Recent interest in wealth inequality has highlighted the situational approach I take to investment advising.

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Ideals vs Practice: Living with contradictions, second thoughts, and caveats

Thanks to a confluence of publications, protests, and politics, the realities and challenges of wealth and income equality are gaining traction in the media. This interest in wealth inequality, exploitation and extraction has highlighted for me the situational approach I take to investment advising. I’m often asked: Given your perspective on the global economy in the face of ecological, social and financial overshoot and limits, what do you advise people to do with their money?

My preference is to get out and stay out of the financial casino, which includes the stock market, hedge funds, many private equity funds, conventional venture capital, and pretty much all forms of derivatives. I say this not because I think they will all crash tomorrow but because I think we can do better. By doing better I mean contribute to more well-being for more people. I think this is possible if we take responsibility for the real-world consequences of our investment and other financial decisions.

That said, I don’t think it’s always advisable or realistic for a person to get out of the markets entirely. They are, to a large extent, the only investment vehicles readily available to individuals (those with high net worth, known as accredited investors, have more options and I encourage them to explore them). Yes, I have little faith in the global economic system—it’s not environmentally sustainable, and it’s not fair. But I don’t know when and how the system will collapse, and I can’t in good conscience tell people who have little or no other financial security to boycott the one place where they stand a chance of increasing their financial wealth.

When I talk with family and friends about investing, I preface every statement with a mini-pontification on the problems, the risks, and the assumptions of our global financial system. I articulate my preference for direct, personal, and transparent financial relationships and am fully supportive of those who choose to walk out and walk on. And I think those of us who can more easily walk out and walk on should do so now in whatever way we can. We need to try new things, break old rules, reject outdated and false dogma, and demonstrate a commitment to urgency for our planet and justice for all.

I have an aversion to fixating on the details of the old system. Participate if you feel compelled to do so. Be very clear about why you are doing it and understand exactly what you are doing. But don’t spend time on the loser’s game of trying to guess short-term movements in the stock market, individual stocks, mutual funds, or portfolio managers. If you’re going to buy publicly-traded stocks and bonds, consider using Vanguard (or other very inexpensive) index funds. My standby funds are the Vanguard Total Stock Market Index Fund, Total International Stock Index Fund, and Intermediate Term Bond Index Fund. This advice holds whether you have $5,000 or $500 million. If you are committed to trying to influence corporate behavior through shareholder activism and wish to focus time, energy, and money in that arena, there are many high-quality advisors and funds from which to choose.

I suggest this pragmatic approach in order to focus on what is most important and to clear the deck of everything else. There is so much to do in the areas of local investing, community collaborations, and direct relationships that I consider it a distraction to engage in the casino culture any more than I have to. Most of us won’t be able to fully resolve the inconsistencies and contradictions in our financial lives, but we can all do something to move forward in meaningful ways.

Clearing the deck makes room for the new, the aligned and integrated. This may be as simple as changing from a multinational bank to a local credit union or opening an account with RSF Social Finance. Whatever it is, do something financial that relates directly to someone or something you care about and that the world needs.



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