A couple of weeks ago I recorded a podcast with a very smart young guy – the son of an old school colleague – called Jyram Sharma.
The focus in the discussion was on what advice an old git like me can offer much smarter, savvier youngsters. Jyram has done a great job of pulling together my rambling thoughts and you can now listen to it online, via various platforms – here are the links:
- Spotify: https://open.spotify.com/episode/0WpNsrYVbSNFMtpsl5ezLZ?si=DtilKIjBSAujQnIACHkTuA
- Apple: https://podcasts.apple.com/ae/podcast/financial-father-and-son/id1516517294?i=1000515944328
- Google: https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy80ZTVlOWJiYy9wb2RjYXN0L3Jzcw/episode/OTkyMTYxN2EtMTZjZi00ZjdmLWFjNmMtODJkMjVjYzQ3Mjk3?ep=14
I suppose if I had to identify one core bit of advice for investing, its be happy to make mistakes, especially when you are young and have time on your side. This slightly contrasts with behavioural research commissioned by Nest some time ago which resulted in a lower risk allocation for auto-enrolment pensions sold to twentysomethings. Their thinking was that if said youngsters suffered risk early on in their investing career, they’d be put off taking risk later. Thus, to a degree, better to derisk to encourage engagement. I think that makes sense for many younger people who are totally uninterested in investing but for those who have some inkling that they would like to invest, its wrong in my view.
Embrace your inner Robin Hood and take a few stupid, calculated risks and then work out how not to make the mistake again.
Stepping back from this I think my big worry with all the paternalistic nudges like the Nest risk step down is that they ‘risk’ producing a generation who are allergic to risk and think that risk can be managed away entirely – or regulated to the death. I think this is the wrong message for younger people. Our move to greater government regulation and a more paternalistic state makes much sense as long as it is accompanied by a greater embrace of more risk, more adventure, more activism, more innovation and more entrepreneurial endeavour at a societal level. Sure, build better safety nets but then let people take risks. Don’t mollycoddle the next generations, otherwise Asian businesses will eat us alive collectively in core markets.
Those kinds of words probably chimes with the fund managers behind the American Conservative Values ETF (ACVF) created for politically conservative US-based investors. I wouldn’t personally invest in said ETFs but I think they are a great innovation. I have long challenged the smug metropolitan liberal stranglehold on ESG investing.
Why is the only sustainable corporation one that agrees with the liberal consensus? I happen to agree with said consensus but I also value diversity and I struggle to understand why businesses engaged in collective liberal group think are ‘better’.
Take the current furore over corporates boycotting Georgia’s electoral law changes. For the record I think these Republican changes are wrong, and at the very least questionable. But I struggle to understand why vast swathes of corporate America are now up in arms. These businesses are frequently perfectly happy to engage in extensive business in China, where many are silent, but when it comes to evil old white Republicans in Georgia, they are vocal. I am increasingly uncomfortable with these corporate platitudes and moralising. Sure, focus on ESG and sustainability but once we force corporates to engage in culture wars I’m not sure that’s a very productive pathway. All that sloganeering might just allow them to escape with minimal action on climate change or avoid recognising unions for instance?
More to the point they also ignore the vast constituency of consumers who are conservative. Surely, they also deserve to be served by the democratic market place of fund ideas, which us where these Conservative Values ETFs come in. This firm is in the news this week because the fund managers have just released their “Most Liberal Companies” survey, with top 4 most liberal companies Facebook, Twitter, Google, and Amazon.
“Over half of the survey participants nominated Facebook as the most liberal company. The biggest movers were Apple, moving up 5 spots to 5th, Netflix moving up 2 spots to 8th, and Microsoft dropping 3 spots to 10th (tied with AT&T). Of the top 13 survey results, ACVF is currently boycotting ownership of 11. In total, ACVF’s 23 boycotts represent approximately 25% of the S&P 500’s weightings. Alternatively, for every $1 invested in the S&P 500, 25 cents is invested in the worst-offending liberal companies, companies we are currently boycotting.”
The paradox here is that I am increasingly of the view that Facebook is actually a pretty good value investment. The latest edition of Barron’s – hardly a paragon of liberal thinking – makes the case elegantly for the value case.
You can read more about these Conservative ETFs here: