Saturday, July 19, 2014

In regione caecorum rex est luscus

I admit it.  This week my ego received a terrible blow.  As is always the case, such wounds are self-inflicted  because the perception of injury can only arise from the a priori notion that one is defined, in part,  by some externality (like the perceptions of others).  I was on a call with a colleague who wanted me to speak with an investment professional because, "you have so much in common."  This colleague has recently seen me as an advisor and has extolled my insight to others as someone "worth listening to."

To say that I shared nothing in common with the person with whom I was introduced would not be appropriate.  As we both have lived in the world of capital markets for much of our professional endeavors, we share a common lexicon.  Words and phrases between us justify the perception that we are similar or "alike".  However, in a few short minutes, I heard this individual promoting investment advice and behavior so entirely antithetical to my values that, for a moment, I was at a loss to know what to do.  Do I create an awkward situation for my colleague and abruptly point out that the dissonance is too great?  Do I accommodate the investment advisor's predatory arrogance and ignore the depth of moral depravity that I'm hearing?  Do I sit and say nothing?

For those of you who know me, you know that the third option doesn't stand a chance.  If I sit and say nothing, someone should check my pulse because I've probably sublimated into pure light and a corpse is all that's left to show for me.  The second possibility is problematic as I'm increasingly concerned with the error in accommodation when the fullness of a message, once delivered, can be assimilated by its audience as a plausible hypothesis - not on its merits but rather because of the contextual unfamiliarity of the hearer.  And, regrettably, the first option affords neither my friend nor his acquaintance the level of respect and decorum with which I choose to enter into communication.  And, seeing no good option, I proceeded to take an introspective view of the situation and there, staring me in the face, was the real paradox.  I am being judged to have valuable insight and experience by a person who does not have the foundation from which to discern the value, or lack thereof, of what I've got to say.  The evidence is in the simile.

It is disheartening to experience the uniform obsession people have with economics on a personal or macro scale when one sees the abject ignorance of the systems upon which economics stand.  Our willingness to allow intercessors to stand between us and our money is only rivaled by our cultural acceptance of consensus illusions about accessing the divine; and then, not by much.  And just because a person uses the same language in no way suggests that they share common values, motivations, or perceptions.  Whether you are an individual investing in a 401(k) - the great tax-deferred illusion that has seduced millions - or a wealth manager or family office; my trouble with 'advisors' is their predictable reflex to view 'safety' and 'risk management' (often pitched as "being conservative") as a justification for herd behavior.  The problem with this is two-fold.  First, herds by definition mean revert.  By this I mean that they collectively act, for the most part, together.  That's kind of the point.  But my bigger objection is that herds attract predators.  And predators have evolved to attack the weak, the young, the desperate, or the feeble.  If you wonder why your investment portfolio is not doing as well as the market, I've got news for you.  It is!  The problem is that you're market exposure is passing through the sticky hands of 'managers' and 'advisors' and they're collecting the return that your money is making.

I recently watched an amazing Planet Earth special on a few lion prides and their hunting behaviors around a watering hole in Africa.  Wildebeest after lumbering wildebeest fell prey to the hungry lions and their training cubs.  Gazelles and other small deer got blind sided by giant paws and teeth as they innocently bent to quench their thirst.  And all the while the monkeys were going nuts trying to scream and warn their quadruped neighbors to look out because there were lions.  The monkeys - none of whom got eaten - provided ample warning and the wildebeests and gazelles grazed on. 

What I realized this week is that I've failed to communicate my true financial insights adequately because I'm too often associated with the pride of predators.  Just because someone has a particular ethnicity, attends the right church, mosque or synagogue, or shows up in a gathering of 'enlightened', and uses the same words I use does not mean that they share my principles and values.

My values are simply articulated (and differentiated):

1.  Value exchange should be linked to productivity and mutual benefit.  Monetary returns that are solely based on manipulations of a market at a micro- or macro level are parasitic and predatory.
2.  Transactions must be done in full transparency when both parties confirm equivalent understanding.  If I'm taking benefit from you based on an incomplete set of information or because I know something that you don't know, that's unethical and unacceptable.
3.  Investments and returns must be understood before they're deployed or redeemed.  If you don't know the reason why there's a gain or loss, it's best not to place the assets you steward into that financial product or venture.
4.  Investment returns must have a basis in real transactions.  Value can be ephemeral but returns should be objective.  When these lines get blurred, someone loses. 
5.  Duration of investment and expected return should be defined and understood.  Nothing grows perpetually.  Nothing operates in perfect linearity.  This is to say that pulses and cycles must be understood so that expectations are appropriately set.
6.  Investing with ethical awareness up front obviates the need for 'charity' and other money-laundering exercises to buy back conscience later.  You can't ring the blood of the miners out of gold no matter how many NGOs receive your generous contributions to end slavery and abuse.  If you're ignorant or morally apathetic with your investment now, there's no "better you" or "better use" that can justify your greed-fueled neglect today.

There's so many more places to go with this but the moral to my story is simple.  I'm not an advisor and I'm going to be more cautious about how I'm promoted by others.  This is, to quote the title of this post - the domain of the blind - and we don't need more kings!  We need to heal the disease that has robbed the land of sight.  The 16th century Erasmus of Rotterdam diagnosed the social disease correctly - he just didn't offer a clear alternative.  But, maybe he was a Cyclops… who knows?

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Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave