AMZN, TSLA, NOW, MELI, HD and LOW in his stock newsletter, Brush Up on Stocks. Follow him on X @mbrushstocks

    More: Nvidia, Disney and Tesla are among 2023’s buzziest stocks. Can they continue to sizzle in 2024?

    Also read: Presidential election years like 2024 are usually winners for U.S. stocks

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  • AI emissions are fueling a new doomerism. This time it's climate change

    AI emissions are fueling a new doomerism. This time it's climate change

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    There is a new doomer narrative over artificial intelligence emerging in the background at this year’s COP meeting. This one isn’t focused on a malignant superintelligence. Instead, it is over sustainability and concerns over AI’s burgeoning energy demands.

    A recent study projects that by 2027, NVIDIA’s new AI servers will be consuming over 85.4 terawatt-hours annually, exceeding the energy usage of countries such as Sweden and Argentina.

    Research from the University of Massachusetts Amherst suggesting that training a single AI model can emit over 284 tonnes of CO2, equivalent to the lifetime emissions of five average American cars, paints a concerning picture of AI’s environmental impact. Annually, AI’s carbon footprint is approaching 1% of global emissions.

    AI’s energy demands have indeed increased dramatically. A Stanford study flags a 300,000-fold rise in AI systems’ power requirements since the early 2010s. And some of this energy is derived from fossil fuels, with data centers globally consuming over 1% of global electricity, a third of which comes from coal and natural gas.

    However, what the doomers miss is the ingenuity of human research and industry. Analyzing IT’s electricity consumption back to the 2000s, Jonathan Koomey and colleagues found that the energy intensity of the global data center industry dropped by around 20% per year between 2010 and 2018. Efficiency gains in data centers, chips, and programming have outstripped the increase in energy use.

    This human factor is what the doomers’ narrative misses, suggesting that while AI’s energy demands are growing, so too are the efficiencies in the systems that support it.

    AI software support

    Innovations in AI also contribute to this trend of increasing efficiency. Techniques like “gradient compression” in AI training, a method being driven forward at my own institution, are reducing the energy required for AI systems to share and process data as they learn, whilst simultaneously speeding up the process.

    AI equipment management

    The impact of AI on energy efficiency extends beyond theoretical research. Google’s AI-driven approach to data center cooling has led to a reduction of about 40% in energy use, equivalent to taking 64,000 cars off the road annually.

    McKinsey’s analysis suggests that AI-enhanced manufacturing could reduce greenhouse gas emissions by 10-20%. Companies like Intel and GE Renewables are harnessing AI for significant CO2 savings.

    AI devices

    In the energy sector, the adoption of “grid edge” AI technologies–everything from smart thermostats to better-managed solar panels–could lead to substantial reductions in utility emissions by 2030.

    Furthermore, AI-powered carbon capture and storage technologies are projected to supercharge scalable and efficient solutions for carbon removal.

    The challenge lies in ensuring that the efficiency gains and emission reductions achieved through AI outpace its own resource consumption. This requires a concerted effort across technology, governance, and collaborative research.

    Industries must focus on developing smarter AI systems powered by renewable energy. Policymakers need to create frameworks that encourage innovation within environmentally responsible boundaries. Academic investments should target the exploration of AI in the realms of climate and clean energy.

    While AI presents significant sustainability challenges, it also offers groundbreaking solutions. With responsible leadership that balances the benefits of AI with its environmental externalities, AI can positively transform systems to accelerate global decarbonization.

    Striking the right balance is essential for AI to usher in an era of sustainable prosperity, moving beyond doomerism to a future where technology and environmental stewardship go hand in hand. The journey towards sustainable AI is not just about technological innovation but also about reimagining our relationship with technology in the context of our planet’s health. As we navigate this path, the decisions we make today will shape the sustainability of our digital future–and hopefully, that is something everyone at COP can agree on.

    Professor Eric Xing is the president of Mohamed bin Zayed University of Artificial Intelligence. Professor Adrian Monck is a senior advisor at MBZUAI.

    More must-read commentary published by Fortune:

    • Bosses thought they won the return-to-office wars by imposing rigid policies. Now they’re facing a wave of legal battles
    • Inside long COVID’s war on the body: Researchers are trying to find out whether the virus has the potential to cause cancer
    • Access to modern stoves could be a game-changer for Africa’s economic development–and help cut the equivalent of the carbon dioxide emitted by the world’s planes and ships
    • Melinda French Gates: ‘It’s time to change the face of power in venture capital’

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

    Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.

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    Eric Xing, Adrian Monck

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  • Imposing harsh return-to-office mandates on employees was like taking candy from a baby. But CEOs will have to answer to their own bosses–investors

    Imposing harsh return-to-office mandates on employees was like taking candy from a baby. But CEOs will have to answer to their own bosses–investors

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    Today’s smart investors are not just looking at financials–they’re diving deep into a company’s culture, including flexible work policies, recognizing them as a significant indicator of future success.

    The Q4 2023 Scoop Flex Index reveals an intriguing trend: Companies that embrace flexible work arrangements are not just surviving–they’re flourishing. The evidence is staggering: From 2020 to 2022, companies with full flexibility led their peers by a remarkable 16% in revenue growth, adjusted for industry differences. And the trend wasn’t confined to the tech world–non-tech companies with flexible policies still boasted a 13% growth advantage.

    Companies that follow hybrid models, which blend remote and office work, are also showing their prowess, outpacing fully in-office companies by a growth margin of 3%. The difference may seem modest, but it highlights the efficacy of a balanced approach to flexible work in driving business growth.

    Why investors are looking at work-from-home policies when making decisions

    The corporate world’s shift toward flexibility is unmistakable. By the end of 2023, 62% of U.S. companies had adopted some form of work location flexibility, a significant increase from 51% at the beginning of the year. Meanwhile, companies insisting on full-time office work dwindled to 38%. This shift transcends a mere pandemic reaction–it’s a strategic move towards adaptability and resilience.

    I get dozens of calls a week from investors who want to consult with me on evaluating the work-from-home policies of companies in which they want to invest–whether it’s a startup or a well-established company. These investors are not just interested in surface-level details. They are keen on understanding how WFH policies translate into tangible business outcomes that affect the bottom line. Their primary concern is not what feels comfortable for company leadership. Rather, they are focused on identifying policies that are optimized for organizational success. This shift in investor perspective marks a significant departure from traditional investment evaluation criteria, where leadership comfort often played a more central role.

    In a recent op-ed, one investor highlighted that in his decision-making of which companies deserve investment, the efficacy of WFH policies is undeniable. That’s especially the case for sectors where human capital reigns supreme, such as tech. With company assets primarily comprising laptops and data storage, the real value lies in the talent pool–from engineers to sales experts. How these teams collaborate significantly influences overall performance as seamless customer journeys are critical to these businesses.

    Startups are leading this change, with 93% offering flexible work arrangements. This number stands strong even outside the tech sector. The message is clear: the future business landscape will prioritize flexible work, with traditional office work likely dwindling to a minority.

    Startups need to realize that their WFH policies are increasingly becoming a key criterion for investment evaluation. The message is clear: In the modern business landscape, WFH policies are not just employee perks. Instead, they should be viewed as crucial determinants of a company’s growth trajectory and, consequently, its attractiveness to investors.

    What investors look at when assessing flexible work policies

    Importantly, investors look for companies that are not just adopting flexibility for the sake of it but are following best practices grounded in empirical research. These best practices are evident in the companies that have integrated flexibility into their core operational strategy, recognizing it as a driver of growth. As the Scoop Flex Index finds, companies offering flexible working arrangements are growing at a faster pace compared to those sticking to rigid, traditional models. This growth is not just in terms of revenue but also market share and innovation capacity.

    Moreover, the clarity of a company’s WFH policy and the degree of employee buy-in are critical factors that investors should evaluate. Policies that are well-defined, transparent, and have the support of the workforce lead to improved retention rates. In the current job market, where talent acquisition and retention are increasingly challenging, the ability to keep skilled employees is invaluable. Companies with strong, clear WFH policies are more likely to attract a diverse talent pool, offering them the flexibility and work-life balance that modern employees seek.

    Additionally, these policies play a significant role in enhancing employee engagement and morale. When employees feel that their needs and preferences are acknowledged and accommodated, it fosters a sense of belonging and commitment to the organization. This heightened engagement translates into higher productivity, creativity, and overall job satisfaction, which are key drivers of business success.

    In essence, for investors looking to gauge the potential of a company, evaluating its WFH policies offers a window into its future performance. Companies that have successfully integrated flexible work arrangements, backed by clear policies and strong employee support, are setting themselves apart as forward-thinking, resilient, and adaptable. These are the companies poised for sustainable growth in an increasingly dynamic and competitive business landscape, making them attractive prospects for discerning investors.

    Addressing biased thinking to appeal to investors

    Incorporating an understanding of cognitive biases into the decision-making process regarding WFH policies can greatly enhance a CEO’s ability to align with investor expectations. Two particularly relevant cognitive biases in this context are the status quo bias and the empathy gap.

    The status quo bias, which is the preference for the current state of affairs, often leads to resistance to change. In the realm of WFH policies, this bias might cause CEOs to lean towards maintaining traditional office-centric models due to comfort with the known, overlooking the potential benefits of flexible work models. This can result in missed opportunities for growth and innovation that flexible policies might bring. As one angel investor notes, “It is the fear of the unknown and the wish to stay in the comfort zones of the last 20 years that makes managers call people back to the office. Successful managers will embrace remote work as an opportunity for improvement and find smart solutions for the benefit of the company and the employees.” To counteract this, CEOs should challenge their assumptions about traditional work models, engaging in scenario planning and examining data from companies that have successfully implemented flexible work arrangements.

    Similarly, the empathy gap, which is the difficulty in understanding others’ feelings when they are in a different emotional or physical state, can create a disconnect between understanding the actual needs and preferences of employees regarding WFH policies. If a CEO hasn’t experienced the challenges and benefits of remote work personally, they might underestimate the value of flexibility for employees. This gap in understanding can lead to policies that do not fully address employee needs, reducing effectiveness in terms of morale, productivity, and ultimately, business performance. To bridge this gap, it’s crucial for CEOs to engage directly with employees to understand their experiences and perspectives. Conducting surveys, focus groups, or informal discussions can provide valuable insights into what employees actually need and value in WFH arrangements. Being aware of and actively addressing these cognitive biases can lead to more informed, balanced decisions that benefit the entire organization and enhance its appeal to investors.

    As we navigate the ever-evolving business environment, the focus on WFH policies as a key investment criterion is not just a trend but also a strategic necessity. Companies that recognize and adapt to this change are set to lead, and investors who identify and leverage this insight will find themselves at the forefront of a new era of smart investing.

    Gleb Tsipursky, Ph.D. (a.k.a. “the office whisperer”), helps tech and finance industry executives drive collaboration, innovation, and retention in hybrid work. He serves as the CEO of the boutique future-of-work consultancy Disaster Avoidance Experts. He is the bestselling author of seven books, including Never Go With Your Gut and Leading Hybrid and Remote Teams. His expertise comes from over 20 years of consulting for Fortune 500 companies from Aflac to Xerox and over 15 years in academia as a behavioral scientist at UNC–Chapel Hill and Ohio State.

    More must-read commentary published by Fortune:

    • Bosses thought they won the return-to-office wars by imposing rigid policies. Now they’re facing a wave of legal battles
    • Inside long COVID’s war on the body: Researchers are trying to find out whether the virus has the potential to cause cancer
    • Access to modern stoves could be a game-changer for Africa’s economic development–and help cut the equivalent of the carbon dioxide emitted by the world’s planes and ships
    • Melinda French Gates: ‘It’s time to change the face of power in venture capital’

    The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

    Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.

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    Gleb Tsipursky

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  • Queen for a Day: Donald Trump – Marilyn Sands, Humor Times

    Queen for a Day: Donald Trump – Marilyn Sands, Humor Times

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    Queen for a Day

    Trump wants to be “Dictator” but don’t worry, just for one day! Next, maybe he’ll be “Queen for a Day!”

    Queen for a DayQueen for a Day

    Trump says he’ll only be a Dictator for a day – but there are so many more days in a Presidential Term, so I immediately signed up for ‘Costumes & Props’!

    I’ll spare you the names of the world’s notorious Dictators as you know who they are & their rap sheets & that’s a good thing because we don’t need another one!

    But Trump said, ‘Just 1 day’ – so we’ll just have to find out on Election Day who wouldn’t mind giving him his little request on his first day!

    DAY TWO

    He won’t be a Dictator anymore – he’ll be QUEEN FOR A DAY!

    Queen for a DayQueen for a Day

    DAY THREE

    He’ll be A SINGER!

    Trump singsTrump sings

    “What a difference a day makes, twenty-four little hours…” Hit song by THE Dinah Washington

    DAY FOUR

    He’ll be THE VILLAGE IDIOT!

    Trump idiotTrump idiot

    DAY FIVE

    He’ll be A FARMER!

    Trump farmerTrump farmer

    DAY SIX

    He’ll be A PREACHER!

    Trump preacher, Queen for a DayTrump preacher, Queen for a Day

    DAY SEVEN

    He’ll be A METAMUCIL SPOKESPERSON!

    Trump depressedTrump depressed

    DAY EIGHT

    He’ll be A POSTAGE STAMP MODEL!

    Trump mug shot stampTrump mug shot stamp

    And, DAY NINE… PRISONER FOR LIFE! **

    Trump prisoner, Queen for a DayTrump prisoner, Queen for a Day

    ** if not sooner!

    Marilyn SandsMarilyn Sands
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    Marilyn Sands

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