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Why Investing in Fossil Fuels Is So Tricky

As concerns about climate change push the world economy toward a lower-carbon future, investing in oil may seem a risky bet. For the long term, that may be true.

Yet for the moment, at least, oil and gas prices appear likely to continue to rise as the economy recovers from the pandemic-driven shutdown of millions of businesses, big and small.

These countervailing trends — increasing demand now and falling demand at some point, perhaps in the not-too-distant future — create a dilemma for investors.

The good news is that an array of traditional mutual funds and exchange-traded funds are available to help them navigate these uncertain waters. Some funds focus on slices of the industry, such as extracting crude oil and gas from the ground or delivering refined products to consumers. Others focus on so-called integrated companies that do it all. Some spice their holdings with some exposure to wind, solar or other alternative energy sources.

International Energy Agency forecast that oil consumption was not likely to return to prepandemic levels in developed economies.

“World oil markets are rebalancing after the Covid-19 crisis spurred an unprecedented collapse in demand in 2020, but they may never return to ‘normal,’” the I.E.A. said in its “Oil 2021” report. “Rapid changes in behavior from the pandemic and a stronger drive by governments toward a low-carbon future have caused a dramatic downward shift in expectations for oil demand over the next six years.”

alternative energy funds. Many enable investors to zero in on discrete segments of the industry.

The biggest holdings of the Invesco WilderHill Clean Energy E.T.F. are producers of raw materials for solar cells and rechargeable batteries or builders and operators of large-scale solar projects. The $2.9 billion fund yields 0.49 percent and has an expense ratio of 0.7 percent.

The First Trust NASDAQ Clean Edge Green Energy Index Fund focuses on applied green technology. Its biggest holdings are Tesla, the American maker of electric automobiles; NIO, a Chinese rival in that field; and Plug Power, which makes hydrogen fuel cells for vehicles. Also a $2.9 billion fund, it yields 0.24 percent and has an expense ratio of 0.6 percent.

The First Trust Global Wind Energy E.T.F., as its name suggests, targets wind turbine manufacturers and servicers, led by the Spanish-German joint venture Siemens Gamesa Renewable Energy and Vestas Wind Systems of Denmark, as well as operators such as Northland Power of Canada. This $423 million fund yields 0.92 percent and has an expense ratio of 0.61 percent.


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The Tax Filing Deadline Was Delayed to May 17, but Read the Fine Print

“They hear Tax Day is moved to May 17, so a lot of people will go to their preparer on April 30,” Mr. Stewart said. “Unfortunately, the first-quarter estimated payment is late.”

The conference and other groups representing tax professionals had urged the government to postpone the estimated tax deadline as well. In congressional committee testimony in March, the I.R.S. commissioner, Charles P. Rettig, said the estimated tax deadline hadn’t been changed because it would, in effect, be giving “a break” on interest and penalties to wealthy people, who would invest the money instead of paying the government.

But people who file estimated taxes also include sole proprietors and workers in the gig economy with modest incomes, accountants say. Many people who lost jobs in the pandemic switched to work delivering meals and groceries ordered by mobile apps, said Melanie Lauridsen, senior manager for tax policy and advocacy at the American Institute of Certified Public Accountants.

“That’s where the need is,” Ms. Lauridsen said.

The disconnect between the filing and estimated tax deadlines means tax preparers are pushed to get returns done by the traditional deadline anyway. “It’s putting a tremendous amount of stress on tax preparers,” said Rhonda Collins, director of tax content and government relations with the National Association of Tax Professionals.

In general, filers must estimate what they owe and round up to reduce the risk of underpaying. “It feels like it’s very much a guesstimate,” Ms. Collins said.

Should you incur a penalty when you file your tax return next year, you can request an abatement. Often, the I.R.S. is lenient with first-time errors, she said, especially when there are extenuating circumstances.

It’s also important to keep track of your income in 2021, tax professionals say. Many people had lower incomes than usual during 2020 because of the pandemic, and could see them rise in 2021 if the pandemic wanes as expected and the economy expands. If your income is turning out to be higher than expected, you may need to increase the amounts of your estimated payments later in the year.

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Learning How to Invest From the Pros

Mr. Green doesn’t choose sides. He simply reports on the views of investors who say the secret to success is buying good companies at relatively inexpensive prices, as well as on others who say it is OK to pay a premium if a company has substantial growth prospects.

But he does hammer home certain lessons he heard from the people he interviewed:

Don’t get in your own way. Don’t be emotional about your investments, and don’t chase fads.

If you don’t understand what a company does or don’t understand an investment opportunity you are being offered, stay away.

Keep enough cash on hand so you can weather the inevitable downturns without being forced to sell your holdings at a loss. And, he writes: “To achieve resilience, it’s imperative to reduce or eliminate debt, avoid leverage and beware of excessive expenses.”

Throughout the book he underscores the central premise that originality is overrated when it comes to investing. You don’t need to come up with your own unique approach. You can simply copy ideas that have worked for others.

“The overarching purpose of this book,” Mr. Green writes, “is to share what I would call ideas worth cloning.”

Throughout, Mr. Green points out lessons that can also be applied to your personal life.

“Both in markets and life, the goal isn’t to embrace risk or eschew it, but to bear it intelligently while never forgetting the possibility of an unpleasant outcome,” he writes. He adds later on: “Nothing is more essential than our capacity to survive the most difficult times not only financially but emotionally.”

As much as I like the book, there are a few things I wish Mr. Green had done differently.

Yes, these are successful men — and just about everyone mentioned in the book is male — but his appreciation of them can sometimes veer into fawning. Howard Marks of Oaktree Capital Management is described as a “philosopher-king of finance,” and Joel Greenblatt, “a giant among giants,” has “a beguiling manner and warm smile.”

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As Talk Turns to Inflation, Some Investors Look to Gold

Inflation is back in the news and so, of course, is interest in gold.

After years of dormancy, inflation is expected to rise a bit this summer. It is even possible that as Americans emerge from Covid-19 induced seclusion, their pent-up demand will overheat the economy and weaken the dollar.

Those concerns have put the spotlight on gold, which has long been viewed as a hedge against inflation, a declining dollar and an unstable stock market. Buy gold now and make a quick profit, or so the thinking goes.

But this analysis has problems, starting with the outlook for inflation, which isn’t necessarily that bad. The inflation rate ended 2020 at an anemic 1.4 percent, and Jerome H. Powell, the Federal Reserve chair, has said that despite the potential for a modest surge above 2 percent this summer, the Fed doesn’t expect inflation to move much higher between now and 2023.

Perhaps that’s why gold hasn’t been soaring lately, either. After peaking at more than $2,000 an ounce last summer, gold prices hovered below $1,750 in early April, a decline of nearly 13 percent.

Warren E. Buffett likes to point out. Finally, investors who buy physical gold face the additional risk and cost and of securing their bullion or coins.

A more cautious approach is to avoid chasing returns. Instead, keep a small percentage of a portfolio in gold and other precious metals in the hope that this will be a long-term stabilizer.

“In a world where equity prices continue to elevate untethered to any fundamentals, precious metals as a small amount of diversification makes sense,” said David Trainer, chief executive of New Constructs, an investment research firm based in Nashville.

George Milling-Stanley, chief gold strategist at State Street Global Advisors, said gold offers two benefits over the long term: protection against risk and volatility, and as asset appreciation.

“Gold is a defensive asset that really comes into its own over the long term, when you can enjoy the return stream,” Mr. Milling-Stanley said.

restrained, rarely rising above 3 percent annually and remaining around 2 percent or less most of the time. Gold prices, however, rose from $274 an ounce at the beginning of 2001 to about $1,750 at the end of March.

“We don’t need inflation,” Mr. Milling-Stanley said. Gold performed well anyway.

Some experts recommend investors stick to E.T.F.s that focus strictly on gold, which tends to lead the other precious metals, silver and platinum. Advisers warn that gold, precious metals and other commodities should make up just a sliver of an individual’s portfolio, usually no more than a total of 5 percent.

Whatever its drawbacks as an investment, gold has had an enduring appeal.

“There is a psychological component in owning gold that goes back for centuries,” Ms. Simonetti said. “It’s an asset that gives peace of mind to investors. It just makes investors feel safe and secure.”

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An Argument for Investing Where the Return Is Social Change

Getting a market-rate return is something impact investors are comfortable with, but a lower return makes it harder to attract enough investors, said Trenton Allen, managing director and chief executive of Sustainable Capital Advisors. “It’s not impossible,” he said. “But you’re narrowing the number of investors you have access to.”

Traditional impact investors also argue that accepting different returns for different investments is already happening. Consider bondlike returns for fixed-income types of risk.

“Impact investing is a big tent and should be a big tent,” said Nancy Pfund, managing partner at DBL Partners, an impact venture capital fund. “The challenge is, we shouldn’t muddy the waters and think impact-first is the only kind of investment. We also don’t want to step backward and deal with biases about returns that we have spent at least 10 years fighting.”

Even those who have taken the approach agree that it is a luxury.

“If the organizing priority is impact, that’s a privilege, but you have to have a deep tolerance for risk,” said Margot Kane, chief investment officer of Spring Point Partners, which is a social venture fund created by the Berwind family of Philadelphia, whose wealth dates to 19th-century coal mining.

For anyone considering taking the middle ground, here are the two key questions: How do you determine if an investment qualifies as impact first? And since impact, not return, is the primary motivation, how do you measure it?

Let’s start with selection.

“One of the things we ask ourselves when we’re doing due diligence on one of these projects is, ‘Is this a really great catalytic investment or a very bad market-rate investment?’” said Liesel Pritzker Simmons, co-founder and principal of Blue Haven Initiative and a member of the family whose wealth derives from Hyatt hotels.

“Honestly, it tends to come down to what is the problem they’re trying to solve and is the nature of that solution super-scalable or not?” she said.

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Pandemic Helps Stir Interest in Teaching Financial Literacy

In the latest round of legislative proposals, some states are merely encouraging the teaching of financial skills while a few would make the subject a graduation requirement. Ohio, for instance, is considering a proposal that would require high school students to pass a half-credit class in personal finance in order to graduate. The class must be taught by a teacher trained in the subject matter.

The bill would also create a fund to help pay for training to teach the subject, said State Senator Steve Wilson, a Republican and former banking executive who co-sponsored the bill. He said he was hopeful that the bill would be voted out of committee this month.

“Kids come out of school having no clue about financial literacy,” Senator Wilson said. “You go out into the world greatly disadvantaged.”

Many financial literacy advocates consider a full-semester course the gold standard for personal finance instruction. Rebecca Maxcy, director of the Financial Education Initiative at the University of Chicago, said many courses focused mainly on skills, like writing a check or filing taxes. While those lessons can be helpful, she said, it’s important for courses to include discussions of how personal values and attitudes about money influence behavior, as well as an examination of the financial systems and potential barriers that students will encounter in the world of money.

Questions like “Who benefits when you open a bank account?” can prompt meaningful discussions, she said.

Some curriculum options, however, offer more condensed, basic instruction.

Everfi, a digital instructional company, offers a free seven-session program for high school financial literacy. Students take interactive, self-guided lessons in topics like banking, budgeting and college financing.

Sidney Strause, a freshman at Marshall University in West Virginia, said she had taken Everfi’s course as a junior in high school. The lessons were assigned as part of another course she was taking, and typically took 45 minutes to an hour to complete.

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N.Y. Seeks Trump Insider’s Records, in Apparent Bid to Gain Cooperation

State prosecutors in Manhattan investigating former President Donald J. Trump and the Trump Organization have subpoenaed the personal bank records of the company’s chief financial officer and are questioning gifts he and his family received from Mr. Trump, according to people with knowledge of the matter.

In recent weeks, the prosecutors have trained their focus on the executive, Allen H. Weisselberg, in what appears to be a determined effort to gain his cooperation. Mr. Weisselberg, who has not been accused of wrongdoing, has overseen the Trump Organization’s finances for decades and may hold the key to any possible criminal case in New York against the former president and his family business.

Prosecutors working for the Manhattan district attorney, Cyrus R. Vance Jr., are examining, among other things, whether Mr. Trump and the company falsely manipulated property values to obtain loans and tax benefits.

It is unclear whether Mr. Weisselberg would cooperate with the investigation and neither his lawyer, Mary E. Mulligan, nor Mr. Vance’s office would comment. But if a review of his personal finances were to uncover possible wrongdoing, prosecutors could then use that information to press Mr. Weisselberg to guide them through the inner workings of the company. The 73-year-old accountant began his career working for Mr. Trump’s father.

ruling from the United States Supreme Court.

he was not seeking re-election.

Seven Springs estate in Westchester County. In addition to possible tax- and bank-related fraud, the prosecutors are examining the Trump Organization’s statements to insurance companies about the value of various assets.

Prosecutors have subpoenaed records from a firm hired by Deutsche Bank, one of the former president’s main lenders, to assess the value of three Trump hotels with Deutsche Bank loans, people with knowledge of the matter said. The firm reviewed the operations of restaurants, bars and gift shops at the hotels, one of the people said.

Last year, the prosecutors subpoenaed Deutsche Bank itself and Mr. Trump’s other main lender, Ladder Capital, which sold its Trump Organization loans years ago. Both banks are cooperating with the prosecutors.

It is unclear whether the prosecutors will ultimately file any charges. But if a case were built against the Trump Organization based on the loan documents, the company’s lawyers could argue that Deutsche Bank and Ladder Capital are sophisticated financial institutions that conducted their own analysis of Mr. Trump’s properties without relying on the company’s internal assessments. The lawyers could also emphasize that providing different valuations for a property depending on the situation — for example, on a loan application or in appealing local property taxes — is common and appropriate in New York’s real estate industry, in part because there are varying methods for calculating property values.

Outside accountants also vet the information provided to local tax authorities, potentially reducing the likelihood of fraud. Mr. Trump has argued that his tax returns “were done by among the biggest and most prestigious law and accounting firms in the U.S.”

In addition to the fraud investigation, Mr. Vance’s office continues to focus on its original target: the Trump Organization’s role in paying hush money during the 2016 presidential campaign to two women who said they had affairs with Mr. Trump.

Mr. Trump’s former personal lawyer and fixer, Michael D. Cohen, paid $130,000 to buy the silence of one of the women, Stephanie Clifford, the pornographic film actress who performed as Stormy Daniels. The Trump Organization later reimbursed Mr. Cohen, and Mr. Vance’s office has scrutinized whether the company properly accounted for the $130,000 payment.

Mr. Cohen, who in 2018 pleaded guilty to federal campaign finance charges for his role in the hush-money scheme, has long implicated Mr. Weisselberg, alleging that he helped devise a strategy to mask the reimbursements. The federal prosecutors who charged Mr. Cohen did not accuse Mr. Weisselberg of wrongdoing.

Mr. Cohen is now cooperating with Mr. Vance’s investigation and has met with prosecutors several times, including to review some of Mr. Trump’s financial documents. Lanny Davis, a lawyer for Mr. Cohen, declined to comment.

The prosecutors have also questioned Mr. Weisselberg’s former daughter-in-law, Jennifer Weisselberg, she has said. Ms. Weisselberg has been enmeshed in a bitter divorce with Mr. Weisselberg’s son, Barry, who manages the Trump Wollman Rink in Central Park.

Ms. Weisselberg said in an interview that prosecutors have asked her about a number of gifts that Mr. Trump and his company gave the Weisselberg family over the years. These include an apartment on Central Park South for Ms. Weisselberg and her former husband, cars leased for several family members and private school tuition.

The scrutiny of the gifts appears to be part of an effort to paint a picture of Mr. Weisselberg’s financial life, as is common when prosecutors seek cooperation from a potential witness. It is unclear whether prosecutors suspect any wrongdoing related to the gifts.

James B. Stewart and Steve Eder contributed reporting. Susan C. Beachy contributed research.

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