tag:blogger.com,1999:blog-55301583697575657172024-03-12T22:32:16.050-07:00Paradigm ShiftingPartnering Stewardship Investors with Values-Driven Business Leaders to Build a Future of Sustainable ProsperityTim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.comBlogger66125tag:blogger.com,1999:blog-5530158369757565717.post-58278150991722687192014-10-20T15:33:00.000-07:002014-10-20T15:33:14.851-07:00Pension Funds... Do Not Belong On Wall Street.<div class="separator" style="clear: both; text-align: center;">
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There's a very good argument for creating a space for Pension Funds to make equity investments that don't use stocks. People have it in their minds that stock and equity are the same thing. But stock is a FORM of equity, and there are other forms of equity. Partnerships, for example, are the original form of equity.<br />
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The problem with stock is when you buy stock you have to sell stock. So you have to have a price and you have to have a market and your point of connection with the enterprise you are investing isn't the customers and the revenues, it's what other investors think their share price should be. <br />
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So you get caught up in the whole shareholder mentality, and it's speculation. Yes, it is, and a <u>fundamental rule of fiduciary law is that pensions should not be speculating.</u><br />
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Just because they shouldn't be making speculative investments using stock doesn't mean they shouldn't be making equity investments. We just need to use a different form of equity. Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-3103490341508768862013-12-17T14:04:00.001-08:002013-12-17T14:04:56.990-08:00US Supreme Court Looks At Fiduciary Prudence<div class="separator" style="clear: both; text-align: center;">
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JDJournal.com reports that the US Supreme Court has agreed to hear a case seeking to hold an employer liable for loses incurred by its employees on 401(k) funds invested in the employers' own stock.<br />
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"Those who work as administrators of employee retirement accounts are required by law to act as ‘prudent’ trustees. The law does not make it clear if they are to be held accountable for losses accrued by their employees because of unwise investments. Regarding the case at hand, the employer encouraged its workers to invest most of their money in the stock held by the company."</div>
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http://www.jdjournal.com/2013/12/16/supreme-court-to-hear-case-regarding-401k-losses/#Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-21249280793989197712013-12-09T09:49:00.000-08:002013-12-09T09:49:24.676-08:00Visioneering Evergreen Investment Beliefs by Evergreen Pension Trusts<div class="separator" style="clear: both; text-align: left;">
This mini-poster is designed to show how the evergreen option empowers evergreen pension trusts, and their trustees to articulate the investment beliefs that guide their investment choices. It is focused mostly on mission and purpose.</div>
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Tomorrow I will post another poster, that looks at diversification and ownership of the impacts of investments on society, the economy and the environment.</div>
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<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-55490009548004904202013-12-05T12:37:00.000-08:002013-12-05T12:37:11.823-08:00Something to Watch. Something to Read.<span style="orphans: 2; text-align: -webkit-auto; widows: 2;"><span style="font-family: inherit;">Our friend and colleague, Raj Thamotheram, is featured in this excellent documentary just released by The Finance Innovation Lab, out of the UK. Please watch and share.</span></span><br />
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<span style="orphans: 2; text-align: -webkit-auto; widows: 2;"><a href="http://www.youtube.com/watch?v=fEqFxgWRBB0&feature=youtu.be" target="_blank"><span style="font-family: inherit;">Transforming Finance</span></a></span><br />
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<span style="font-family: inherit;">Also, John Fullerton of Capital Institute published posted a blog to the CSR Newswire: <a href="http://www.csrwire.com/blog/posts/1133-evergreen-direct-investing-the-ceo-perspective" target="_blank">Evergreen Direct Investing, the CEO Perspective.</a></span>Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-20806441114068164942013-11-30T16:11:00.000-08:002013-11-30T16:11:38.510-08:00Investment, Architecture and Stewardship<div class="separator" style="clear: both; text-align: center;">
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On a visit to my son the other day, I was leafing through a back issue of <a href="http://www.architectureboston.com/" target="_blank">ArchitectureBoston</a> (Spring 2013), where I found an article - an interview, really - on a conversation about the education of architects. It opened with this quote, from the 19th Century: "Shall the pupil of architecture be educated in some mechanical workshop, in an art studio or a polytechnical school?"<br />
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One of the interviewees, Nadar Tehrani, offered this insightful comment: "What's remarkable is all the other things that quote overlooks that we consider indispensable to the study of architecture today - history, anthropology, sociology..."<br />
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Buildings define our public spaces, the spaces we share with others. Building architects are the co-creators and co-curators of our public spaces; stewards, really, of the shared spaces within which we live and work in community together.<br />
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The education of building architects has evolved so that it now includes an understanding of how architecture itself has evolved, over time and within the changing spaces that buildings define and that define the possibilities for how we can live in community together. <br />
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Why?<br />
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I imagine it is because the profession has built up over time an institutional memory of how bad the experience can be when buildings fail to define public spaces effectively. There is as much art as there is engineering in the design of effective public spaces, and just as all art evolves out of the art that went before it, architecture, too, has learned to evolve out of the architecture that preceded it. And not just the architecture, but the entire human experience of living together, in community, within publicly shared spaces that are co-created and co-curated through building design, construction and use.<br />
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Architects are stewards of our experience of living in community, in publicly shared spaces that change from time to time, and over time, as our economy, our technology and our society also change from time to time, and over time. As stewards, they must have a sense of the whole, and not just their part.<br />
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The parallels are strong to Pension Trustees, who as stewards of our retirement savings, are also evolving into stewards of our shared experiences of prosperity across the generations. This is new. Before the 1970s, pensions were not significant contributors to wealth creation. But it is happening. Since the 1970s, pensions have grown is scope and scale, to the point where some individually, and all taken together, now drive the global financial markets, and that drives the global economy, co-creating and co-curating our shared prosperity (and also our episodic losses of shared prosperity - think 2008).<br />
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Where building architects use the design of buildings to co-create and co-curate our public spaces, Pension Trustees use the design of their investments and investment portfolios to co-create and co-curate our shared prosperity.<br />
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The parallels to education are also strong. The ideal Pension Trustee will be well-grounded in the mechanics of investing; the polytechnics of technology, industry and trade; and also in history, anthropology, sociology and all the other aspects of the story of the evolution of knowledge, work and wealth, from time to time, and over time, that sometimes delivers prosperity, and sometimes does not.<br />
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There is as much art as there is mathematics to investing in new wealth creation. Like art and like architecture, new wealth evolves out the wealth that preceded it.<br />
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And just as thoughtless building leads to ineffective sharing of public spaces, thoughtless investing leads to ineffective sharing of prosperity.<br />
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Good Pension Trustees know that. Evergreen Trustees act on it.<br />
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Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-74057120002588872782013-11-01T07:11:00.000-07:002013-11-01T07:11:10.021-07:00A New Choice. A New Narrative.<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmQGXMxeON19_hN4Y9qZpozWN_kKdGW2ifURwJNNPQkZ5HbVpcnHGJIOBsbDkYjcTWm-3cQlvZQqFrnYs3cKdkofnycbLt1bAEqsa9ibca2qIc2HOR_gzYF7BGivg8hP2wMrvNiGBITmxm/s1600/which+do+you+choose%3f.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="289" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmQGXMxeON19_hN4Y9qZpozWN_kKdGW2ifURwJNNPQkZ5HbVpcnHGJIOBsbDkYjcTWm-3cQlvZQqFrnYs3cKdkofnycbLt1bAEqsa9ibca2qIc2HOR_gzYF7BGivg8hP2wMrvNiGBITmxm/s320/which+do+you+choose%3f.png" width="320" /></a></div>
Yesterday, I had the chance to visit with Dr. Philip Grant, a Research Fellow in Social Studies of Finance at EPIFM, School of Social and Political Sciences, University of Edinburgh.<br />
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Philip is in New York doing anthropological research on how the capital markets work at an interpersonal level. Fascinating, and very timely.<br />
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We met for a visit and some lunch at Douro, in Greenwich CT, with my colleagues at the Capital Institute. Philip wanted to know more about the Evergreen hypothesis as an interesting variation on the main theme of his research, which focuses on current standard practices in securities trading.<br />
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Among the many excellent topics Philip raised was a question about why an enterprise would choose evergreen over the usual corporate finance solution. The answer comes in the form of a choice about who the enterprise wants to be accountable to, and what it wants to be accountable for, when it accepts other people's money as equity capital.<br />
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In the default choice of corporate finance, the enterprise becomes accountable to the securities trading markets for constantly increasing the price of financialized fractional shares. This gets phrased as growth and it provides the liquidity that is the primary value proposition that securities trading offers to investors: instant liquidity, at an uncertain price. Growth provides the expectation that the selling price, although uncertain, will usually be higher than the purchase price, especially over time.<br />
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In the new choice of pension finance, the enterprise becomes accountable to the stewards of the pension trust for passing agreed equity payback milestones that are established through negotiation. As those milestones are passed, equity payback is achieved, and accountability to the providers of that equity diminishes. It never goes away entirely, because the equity is evergreen, but as payback milestones are passed, and sharing formulas get reset, enterprise leaders earn back both a higher share in the profits they are generating, and more autonomy in running the enterprise going forward. <br />
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Its a path to ownership earnback.<br />
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In the default standard corporate finance option, Management never earns back ownership. It always works for the stock market and always has to be "maximizing shareholder value" in a perpetual present.<br />
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In the new evergreen pension finance option, leadership does earn back ownership, and always works to optimize competitiveness under changing competitive conditions.<br />
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It's a new choice, that requires a new narrative to understand.<br />
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Which do you choose? Let's discuss.Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-86187753423501077612013-11-01T06:20:00.000-07:002013-11-01T06:20:03.664-07:00Article in Investment & Pensions Europe<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqZ4ansWOdMxsV4CnIA6UNcOIrxVoXEm5gC7WpbNOxP1XsNAlpY5pqyl4N_hmIAp7QIPdbc3thwjkXvkQrsWOlQ44U2qIy7fryCeZyFGF0nqklSYTgyTixVCv4M09Ei_GxPuXet2fUvCYO/s1600/IPE+Nov+2013.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="122" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqZ4ansWOdMxsV4CnIA6UNcOIrxVoXEm5gC7WpbNOxP1XsNAlpY5pqyl4N_hmIAp7QIPdbc3thwjkXvkQrsWOlQ44U2qIy7fryCeZyFGF0nqklSYTgyTixVCv4M09Ei_GxPuXet2fUvCYO/s200/IPE+Nov+2013.png" width="200" /></a></div>
Raj Thamotheram once again generously shared his byline, this time in an article out today in Investment & Pensions Europe.<br />
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<span style="font-family: inherit;">This piece on ESG 2.0 presents our thoughts about what PRI members could usefully focus on in this next and rather critical phase of the evolving conversation on institutionally responsible investing.</span><br />
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<span style="font-family: inherit;">Whenever there are internal governance debates and tensions over competiing strategies – important as these may be – it is sometimes also useful to look outside and ask the hard question, so what are we here for <u>now</u>? Here's what Raj and I agree would make a good narrative going forward. We look forward to hearing what you think too.</span></div>
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<span style="font-size: large;"><a href="http://www.ipe.com/analysis/long-term-matters/esg-20-lets-get-serious/10000296.article?adfesuccess=1" target="_blank">ESG 2.0 – let’s get serious</a></span></h1>
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Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-68686752382166292532013-10-31T03:09:00.000-07:002013-10-31T03:09:07.184-07:00Enterprise. Finance. Choice.Enterprise is a physical reality. It is people coming together to do work that creates wealth for themselves by contributing to the wealth of choices available to others.<br />
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Finance is a specialized form of enterprise. It does the work of aggregating savings from individuals to form capital for investment in enterprise.<br />
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Finance is a fundamentally extractive activity. It extracts value from the enterprises it funds. This extraction has to be restrained. Otherwise, society, the economy and the environment within which we all live cannot flourish.<br />
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There are many forms of finance, each with its own methods of aggregating savings, sponsoring enterprise and restraining its extractive activities. The list includes: household finance; communal finance; religious/theocratic finance; secular/aristocratic/democratic finance; commercial/bank finance; partnership/mercantile finance; corporate/industrial finance; and the newest form of finance, which is pension/retirement finance.<br />
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Pensions are an invention of the 20th Century, but they are really only just coming into their own right now, today, in the 21st Century.<br />
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A pension is a form of what may be called an evergreen investment trust. It aggregates savings from, or on behalf of, individuals who come in and out of the plan according to the rhythms of their own lives. It invests in enterprises that flourish and fade over time according to the rhythms of choice and change. Across the generations and the innovations, the plan itself endures. It continues, ongoing and open-ended. Evergreen.<br />
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The corporation is also a form of evergreen investment trust. It too aggregates savings from individuals who, as shareholders, enter and exit the corporation according to the idiosyncratic rhythms of their own, individual lives. It too invests in enterprises, as business units or subsidiaries, that flourish and fade according to the rhythms of choice and change within an open-ended and evolving economy. It, too, endures across the generation and the innovations. At least in theory. In practice, innovation can be a challenge to the longevity of the corporation.<br />
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Pensions and corporations are both forms of evergreen investment trust, but each is formed for its own purpose. The pension is formed for the purpose of providing income security in retirement across the generations. The corporation is formed to finance growth.<br />
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Pensions should be investing directly in enterprise, in competition with corporations, offering enterprise a choice.<br />
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Instead, they are investing in corporations, denying enterprise a choice. In the process, they are not achieving their mission of providing income security in retirement across the generations. They are also releasing the restraints on the extractive processes of the corporate form, so that society, the economy and the environment are suffering from an excess of wealth extraction by the corporation.<br />
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This has to change. And so it will.<br />
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<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-28472812694193036282013-10-29T05:18:00.001-07:002013-10-29T05:18:59.264-07:00Bifurcating the Narrative<div class="separator" style="clear: both; text-align: left;">
<span style="font-family: inherit;">In his Strategy Snack for yesterday, October 29, 2013 in the <a href="http://www.strategicmanagementbureau.com/home/2013/10/28/shareholder-value-is-not-a-bad-measure-of-performance-provid.html" target="_blank">Strategic Management Bureau</a>, Paul Barnett tells the story of an exchange he had with Professor Malcolm McDonald of Cranfield University over the use of shareholder value as a measure of corporate performance. Professor McDonald defended its use, while Paul offered this observation:</span></div>
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<span style="background-color: white; color: #444444; font-size: 14px; line-height: 19px;"><span style="font-family: inherit;">"Between 1975 and 2010, the average period for holding shares on the New York Stock Exchange declined from six years to about six months." </span></span></div>
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<span style="background-color: white;"><span style="color: #444444; font-family: inherit;"><span style="font-size: 14px; line-height: 19px;">Around 1975 is </span></span><span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">when</span></span><span style="color: #444444;"><span style="font-family: inherit;"><span style="font-size: 14px; line-height: 19px;"> Pensions, following the lead of Foundations, applying the newest reinterpretation of the fiduciary standards of </span></span><span style="font-size: 14px; line-height: 19px;">prudence by </span><span style="font-family: inherit;"><span style="font-size: 14px; line-height: 19px;">the Uniform Management of Institutional Funds Act, first started trading in securities, seeking equity rates of total return. Up until then, Pensions invested mostly in buy-and-hold bonds, with some dividend stocks.</span></span></span></span></div>
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<span style="background-color: white;"><span style="color: #444444;"><span style="font-family: inherit;"><span style="font-size: 14px; line-height: 19px;">By 2010, Pensions had grown to </span></span><span style="font-size: 14px; line-height: 19px;">control approximately $30 Trillion USD of our collective retirement savings, representing about half the total value of all Global Equities.</span></span></span></div>
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<span style="background-color: white;"><span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">Between 1975 and 2010 the default form of investment became securities trading, and the standard practice of securities trading morphed from buy-and-hold to buy-low-to-sell-high to buy-high-to-sell-higher. Along the way, the shelf life of trading positions got shorter and shorter. We got the current state of short-termism, with all its many complications for pensions, for the markets, and for us all.</span></span></span></div>
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<span style="background-color: white;"><span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">Is there a connection between the change of pension investing to securities trading, the growth in savings entrusted to pensions and the increase in short-termism, or is it all just a coincidence?</span></span></span></div>
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<span style="background-color: white;"><span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">Let's assume it is not coincidence. Let's assume it is a causal connection, that pensions as large and powerful investors are driving short-termism, and the current obsession with quarterly earnings and "maximizing shareholder value" as the single point of value by </span></span></span><span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">which corporate performance is measured.</span></span></div>
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<span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">Let's assume this is a problem and that it needs to be fixed. Finally, let's assume that to fix this problem, we have to bifurcate the narratives on investment and wealth creation. We need to have one narrative for the new form of pension investor, for sound pension investment and for effective pension leadership. We need to have another narrative for the old form of retail investor, for sound corporate investment and for effective corporate leadership.</span></span></div>
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<span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">The corporate narrative can continue to be the familiar story of fractionalized shares, diversified portfolios, and measuring wealth creation only indirectly, through growth in share price.</span></span></div>
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<span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">The pension narrative must be different. It must begin with the special purpose and the special power that pensions have as stewards of our income security in retirement across the generations. It must build a new form of investment to fit the special purposes of this new form and investor. It must measure wealth creation directly, as cash flow generation through adaptive co-creation in a robust, resilient and regenerative economy that evolves over time, through an open-ended and ongoing process of change, and adaptation to change, through innovation and transformation.</span></span></div>
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<span style="color: #444444;"><span style="font-size: 14px; line-height: 19px;">How can we use the Public Humanities to help us bifurcate this narrative, and bring an end to short-termism, with its many complications?</span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxpEs5R_eb6u9zEkjypnJnHA_72Hkrx15oq-vMkOb-WXda1wIuWtjYT3zPOsjYRE22fNPZycLmoDfaeGhdwS23_Q03QoMiQrR8u7aN71kAQrwFB7DmV56xDdy5LhbXHPYVcaUYXudZM3Wv/s1600/Lobsta+For+Sue.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="313" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxpEs5R_eb6u9zEkjypnJnHA_72Hkrx15oq-vMkOb-WXda1wIuWtjYT3zPOsjYRE22fNPZycLmoDfaeGhdwS23_Q03QoMiQrR8u7aN71kAQrwFB7DmV56xDdy5LhbXHPYVcaUYXudZM3Wv/s320/Lobsta+For+Sue.jpg" width="320" /></a></div>
<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-12956382272687360622013-10-25T05:41:00.000-07:002013-10-25T05:41:27.591-07:00Public Equities vs. Private Companies<br />
<span style="font-family: inherit;">Earlier this year, John Asker and Alexander Ljungqvist, both of NYU-Stern teamed up with Joan Farre-Mensa, of Harvard, to publish the results of an interesting study they performed, with the engaging title: "<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1603484" target="_blank">Corporate Investment and Stock Market Listing: A Puzzle?</a>"</span><br />
<span style="font-family: inherit;"><br /></span>
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<span style="font-family: inherit;">They state their conclusion as follows:</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">"This paper compares the investment behavior of comparable public and private firms, matched </span><span style="font-family: inherit;">primarily on size and industry. Our results show that relative to private firms, comparable public firms </span><span style="font-family: inherit;">invest considerably less and in a way that is significantly less responsive to changes in investment </span><span style="font-family: inherit;">opportunities, especially in industries in which stock prices are quite sensitive to earnings news."</span><br />
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<span style="font-family: inherit;">This conclusion bolsters our Evergreen hypothesis that pensions will realize better portfolio performance while helping to build a better world by de-financializing their portfolios, replacing Public Equities with Evergreen sponsorship of private companies.</span><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqllCJlAoGLRF2Nm4mva42LP8R5KmfduzwRrvjVeauPZdR5Wnj6Ka6dEFr9YYbnENV1p8sTyy1ers5rqbnjuroF9458plqtLHjFVXT6ckcdEsq9ndWZ_Zv0N4Ua2DF9-8cy5Si-wXfMRVy/s1600/evergreen+society+economy+environment.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqllCJlAoGLRF2Nm4mva42LP8R5KmfduzwRrvjVeauPZdR5Wnj6Ka6dEFr9YYbnENV1p8sTyy1ers5rqbnjuroF9458plqtLHjFVXT6ckcdEsq9ndWZ_Zv0N4Ua2DF9-8cy5Si-wXfMRVy/s1600/evergreen+society+economy+environment.png" /></a></div>
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Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-75270570319652068382013-10-24T07:17:00.000-07:002013-10-24T07:17:41.387-07:00Guardian post re-posted in AltEnergyStocks.com<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO8SEzZV-eK9OFjKBkuWokCxgj4sYBOswkVLXjtej5DmGJZJR49onIXagpkqqghWC6EAb01OaVQr_A7dVJFatz4AeB6FomLX4xBFG1Jm9iSuBL15tGosjaWrqX5lwuKG8ErvYrkRqsHxxr/s1600/Alt+Energy+re-post.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="246" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhO8SEzZV-eK9OFjKBkuWokCxgj4sYBOswkVLXjtej5DmGJZJR49onIXagpkqqghWC6EAb01OaVQr_A7dVJFatz4AeB6FomLX4xBFG1Jm9iSuBL15tGosjaWrqX5lwuKG8ErvYrkRqsHxxr/s400/Alt+Energy+re-post.png" width="400" /></a></div>
The blogpost on Evergreen Direct Investing that originally appeared in <i>The</i> <i>Guardian</i> has been re-posted in AltEnergyStocks.com<br />
<br />
>>> <a href="http://www.altenergystocks.com/archives/2013/10/6_reasons_why_stock_markets_are_no_longer_fit_for_purpose_1.html" target="_blank">click here</a><br />
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<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-33804960050704696562013-10-22T04:26:00.002-07:002013-10-22T04:26:51.255-07:00Article in the Guardian <div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWTNlPthA4MwTAg67H-P6FjEE__F8B1qQ3OTgxFwV-lnFXnO20Mx5fsZf8RCTx9X3F8lsADsr6CirfOIS2fhRGUgDZrqVoPtEF0hvf-ev4X7QhrFQ9RHCADUSFmlDg2jNxIDZk2MkGzZ4v/s1600/Guardian+Post.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWTNlPthA4MwTAg67H-P6FjEE__F8B1qQ3OTgxFwV-lnFXnO20Mx5fsZf8RCTx9X3F8lsADsr6CirfOIS2fhRGUgDZrqVoPtEF0hvf-ev4X7QhrFQ9RHCADUSFmlDg2jNxIDZk2MkGzZ4v/s1600/Guardian+Post.png" /></a></div>
This article appears in the <a href="http://www.theguardian.com/sustainable-business/stock-markets-no-longer-fit-purpose" target="_blank">Guardian Sustainable Business blog</a><br />
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Evergreen investing is introduced as a way to help restore the balance that has been lost been speculation and investment.Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-59690383469734057322013-10-20T10:15:00.001-07:002013-10-20T10:15:16.021-07:00Opening Up Spaces for Innovating New Forms of Investment<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVu40tGEq3QfCSzGt1q7Vyg9uDq2FZlpIIh5Vj_v4s0lhvoqxfJU1gtap-C2sssCECp38vLiT_JntPgIHZwa9zMlKbOzMgg4lU93c6i1w7ba1PBWm5VXIry9TLf9fv5vq4Bd2S2umG1JBB/s1600/pumpkins+on+a+wall.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span style="font-family: inherit;"><img border="0" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVu40tGEq3QfCSzGt1q7Vyg9uDq2FZlpIIh5Vj_v4s0lhvoqxfJU1gtap-C2sssCECp38vLiT_JntPgIHZwa9zMlKbOzMgg4lU93c6i1w7ba1PBWm5VXIry9TLf9fv5vq4Bd2S2umG1JBB/s200/pumpkins+on+a+wall.jpg" width="200" /></span></a></div>
<span style="font-family: inherit;">On Friday past, I attended a conference on <b>ESG in the Manager Selection Process </b>hosted by Tony Hay and organized by Rachel Pine of <i>Responsible Investor</i>.<br /><br />This Conference focused on Institutional ESG. (ESG stands for Environmental, Social and Governance). During the wrap-up of this interesting all day presentation of perspectives, Tony Hay, Publisher of <i>Responsible Investor</i>, offered these two points, among others</span><br />
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<ol>
<li><span style="font-family: inherit;">there are mixed messages circulating about whether ESG is stalled, or going mainstream, but nonetheless the conversation is continuing and gaining participants</span></li>
<li><span style="font-family: inherit;">as the scope of conversation expands there is a growing need to bring consistency to the terminology</span></li>
</ol>
<span style="font-family: inherit;">As a lawyer expert in negotiated investment, legal drafting and tax law, I am very in tune to the power of precise vocabulary (and also to the dangers of sloppy language). I am equally sensitive to the brain-numbing dullness of the vocabulary building process, so these twin challenges resonate very strongly with me.<br /><br />I would propose that the ESGers need to agree on a statement of their mission and vision, and when I sort through the chatter, it becomes clear to me that ESG has twin missions.<br /><br />One is to serve as the conscience of the public equities markets, and a stalwart against the rampant miscreant market manipulation associated with 2008 and other catastrophic financial market events.<br />Two is to promote institutional responsibility in the deployment, recovery and redeployment of Other People's Money entrusted to their care to sustainably realize fiduciary returns while contributing to a better world for the people whose money they have charge over.<br /><br />The first mission, above, requires that the movement stay, as it has, within the existing default form of investment as financialized asset trading, and work as they are to increase transparency through additional disclosure and to improve accountability through increased shareholder activism.<br /><br />The second mission, however, requires that they begin some new work. This is the work required to open up spaces where innovation can take place. The required innovation is new forms of investment that are purpose-built to achieve the twin goals of sustainably realizing fiduciary returns while building a better world.<br /><br />One innovation may prove to be the Evergreen hypothesis. Other and better innovations may also be found, once the work is begun in earnest. </span><br />
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<span style="font-family: inherit;">First step. This work must begin in earnest.</span>Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-59277983901469200022013-10-19T16:20:00.003-07:002013-10-19T16:20:37.204-07:00Article on ESG for National Ethical Investment Week<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7Sk8qWczZkQO3bjNDu2GNUvZIMlM2sc41uMo3DTqULnsDtfbQ5CrdOQayljyRWlh8c3NGumErpTa5FYeSAzr_B6UtQshFmKDcKPKA4-yFM1IbZFlcWsQjsLkCXq0zDrhy34f5aYj4a8rF/s1600/NEIW+Article.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7Sk8qWczZkQO3bjNDu2GNUvZIMlM2sc41uMo3DTqULnsDtfbQ5CrdOQayljyRWlh8c3NGumErpTa5FYeSAzr_B6UtQshFmKDcKPKA4-yFM1IbZFlcWsQjsLkCXq0zDrhy34f5aYj4a8rF/s1600/NEIW+Article.png" /></a></div>
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My friend and colleague, Raj Thamothermam, generously shared the by-line on an article published last week by blueandgreentomorrow.org in its Guide to National Ethical Investment Week (UK).<br />
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<a href="http://blueandgreentomorrow.com/wp-content/uploads/2013/10/guide-to-neiw-10mb.pdf" target="_blank">See pages 20-23</a>.<br />
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Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-6601098985315586952013-10-07T13:51:00.000-07:002013-10-07T13:51:41.973-07:00Both ESG 1.0 and ESG 2.0<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="http://kelleymacdonalddailypaint.blogspot.com/2013/10/which-one-is-yours-6x6-inch-oil.html" target="_blank"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNPVbU4E07U4J0c9GAVtzsXo2P-vINV-HLGEDmpP_GlsOt3L-yhMAkl-zkECe8HrY0ICiJ04s3aARSj3NxsyKtsnxZkj5akM7906EQkFHYP3R_DJ9kpNgPFkY91ZaMGjXwp0mfIHxLRvZp/s200/Donut+Trio.jpg" style="margin-left: auto; margin-right: auto;" width="195" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><a href="http://kelleymacdonalddailypaint.blogspot.com/2013/10/which-one-is-yours-6x6-inch-oil.html" target="_blank"><br /></a></td></tr>
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Pensions and other stewards of an evergreen trust are a new form of INVESTOR.<br />
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Evergreen investing is a new form of INVESTMENT.<br />
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That gives us two forms of investor: time-limted and evergreen.<br />
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It gives us two forms of investment: the default form of securities trading, and the new form of evergreen investing.<br />
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The new form of evergreen investing gives the new form of evergreen investor more choice. They can use the old form of securities trading, and they can also choose the new form of evergreen investing.<br />
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The default form of securities trading is purpose-built to provide the liquidity required by time-limited investors, so they can buy when they can, and sell when they need to.<br />
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The new form of evergreen investing is purpose-built to provide longevity to evergreen investors, so they can participate directly in wealth creation matching cash inflows from sponsored enterprises to cash outflows to their entrusted beneficiaries.<br />
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The original form of ESG 1.0 works with the default form of securities trading, increasing disclosure in support of stock selection and shareholder activism.<br />
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The new form of ESG 2.0 works with the new form of evergreen investing, fusing stewardship values with time-tested equity payback structures common in real estate and other cash-flow-oriented investments.<br />
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Together, they are a complete solution.Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-49517927968753859042013-10-05T07:30:00.001-07:002013-10-05T07:30:43.441-07:00Will we learn the lessons of history, or relive them?<div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHBJJA0-8dO3XnRfdlt9BNp3pgwTIVhfCJumfiaNHp2aFSpTblswnG1twZC4QCiUicXH2CG5jhxu-_p3HyVO893bk2KIqnyEK9FUfl7rh1DGfUs1SWJefDRbVNy5O96oEyocOzGi9F-0CN/s1600/dock+to+a+pavilion.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHBJJA0-8dO3XnRfdlt9BNp3pgwTIVhfCJumfiaNHp2aFSpTblswnG1twZC4QCiUicXH2CG5jhxu-_p3HyVO893bk2KIqnyEK9FUfl7rh1DGfUs1SWJefDRbVNy5O96oEyocOzGi9F-0CN/s320/dock+to+a+pavilion.jpg" width="320" /></a></div>
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<span style="font-family: inherit;">For many people, history is very personal. If it did not happen <i>to them</i>, it does not matter.</span></div>
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<span style="font-family: inherit;">From those who we entrusts as stewards of our future income security in retirement, and by extension, of the future of possibilities for prosperity, we can, should and must demand more.</span></div>
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<span style="font-family: inherit;"><br /></span></div>
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<span style="font-family: inherit;">We must insist that they take a long view of the past, to support their long view of the future. They must learn for us the lessons that history has to teach.</span></div>
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<span style="font-family: inherit;"><br /></span></div>
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<span style="font-family: inherit;">The lesson begins with th</span><span style="font-family: inherit;">e story of what happens when securities trading teams up with trusts for aggregating control over Other People's Money.</span></div>
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<span style="font-family: inherit;"><br /></span></div>
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<span style="font-family: inherit;">We should have learned this lesson the first time, back at the end of the 19th Century, when life insurance was a new technology, and this new form of evergreen trust started speculating with Other People's Money. We got the Panic of 1897 that almost bankrupted the United States, and lead to the trust-busting of the early 1900s. It also lead to laws prohibiting insurance companies from trading securities with premium dollars, prohibitions that still exist, as the Legal List administered by the National Association of Insurance Commissioners ("NAIC").</span></div>
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<span style="font-family: inherit;"><br /></span></div>
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<span style="font-family: inherit;">We didn't learn, because it happened again, in a modified form, in the 1920's. This time, it was commercial banks lending to speculators "on margin", that is, against their portfolios of speculative trading positions, as collateral. We all know what happened then. The Crash of 1929, followed by the Great Depression. The fix came in the form of Glass-Steagal, a law that prohibited commercial banks from participating in securities trading. A law that was repealed in the late 1990s.</span></div>
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<span style="font-family: inherit;"><br /></span></div>
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<span style="font-family: inherit;">We still have not learned. Now it is happening again, this time with pension funds, speculating in the securities markets with our retirement savings. This time, nothing has really changed. At least not yet.</span></div>
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<span style="font-family: inherit;"><span style="background-color: white; color: #333333; line-height: 17px;">We remain caught in a trap of Casino Capitalism that is fueled by professionally managed pensions and other retirement savings committed to the default form of investment as securities trading. </span><br style="color: #333333; line-height: 17px;" /><br style="color: #333333; line-height: 17px;" /><span style="background-color: white; color: #333333; line-height: 17px;">The problem with these managed funds is that they are open-ended, ongoing and therefor evergreen. There is no natural end-date, when the books can be closed and the accounts settled. They just keep going. </span><br style="color: #333333; line-height: 17px;" /><br style="color: #333333; line-height: 17px;" /><span style="background-color: white; color: #333333; line-height: 17px;">They are then being double-stacked on top of financialized forms of enterprise ownership that are also open-ended, ongoing, and evergreen. Also no end-date, when the books are closed and the accounts settled. </span><br style="color: #333333; line-height: 17px;" /><br style="color: #333333; line-height: 17px;" /><span style="background-color: white; color: #333333; line-height: 17px;">That should sound like a natural match, but it is not. There is no natural way for cash to flow out of financialized enterprise and into stewardship trusts. Instead, the money gets caught in a closed loop of speculative trading on financial asset/securities valuations in a zero-sum game of extracting value by outsmarting the other guy. We get what is now called systemic risk. All the values get inflated.</span><br style="color: #333333; line-height: 17px;" /><br style="color: #333333; line-height: 17px;" /><span style="background-color: white; color: #333333; line-height: 17px;">2008 proved that evergreen trusts and securities trading don't mix. </span></span></div>
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<span style="font-family: inherit;">The fix this time is easy. It does not require new legislation or government regulation. The legal profession can do it. Pensions themselves can do it. All it takes is an upgrade in the standards of fiduciary duties of loyalty, prudence and competence, an upgrade that recognizes the lessons we have learned about pension investing over the last 40 years, since the last time we upgraded the standards for fiduciaries, to empower them to speculate in securities in the belief that diversification would provide protection. </span></div>
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<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-37314828981625228912013-10-04T07:33:00.000-07:002013-10-04T07:33:55.672-07:00A Moment of Possibility<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibZ0Vaa1NH7fQZbmKd6s9cBdJU8YcmDPRYbxE59TrmzOkPd5Z5R-S5YdGmGzp-1CEa9HuTrPFjqyFqk-C_quaBlq2titnOFQ4PYmJShCaCaFVjBti7pq3P_5HvDbb32mT8N8uaS1sg_6AR/s1600/paint+brushes.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibZ0Vaa1NH7fQZbmKd6s9cBdJU8YcmDPRYbxE59TrmzOkPd5Z5R-S5YdGmGzp-1CEa9HuTrPFjqyFqk-C_quaBlq2titnOFQ4PYmJShCaCaFVjBti7pq3P_5HvDbb32mT8N8uaS1sg_6AR/s1600/paint+brushes.jpg" /></a></div>
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I had the pleasure yesterday of meeting in Providence for coffee with Bill Densmore. Bill is one of a small group who are coming together as <a href="http://ruleschange.org/">RulesChange.org</a>. Bill enters this conversation with a background in Journalism.</div>
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Bill told me this story. His Dad was a corporate executive in the old days, when corporations worked for all their stakeholders, not just their market-quoted share price. That makes Bill aware that something has changed. That we can't keep doing the things we are doing, the way we are doing them. Bill reports that he finds, as a Journalist, that we are now in a moment of possibility. To say that we need to make this kind of fundamental change is no longer received as heretical, whereas even just a couple of years ago, it might be. However, Bill sees lots of silos. Different people banding together around single issues they are passionate about, but not interacting with other people who are equally passionate about different, but aligned issues. Bill sees a need and an opportunity for some form of umbrella organizing activity, that gets these silos interacting, while also maintaining their own focus, integrity and authenticity.</div>
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Maybe Evergreen?</div>
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It touches many issues, empowers actions on all the issues that it touches, but does not dictate policy to any of them. To the contrary, we need to engage with all these silos, so they can inform Evergreen with the right policies on each of their substantive issues: income inequality/economic inclusiveness; basic research, education and innovation; climate risk, environmental degradation and ecological integrity. And many others.</div>
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PS - Bill also expressed anxiety about the survival of Journalism in the social media age. We agree that is a problem. How can you have democracy without Journalism?</div>
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<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-89797534047165905342013-10-03T04:10:00.000-07:002013-10-03T04:10:34.422-07:00A Safe Place to Try<span style="font-family: inherit;">If we do not try, we cannot succeed.</span><br />
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<span style="font-family: inherit;">This is an experiment of high importance to everyone who is retired, or who is planning to retire, and anyone who wants to see the Casino Capitalism of today transformed into a new, co-creative capitalism for the 21st Century.</span></div>
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<span style="font-family: inherit;">We have our hypothesis: pension trusts have the size, the purpose, the power and the longevity required to generalize the proven practices of cash flow based investing common in Real Estate to investment in enterprise of any kind; they have as fiduciaries both the right and the responsibility to use those unique capabilities to optimize their ability to provide income security in retirement to successive generations of current and future retirees.</span></div>
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<span style="font-family: inherit;">We have our expectations. There will be a natural fit between enterprise as a time series that is open-ended, ongoing, and therefor evergreen, wealth creation as a time series that is also open-ended, ongoing and therefor evergreen and pension trusts that are also a time series that is open-ended, ongoing and therefor evergreen, all aligned around the shared values of optimizing cash flows over time for enterprise, for investment, for society, for the economy and for the environment within which we all must live, work, and retire.</span></div>
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<span style="font-family: inherit;">The advantages to pension investing will include:</span></div>
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<li><span style="font-family: inherit;">engineered returns</span></li>
<li><span style="font-family: inherit;">controlled costs</span></li>
<li><span style="font-family: inherit;">chosen impacts</span></li>
<li><span style="font-family: inherit;">streamlined design</span></li>
<li><span style="font-family: inherit;">transparent management</span></li>
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<span style="font-family: inherit;">The benefits to plan executives, sponsors and participants will include:</span></div>
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<li><span style="font-family: inherit;">availability of benefits, now and later;</span></li>
<li><span style="font-family: inherit;">adequacy of benefits, now and later;</span></li>
<li><span style="font-family: inherit;">affordability of benefits, now and later.</span></li>
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<span style="font-family: inherit;">See below.</span></div>
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<span style="font-family: inherit;">Additional benefits:</span></div>
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<li><span style="font-family: inherit;">to society: economic inclusiveness and financial authenticity</span></li>
<li><span style="font-family: inherit;">to the economy: robust, resilient and regenerative patterns of wealth circulation that drive sustainable prosperity as constant, continuous and enduring (not boom-and-bust)</span></li>
<li><span style="font-family: inherit;">to the environment: ownership of impacts on climate and resources</span></li>
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<span style="font-family: inherit;">We need as safe place to try</span></div>
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<li><span style="font-family: inherit;">de-financializing established enterprise</span></li>
<li><span style="font-family: inherit;">sponsoring new enterprise</span></li>
<li><span style="font-family: inherit;">investing for impact.</span></li>
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<span style="font-family: inherit;">A pilot project, away from the engrained habits (and vested interests) of the default form of investment as securities trading, that is scientifically controlled and rigorously tested along multiple measures: strategy, leadership, governance, fiduciary responsibility, teaching and learning, impacts on society, the economy and the environment.</span></div>
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<span style="font-family: inherit;">What else?</span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQr1PCZa6wqKvC5DLcGhEpBhDxaS5kd-uJkcORgCbUoghk1CgR_LRyw9Cf9tZynhj8exqJW1n2RL6JOpdmt_VznTg1W_Uao8QEJJszcWIb0Lql6h_79K4DuSylTMtHTWkgm_Vp1JcH8h_o/s1600/cash+flow+features+and+benefits.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="73" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQr1PCZa6wqKvC5DLcGhEpBhDxaS5kd-uJkcORgCbUoghk1CgR_LRyw9Cf9tZynhj8exqJW1n2RL6JOpdmt_VznTg1W_Uao8QEJJszcWIb0Lql6h_79K4DuSylTMtHTWkgm_Vp1JcH8h_o/s320/cash+flow+features+and+benefits.png" width="320" /></a></div>
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Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-84687220335235555472013-10-02T06:47:00.002-07:002013-10-02T06:47:51.396-07:00Linking Inequality for All with Pension Reform<div class="separator" style="clear: both; text-align: left;">
Yesterday, Sharan Burrow, General Secretary of the International Trade Union Confederation, gave a speech before the United Nations Principles of Responsible Investing convening in Cape Town, South Africa.</div>
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Last night, she emailed me the text of her remarks.</div>
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The title: <b><span style="font-family: Helvetica; font-size: 11pt;">PUSH THE RESET BUTTON - A LINE BETWEEN
SPECULATION & INVESTMENT</span></b></div>
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<span style="font-size: 11pt;"><span style="font-family: inherit;">In it, Sharan makes the connection that Robert Reich has not yet made in his powerful documentary film, <i>Inequality for All</i>, about the link between pension investing, economic inclusiveness and environmental ownership for a truly sustainable prosperity in the 21st Century.</span></span></div>
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<span style="font-size: 11pt;"><span style="font-family: inherit;">Here is an excerpt.</span></span></div>
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<b><span style="font-family: Helvetica; font-size: 11pt;">"The Central Role of Pension Funds</span></b><b><span style="font-family: Helvetica; font-size: 11pt;"><o:p></o:p></span></b></div>
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<span style="font-family: Helvetica; font-size: 11pt;">"In the discussion on [Long Term Investing] by institutional investors, it is important to distinguish between </span><span style="font-family: 'Arial Unicode MS'; font-size: 11pt;">“</span><span style="font-family: Helvetica; font-size: 11pt;">asset owners</span><span style="font-family: 'Arial Unicode MS'; font-size: 11pt;">”</span><span style="font-family: Helvetica; font-size: 11pt;"> (pension funds, insurance companies, sovereign wealth funds) and
asset managers (asset management firms, bank asset management branches) and to
give primacy to the former over the latter. That is particular true for pension
funds with liabilities that can span over 20-30 years, (i.e., the time needed
to accumulate capital to finance workers</span><span style="font-family: 'Arial Unicode MS'; font-size: 11pt;">’</span><span style="font-family: Helvetica; font-size: 11pt;"> right to retirement). With over USD30tr assets under management,
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<span style="font-family: Helvetica; font-size: 11pt;">"Importantly, pension
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established as part of a collective bargaining agreement and include
member-nominated representatives on their board of directors. Given their
social purpose, it would make sense for
pension funds to embrace fully both a negative and positive list approach to
LTI </span><span style="font-family: 'Arial Unicode MS'; font-size: 11pt;">–</span><span style="font-family: Helvetica; font-size: 11pt;"> shifting away from short-term to long-term
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<span style="font-size: 11pt;"><span style="font-family: inherit;">Once pensions fully embrace their stewardship responsibilities to invest with social purpose by going long term, it is a easy step to going evergreen.</span></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjN6i7G2eVjXaaQXH-5l_bBap9QIOCDBrjHoLuYNLh3luVY_zO7nkYq1nX06f74ZMKP71AT6plN0LVdMm0PO3CWd42twEydjJMHcFeQy0S7MxGY1MljRKatvIzecG-vNmOTk78npwPo0Nb4/s1600/IMG_0388.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjN6i7G2eVjXaaQXH-5l_bBap9QIOCDBrjHoLuYNLh3luVY_zO7nkYq1nX06f74ZMKP71AT6plN0LVdMm0PO3CWd42twEydjJMHcFeQy0S7MxGY1MljRKatvIzecG-vNmOTk78npwPo0Nb4/s320/IMG_0388.jpg" width="240" /></a></div>
<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-42966110700189059232013-10-01T04:49:00.000-07:002013-10-01T04:49:06.231-07:00Recapping Progress Towards Capitalism 2.0<br />
<span style="font-family: inherit;"><b>Sharan Burrow</b> of the ITUC got us started with her call for pensions to "<b>Hit the reset button</b>".</span><span style="font-family: inherit;"><b><br /></b></span><br />
<span style="font-family: inherit;"><b>Suzanne Lynne Duncan</b> of State Street Center for Applied Research began the answer with her "<b>Influential Investor</b>".</span><span style="font-family: inherit;"><b><br /></b></span><br />
<span style="font-family: inherit;"><b>Anne Simpson</b> at CalPERS is now at the forefront, with her efforts to transform one of the world's largest pension plans from just being Wall Street's biggest customer, to becoming a center of <b>true stewardship</b>.</span><span style="font-family: inherit;"><b><br /></b></span><br />
<span style="font-family: inherit;"><b>This comes next</b>, upgrading pension investing by modernizing standards of fiduciary prudence and <b>evergreening pension portfolios</b></span><span style="font-family: inherit;"><br /></span><br />
<span style="font-family: inherit;">That will clear the way for a renewed conversation to put ecological health at the heart of a new regenerative prosperity of <b>adaptively co-created capitalism</b>.</span><b><span style="font-family: inherit;"><br /></span></b><br />
<b><span style="font-family: inherit;">Capitalism 2.0</span></b><span style="font-family: inherit;"><br /></span><br />
<span style="font-family: inherit;">Another small step towards spreading the word on evergreen was taken yesterday, with a piece on evergreen investing that got published over <i>US New & World Report</i>. See link, below</span><br />
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<a href="http://www.usnews.com/opinion/blogs/economic-intelligence/2013/09/27/seventh-generation-patagonia-and-stonyfield-examples-of-a-sustainable-economy" mce_href="http://www.usnews.com/opinion/blogs/economic-intelligence/2013/09/27/seventh-generation-patagonia-and-stonyfield-examples-of-a-sustainable-economy" style="font-family: arial, helvetica, sans-serif; font-size: 13px;" target="_blank" title="http://www.usnews.com/opinion/blogs/economic-intelligence/2013/09/27/seventh-generation-patagonia-and-stonyfield-examples-of-a-sustainable-economy">http://www.usnews.com/opinion/blogs/economic-intelligence/2013/09/27/seventh-generation-patagonia-and-stonyfield-examples-of-a-sustainable-economy</a><span style="font-family: arial, helvetica, sans-serif; font-size: 13px;"> </span></div>
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Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-10935866108591097212013-09-29T07:12:00.000-07:002013-09-29T07:12:03.500-07:00Monopoly MindsetThe current default form of investment as securities trading has a monopoly on our thinking about enterprise, investment, society, the economy and the environment.<br />
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Is such a monopoly a good thing?Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-83052725709842577982013-09-28T08:10:00.001-07:002013-09-28T08:11:08.369-07:00Copernican Revolutions to Restore Equality of Economic Opportunity and a Functioning DemocracyIn Robert Reich's documentary, <i>Inequality for All</i>, they make the point that the consumer is the center of the economy. like the sun at the center of the solar system. <br />
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Evergreen is a form of investment built on a customer/cash flow centered model of the enterprise. See below.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNx1dL_b1iIuzaKpUJy-4KhHTR9TxZl7Gx1pbw7yXrwlFtIjr2NQHmrWAwgZ9XBBNgBRZbbiz8sLCS4pLzDMFRcjXByk0EARNgQygQ94VX3AsictgDUNQB8xJcQh1STmGn_Dml8srGwBjf/s1600/cody+on+cash+flow+.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNx1dL_b1iIuzaKpUJy-4KhHTR9TxZl7Gx1pbw7yXrwlFtIjr2NQHmrWAwgZ9XBBNgBRZbbiz8sLCS4pLzDMFRcjXByk0EARNgQygQ94VX3AsictgDUNQB8xJcQh1STmGn_Dml8srGwBjf/s320/cody+on+cash+flow+.png" width="320" /></a></div>
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This is one of two Copernican revolutions in evergreen investing. This on replaces production that is the center of enterprise in the current default form of investing as securities trading with customer cash flows.<br />
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The other replaces Wall Street at the center of a trading universe with stewardship investors at the center of a direct investing universe.<br />
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<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-17752391588305001102013-09-27T04:55:00.001-07:002013-09-27T08:28:02.564-07:00Connecting the Dots on InequalityLast night I attended the Boston area premiere of Robert Reich's new documentary, "<i>Inequality for All</i>", at the Kendall Square Cinema in Cambridge.<br />
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The movie tells many powerful stories about the growing wealth inequality in this country.<br />
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Here is one story it does not tell<span style="font-family: Helvetica; font-size: 12px; letter-spacing: 0px;">.</span><span style="letter-spacing: 0px;"><span style="font-family: inherit;"> Can you imagine it as an animation in your mind's eye?</span></span><br />
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<ol>
<li><span style="font-family: inherit;">It starts with you, and each of us, as individuals working hard to
build something we each treasure, and collectively we all treasure: savings
held for investment and reinvestment, so that we may live well in our
retirement, and have something to pass on to the next generation,</span></li>
<li><span style="font-family: inherit;">We give those savings to pensions as stewards of our future, to
invest and reinvest, prudently, on our behalf - imagine this as a physical
transfer</span></li>
<li><span style="font-family: inherit;">Pensions give our savings to experts in the default form of investment as securities trading, who take
us on the bumpy ride, buying low and selling high</span><span style="font-family: inherit;">.</span></li>
<li><span style="font-family: inherit;">Fiduciary duty should shout: STOP!. Speculating is not allowed, because it is too dangerous.</span></li>
<li><span style="font-family: inherit;">Economics pushes fiduciary duty out of the way, giving us all its
assurances that speculation can be made safe through diversification and
disclosure.</span></li>
<li><span style="font-family: inherit;">We get: 2008. The markets collapse, the global economy comes to a
virtual standstill.</span></li>
<li><span style="font-family: inherit;">The Advisor (dressed as a wizard, in flowing
robes and a pointy hat: a Wizard of Wall Street) comes in, saying in a
very pleased tone "delighted to report that your volatility was well
controlled and your fund outperformed the benchmark and median". </span></li>
<li><span style="font-family: inherit;">The pension fiduciary turns round to the Wizard
in shock and dismay, and says "what the xxxx does that mean?". </span></li>
<li><span style="font-family: inherit;">The Wizard says "you lost money but not as
much as other folks and its meaningless 'cause they are talking about 3
years".</span></li>
<li><span style="font-family: inherit;">Evergreen steps forward and pushes the Wizard away, saying
diversification and disclosure only work for the little guy, that needs
liquidity. For large, purposeful, powerful stewards of an evergreen trust, that
needs longevity more than liquidity, they are not enough.</span></li>
<li><span style="font-family: inherit;">Evergreen says, "Evergreen stewards have the power to 'go long'
themselves, directly, and take back control of the decision to reinvest."</span></li>
<li><span style="font-family: inherit;">Fiduciary duty steps back in and says: "Pensions must go
Evergreen, because they can. If they can, then they should. Anything else is
not prudent, and is not loyal."</span></li>
<li><span style="font-family: inherit;">Speculation fades away. It has nothing to say.</span></li>
<li><span style="font-family: inherit;">Business Strategy says, "You're right"</span></li>
<li><span style="font-family: inherit;">Casino Capitalism becomes once again Creative Capitalism, but this
version is new and improved. Creative Capitalism 2.0: robust, resilient,
regenerative and adaptively co-creative. A kinder, gentler Creative Capitalism.
For society. The economy. The environment. People and Planet, alongside Profit!</span></li>
</ol>
Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-19272002975974699602013-09-25T04:04:00.000-07:002013-09-25T04:04:08.320-07:00Capital Institute on Evergreen InvestingCapital Institute has published a Field Guide Study on evergreen investing as co-creating a regenerative economy.<br />
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You can find it in the spotlight at <a href="http://www.capitalinstitute.org/">www.capitalinstitute.org</a><br />
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<a href="http://www.capitalinstitute.org/" target="_blank"><img border="0" height="80" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgC4f4k2rmssfgpZbJdedhS8UEdvTL9nO698K72SyV8-GIzG_poNu-FcQqY58Q-gSgmg0RSNXAWQyEKCPAbDLwCOleRXoRPGxwpsNwgvkLl6Set3coZ6yCE6nFSq2aieY5HGd-GXPNGmSVy/s320/CI+Evergreen+FG+logo.png" width="320" /></a></div>
<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0tag:blogger.com,1999:blog-5530158369757565717.post-19188644240671834412013-09-24T04:17:00.000-07:002013-09-24T04:17:45.700-07:00Evergreen is for EverybodyIt takes size to negotiate investment directly with enterprise. It takes purpose. It takes longevity. It takes leverage.<br />
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As individuals, we do not have the size, the purpose, the longevity or the leverage it takes to negotiate. We are small, idiosyncratic, time-limited, and therefor leverage limited. The default form of investment as securities trading is a good fit for our small scale, idiosyncratic and highly liquid investment needs and capabilities as individual investors investing for our own account.<br />
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As participants in a pension plan, however, we do, collectively, have the size, the purpose, the longevity and the power to negotiate. Or rather, our pension trustees do, when investing "other people's money" -- our money -- on our behalf and for our benefit. The new form of evergreen investment is a good fit for large, purposeful and powerful pension plans and other evergreen trusts investing for the collective benefit of successive generations of current and future retirees or other chartered beneficiaries.<br />
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The choice of evergreen investing by pensions and other evergreen trusts is important to those trusts, to their trust sponsors and to their sponsored beneficiaries. It is also important to all of us, because it affects the proper flow of money through the economy.<br />
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Evergreen investing by evergreen trusts flows money directly into enterprises that are also evergreen, to sponsor the ongoing work of physical wealth creation that is also evergreen. There is matching, alignment and balance. A healthy flow.<br />
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The default form of securities trading by evergreen trusts traps money inside the closed loop of a zero-sum game of extracting value from other investors, including other evergreen trusts. There is bloat, not balance.<br />
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This affects more than just the trusts. It affects us all.<br />
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<br />Tim MacDonaldhttp://www.blogger.com/profile/09661624160832575922noreply@blogger.com0