We are taught early in our lives that we must become self-sufficient.
In other words, don’t depend on someone else for things you should be doing for yourself.
Good parenting includes preparing your children to become self-sufficient adults, ensuring the kids are going to be okay on their own someday. By the time we reach adulthood, we should be able to thank our parents for imbuing us with a highly-evolved sense of self-sufficiency.
There is a destructive trend that has been building for generations in these United States that says you are fine and swell if you decide to depend on others to make decisions for you, and depend on them to provide things that you would otherwise have to work for. The current political zeitgeist has tapped into this apparently mesmerizing elixir to the point that political candidates don’t actually bother adopting a platform. They just need to promise free stuff.
Freedom and self-sufficiency are being replaced by free stuff.
It’s a dangerous and radical idea.
The American spirit is rooted in freedom. It’s our number one export. Self-sufficiency thrives on an unshakable foundation of freedom, but the more free stuff you take, the more they own you. Precisely what progressive politicians want.
This is America. Debate is welcome, or at least was, but nobody has cornered the market on best practices yet. This article is not intentionally political, and not even necessarily about free stuff, but with the dreamy watercolors of socialism being forced down our collective gullet non-stop, we cannot afford to ignore the fact that political activism is infecting the way people think about money and personal financial responsibility.
Capitalism has become the bogeyman. To be more precise, personal wealth has become the bogeyman, and too, too many from Capitol Hill to your local school board are working like hell to make you feel guilty about it, despite the fact that you worked for your wealth. Knowing these truths to be self-evident, I still find myself amazed that most of our career “civil servants” have become richer than your entire neighborhood.
An undemanding life of never ending free stuff appeals only to the childlike among us. Freedom, responsibility and self-sufficiency are adult ideals. They require work.
Private investors are free market capitalists, heart and soul, but today, freedom and self-sufficiency are being cast as wicked and immoral. The new ESG movement is wicked and immoral.
What Are Environmental, Social, and Governance (ESG) Investing Criteria? From Investopedia.com:
Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Oh sure, it’s cloaked in a language designed to make those that disagree with it the villains, but the clear-headed and intellectually honest among us know the truth.
Here is the truth: In the very near future your accounts held at your investment firm will include a personal ESG Score. The score will determine how much of your money is invested in virtuous social experiments and how much is funding holdovers of the dirty, rotten capitalism by which capitalists pigs profit.
ESG is not designed to make you money. Its designed to have you fall in line.
Yesterday, wearing a red MAGA hat made you a target. Tomorrow, wear one that says I Am Free and Self-Sufficient Again and you’re probably going to be mugged by ANTIFA sympathizers, who parenthetically are funded with vast amounts of ESG money.
I’ll take that chance. I also believe in self-defense.
Freedom and self-sufficiency imply cutting loose from dictatorial government and Wall Street writ large.
To be fair, our federal government has some wonderful programs. For instance, welfare started out with its heart in the right place, but years of bicameral political pandering and fraud from both sides of the aisle have turned it into the boondoggle it is today. Some people genuinely depend on welfare, and they deserve to get it. Its a social contract that we take care of those who need help.
Financially speaking, we rely on federal government for strong defense, minimal regulations, fewer laws, less taxes, effective spending, and smart fiscal and monetary policy. We don’t need free stuff. Free stuff costs too much.
The problem is the proliferation of free stuff is so rampant that many otherwise healthy and potentially productive citizens want free stuff, too, so they’ve been encouraged to deceptively hold out their hands. It’s not fair to the people that actually need it, or to the people that pay for it.
It’s also fair to say that Wall Street has done good things, specifically, building the engines of corporate capital formation. This is a very good thing. Wall Street capital has built America, chiefly instrumental for the creation of public companies from Apple (AAPL) to Zebra Technologies (ZBRA).
Capitalism is good. Its good for America. Its good for the world.
But then there was that whole big short thing, the 2008 financial mortgage crisis, and when it comes to private investors, Wall Street has been more piggish than bullish. And now, there is the ESG thing.
I’ve personally worked hand-in-hand with private clients since 1983. For the most part, Wall Street has trained our clients to “trust the professionals.” We’ve learned that trust can be costly. From Wall Street we simply want the truth, not having our portfolios be taken hostage by those who control the levers and switches of ESG.
So about 800 words ago, regarding Investor Self-Sufficiency, I asked: Why do you need it?
From a personal behavioral perspective, money coaching can help you become a more informed and less fearful manager of your money, the ultimate goal being self-sufficiency.
You need to become self-sufficient so you can feel unshakably confident in making your own informed decisions about your money. Not the government. Not Wall Street. You!
ESG will take away your freedom to choose. Want to still invest in fossil fuel? Still like heavy manufacturing? Mining stocks? Good luck, but lets just cut to the chase.
Anything that is not green, not socially woke, has already been been cancelled, or is tied to traditional American values will be the target of the new progressive reset in corporate values.
No, just like now and forever, your non-ESG portfolio decisions will not be right all the time, and you won’t be wrong all the time either. The freedom of choice is a beautiful thing.
After years of trusting “the professionals,” you can get to that self-sufficient place by working on your investing habits and behaviors, and learning the most relevant and productive money skills, based on your life goals. Period. That’s it!
Investing can be intimidating, but it’s not as complex as Wall Street wants you to believe. It’s an addiction you can break. Learn the basic tenets of passive asset management and learn about your own behaviors and attitudes toward money, and you will go a long, long way toward freedom and self-sufficiency.
Post script: For investors who still look for traditional performance:
The seduction of out performance (beat the market, excess alpha, etc.) is elusive as a unicorn. Out performance is the amount of return that is over what the market does on its own, without active management (and no ESG to worry about).
This excess return may be earned if the investment manager is skilled enough to outperform or beat the market. For a large majority of investors who willingly surrendered their self-sufficiency, they found out the hard way that active management sucks about 95% of the time.
From the S&P Dow Jones SPIVA® U.S. Year-End 2018 report: “…over the 15-year investment horizon, 91.62% of large-cap managers, 95.05% of mid-cap managers, and 97.44% of small-cap managers failed to outperform on a relative basis.”
This is nauseating. When there are proven, less costly ways to make what the markets make, and never less, why would you willingly surrender your freedom, self-sufficiency and money to “professionals” that cannot deliver almost 95% of the time?
You would have done better in cheap index funds.
But, sales pitches are seductive. I understand.