Posts tagged with: investment

pilgrim, property rightsEach Thanksgiving brings with it another opportunity to pause, meditate, and express our gratitude for the great blessings in life. As one who recently welcomed a new baby boy to my family, it seems particularly evident this season that the greatest blessings are not, after all, material.

Yet material need is a persistent obstacle, the dynamics of which wield significant influence over the entirety of our lives, from the formative effects of our daily work to the time, energy, and resources we pour out out in the service of others. Thus, it should be no surprise that Thanksgiving is often accompanied with reflections on the material: how we’ve been blessed with food in our bellies, shelter from the cold, a means to provide, and so on.

In the spirit of such reflections, Reason.tv released a nice, albeit excessively cheeky, video aimed at prodding our gratitude beyond the bread on the table and toward one of the systemic features that helps bring it from the field to the baker to the boca: property rights. (more…)

Faithful in All God's House

I recently shared a lengthy excerpt from Faithful in All God’s House, highlighting the investment-return motif that appears throughout the Bible. “All of God’s gifts to mankind are as a divine investment on which the investor expects full return,” write Berghoef and DeKoster.

Several readers pushed back on the analogy, interpreting it to mean that God rolls out his divine plan according to earthbound assumptions, as if “prudent investment” means being beholden to the outputs of a narrow, materialistic cost-benefit analysis.

It’s troubling on many levels that “prudent investment” has come to reckon imaginations of something so imprudent for so many. We humans, the “agents of return,” are called to live within a framework much more varied, complex, and mysterious than the confines of a Wall Street banker, despite those times when such considerations have their place. We serve a God of love, and just as that love is deep and distinct from distorted human variations, we are called to live and think and act according to an economy not of our own constructing. (more…)

Here’s today’s offering from Jim Wallis’ Rediscovering Values for Lent on the Sojourners website:

Today, instead of statues, we have hedge funds, mortgage-backed securities, 401(k)s, and mutual funds. We place blind faith in the hope that the stock indexes will just keep rising and real estate prices keep climbing. Market mechanisms were supposed to distribute risk so well that those who were reckless would never see the consequences of their actions. Trust, security, and hope in the future were all as close to us as the nearest financial planner’s office. Life and the world around us could all be explained with just the right market lens. These idols were supposed to make us happy and secure and provide for all our needs. Those who manage them became the leaders to whom we looked, not just for financial leadership, but direction for our entire lives. That is idolatry. (page 29).

Last month, Fidelity Investments reported that the average 401(k) balance reached a 10-year high at the end of 2010 — two years after the financial crisis and recession. It also pointed out that “the majority (53%) of participants in 401(k) plans … earning between $20,000 and $40,000 do participate, and 71 percent of participants earning $40,000 and $60,000 participate.” That’s a lot of lower-income idolatry.

This is not a picture of the stock market

According to a report (issued in 2008) by the Investment Company Institute and the Securities Industry and Financial Markets Association, “ownership rates for equities and bonds across U.S. households grew dramatically between 1989 and 2001, but have since tapered off. In the first quarter of 2008, 47 percent of U.S. households (54.5 million) owned equities and/or bonds. The overall ownership rate in 2008 is still much higher than it was in 1989.” The report noted that “ownership of these investment assets has declined since 2001, as increasing market volatility has reduced Americans’ tolerance for risk.” But, most likely, those investment funds will be saved somewhere or moved into lower risk vehicles.

Of course, if you are afraid that investing in the stock market, a mutual fund, a money market account, etc., makes you an idol worshipper, the cure would be to stuff your cash into the mattress or bury it in a coffee can. But would that be good stewardship?

Blog author: jballor
Wednesday, November 8, 2006
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Strong claims coming from Sam at the Philanthropy in Culture, Education, Entrepreneurship blog:

The Charity model does not work – Fact. Time to move on. Responsible, accountable, dignified, respectable investment will liberate the developing world. Inventing a new model for the philanthropic space is not necessary. There is one already in existence – the business model. Change comes about through those who are bold and fearless, constantly innovating on a daily basis, questioning, re-inventing out dated methodologies. Trends suggest partnerships between business and NGO, sharing expertise to deliver lasting, viable solutions – a potent combination.

I guess it depends on what you mean by “the charity model,” but this strikes me as a false dichotomy. Why not both vibrant charity and vigorous commercial investment? Or is that what Sam is arguing for?

Mark Cuban, billionaire and owner of the NBA franchise in Dallas, announced that he is “starting a website that focuses on uncovering corporate crime.” He continues, outlining the business model for the site: “I have every intention of trading on the information uncover[ed], and disclosing exactly what i do. The ultimate transparency.”

Another of Cuban’s ventures, HDNet, the first all high-definition TV network, is “talking to Dan Rather and we hope to do a deal where he produces a show that uncovers news. Information with a payoff.” Perhaps some of the news Rather uncovers will be of interest to the Cuban corporate corruption site.

Cuban defends his decision to trade on the corruption and crime information: “You may not like that I will trade on information we uncover and then publish it. I think reporting what we find is better than not reporting it. If we can uncover fraud. Thats a good thing. That profiting on the information we find is the smart thing to do. It beats the hell out of trying to remake the site every year to maximize advertising or subscriptions. It changes the newsenomics, which need to be changed.”

One conceptual difficulty I see is that for Cuban to “trade on” the information he gets, he’ll already have to own shares of stock in the affected company. Indeed, to trade on the news seems to mean that he’ll only be selling. That is, unless the news he breaks is in some cases about the lack of corporate crime in a case where it is suspected…then he could buy, I suppose.

In any case, Cuban’s plan certainly takes the idea of investment research to a whole new level.

Updated Update: Chris Roush gives an overview of Cuban’s plans as well as the site name, ShareSleuth.com, and links to a reaction from former BusinessWeek reporter Gary Weiss.

TCS Daily writer Larry E. Ribstein, a law professor at the University of Illinois College of Law, writes about the Cuban plan and confirms that “presumably this means that he will sell ‘short’ the stocks the journal investigates, and then buy them after the revelations puncture the price.”