America is experiencing a cathartic moment in time. Common Sense, which we Baby Boomers grew up more or less taking for granted, has been eroding at an alarming pace for a few decades. Call it Political Correctness, CRT (Critical Race Theory), Equity, DEI (Diversity, Equity, and Inclusion), Affirmative Action, or ESG (Environmental, Social, and Governance), the powerful movement has infected American sensibilities, negatively affecting our investments. Lately, their popularity appears to be coming to a halt.

Socially Conscious investing has been popular for decades, as many mutual funds and ETFs (Exchange-Traded Funds) were developed to offer investors the ability to avoid holdings in the tobacco industry, defense weapons production, fossil fuels, and any number of individually distasteful arenas. Among the most recent were investments tailored to DEI proponents.

One after another, America’s publicly traded corporations are terminating their DEI programs. Until recently, public pressure to adopt these programs was difficult to ignore. Remember when Chief Justice John Roberts rendered his opinion that perhaps the best way to end discrimination was to “stop discriminating?” Doing the right thing does not need to be tailored to social fads.

Recent investment performance problems have raised eyebrows among investors, Wall Street practitioners, and government officials. Fiduciary Responsibility, which compels managers to do the best thing for shareholders, was violated, all in the name of Political Correctness (or whichever trendy term applies). Investors noticed, scrapped their underperforming assets, and took their investment cash elsewhere.

Just this week, American Airlines lost a court case alleging that the company’s 401(k) Plan underperformed due to an emphasis on ESG investing, resulting in reduced returns for their employees.

Lowering standards to accommodate feel-good policy acronyms leads to reduced performance. Demand for improved performance has induced corrective action, such as elimination of ESG and DEI, which are suddenly being dropped like proverbial hot potatoes.

Recently, Vivek Ramaswamy noted that “American culture has venerated mediocrity over excellence for way too long.” That did not sit well with all Americans, but evidence is all around us. As we re-enter a period of America First attitudes, individuals and corporations are seeking performance. Stock and bond markets will hopefully react positively to recent changes, and we all win.

As investment managers, we are constantly seeking improved performance. Our economic futures will all be enhanced as the country returns to the pursuit of excellence through common sense competition.