28/06: Sub Prime Mess
What will happen next in the market for sub prime loans? These mortgages, that have been packaged and sold to hedge fund and other investors, are experiencing very high default and delinquency rates. The result is that the liquidity of this market has been seriously diminished.
The practical result is a rush to reduce risk on the part of many investors worldwide. Should this continue, a global credit crunch might result thereby removing the major prop of recent economic expansion. Recent plentiful liquidity in many global markets helps explain rising stock markets including the US market despite an economy that is weak.
Given these very serious risks how is it that the markets continue on their merry ride? What am I missing?
OSF
June 28 2007
The practical result is a rush to reduce risk on the part of many investors worldwide. Should this continue, a global credit crunch might result thereby removing the major prop of recent economic expansion. Recent plentiful liquidity in many global markets helps explain rising stock markets including the US market despite an economy that is weak.
Given these very serious risks how is it that the markets continue on their merry ride? What am I missing?
OSF
June 28 2007
26/06: SRI Paradox
Category: General
Reply To: benbingham
Lately I have become aware of ironies in SRI discussions on the virtues of private versus public corporations. Everyone is jumping onto the private bandwagon, hedge funds and all. Meanwhile I have a thesis: public corporations will have to become good citizens over time, and the public does not believe this. Some observations:
My research assistant just admitted her prejudice that private companies are inherently good and public corporations are inherently bad. Understandable, but ironic since public entities are more regulated and private companies are far more able to avoid scrutiny.
In the Financial Times this week, it was stated that Moody’s may downgrade corporate bonds when corporate governance is “improved” by allowing more shareholder representation. Their reason: private (private!) groups could force the corporation to make decisions based on short term gains rather than long term value creation!
This morning on NPR I heard something about Congress accusing the SEC of favoring business interests…hello. So one day perhaps the regulators will uphold all the stakeholders’ interests. By investing in good public companies Benchmark is supporting the possibility that one day public markets will benefit the public good. Private does not mean good anymore than public means bad!
G. Benjamin Bingham
June 26 2007
My research assistant just admitted her prejudice that private companies are inherently good and public corporations are inherently bad. Understandable, but ironic since public entities are more regulated and private companies are far more able to avoid scrutiny.
In the Financial Times this week, it was stated that Moody’s may downgrade corporate bonds when corporate governance is “improved” by allowing more shareholder representation. Their reason: private (private!) groups could force the corporation to make decisions based on short term gains rather than long term value creation!
This morning on NPR I heard something about Congress accusing the SEC of favoring business interests…hello. So one day perhaps the regulators will uphold all the stakeholders’ interests. By investing in good public companies Benchmark is supporting the possibility that one day public markets will benefit the public good. Private does not mean good anymore than public means bad!
G. Benjamin Bingham
June 26 2007
Category: General
Reply To: benbingham
The last two week-ends I read two books that have shifted my understanding and my sense of possibility. Paul Hawken's Blessed Unrest in an open ended and artistic way describes the phenomenal immune response of over a million groups dedicated in myriad ways to saving the earth, while Riane Eisler in her book The Real Wealth of Nations deftly attacks the dominator paradigm which is the basis for so many stubborn and wrong headed cultural assumptions, and describes the potential for a world undergirded with an economy based on caring.
What is most synergistic about these two books read together is that Ms. Eisler's historical description of the ancient causes and the destructive effects of male domination ("Male" meant in the sense of left brain dominant and competitive) and her call to change our orientation in the realm of economics to caring (a "female" attribute) is already apparently being answered globally by an unprecedented upwelling of NGO's dedicated to respond to human and environmental needs.
This is inspiring and hopeful. The next step is to research and confirm that there is a similar global response to the call for caring in the realm of business. This is what we are recognizing in our daily research at Benchmark: not only are the corporate dragons washing themselves in green, but, more importantly possibly thousands of companies are emerging though still under the radar screen that are sincere in their missions to meet the needs of our time with sustainable solutions.
Though still on a watch list, three examples we found this week are indicative of a trend: a furniture maker in California, that uses 95% recyclable materials, takes back and recycles their own furniture and buys used materials from schools to help support programs; a rice processor in India that realized that burning the unused parts of the plant was wasteful and polluting, so they now use all aspects of the plant producing rice, rice oil, rice fodder for cattle, and replacing imported coal for local electricity with their new biomass energy plants; and a small environmental engineering company in China that is winning massive contracts for managing waste water without chemicals. One by one we are finding and investing in such companies. I believe there will be more and more.
G. Benjamin Bingham
June 2007
What is most synergistic about these two books read together is that Ms. Eisler's historical description of the ancient causes and the destructive effects of male domination ("Male" meant in the sense of left brain dominant and competitive) and her call to change our orientation in the realm of economics to caring (a "female" attribute) is already apparently being answered globally by an unprecedented upwelling of NGO's dedicated to respond to human and environmental needs.
This is inspiring and hopeful. The next step is to research and confirm that there is a similar global response to the call for caring in the realm of business. This is what we are recognizing in our daily research at Benchmark: not only are the corporate dragons washing themselves in green, but, more importantly possibly thousands of companies are emerging though still under the radar screen that are sincere in their missions to meet the needs of our time with sustainable solutions.
Though still on a watch list, three examples we found this week are indicative of a trend: a furniture maker in California, that uses 95% recyclable materials, takes back and recycles their own furniture and buys used materials from schools to help support programs; a rice processor in India that realized that burning the unused parts of the plant was wasteful and polluting, so they now use all aspects of the plant producing rice, rice oil, rice fodder for cattle, and replacing imported coal for local electricity with their new biomass energy plants; and a small environmental engineering company in China that is winning massive contracts for managing waste water without chemicals. One by one we are finding and investing in such companies. I believe there will be more and more.
G. Benjamin Bingham
June 2007
05/06: California Dreamin'?
Category: General
Reply To: benbingham
The Investors' Circle and Business Alliance for Local Living Economies (BALLE) were conveniently set in the calendar so that I could take a few days on the Lost Coast north of San Francisco in between. This part of the world is spoiled with conservation easements, open sky and extraordinary beauty which lends itself to a liberal view and a tendency to "build castles in the sky." As Paul Hawken underlined in his new book, "Blessed Unrest," Thoreau reminds us that "that is where the (castles) should be. Now put the foundations under them." So after two inspiring conferences: one with social investors and entrepreneurs that want to change the world, and the other with business owners focused on creating more vibrant local economies, I return to work inspired and with an aching need for foundation building.
There seemed to me to be a lack of clear direction in the choice of investment opportunities at the semi-annual Investor's Circle. Benchmark's High Impact Portfolio, as you know, looks at diverse industries with differentiated principals for each. The panels that chose winning companies to present to this eager gathering of idealistic investors had no such guidelines, so there were several that I felt missed the mark. Since Wellness is what I want to invest in if looking at Healthcare, for example, I would not promote companies that are using the established aleopathic paradigm (eg vaccines for Africa), but might rather look for companies that promote health and prevent illness (e.g. innovative fitness programs, mosquito nets or natural supplements).
The important thing in social investing is to promote those companies that you as an investor think will benefit the world, and this requires some guiding principals.
At the BALLE conference this approach was supported by the public "coming out" of B Lab, a non-profit led by Benchmark investor, Jay Coen Gilbert, whose goal is to differentiate good companies from good marketers by providing a self regulated but transparent rating system online. By taking a survey companies publicly commit to principals in their practices, knowing that even if they are not audited, consumers can check out if they are following through with what they have submitted. The second piece of this initiative is to assist companies to amend by-laws so that all investors are given notice that, as a "B" or "For Benefit" Corporation, decisions will be made for the good of all, and not just to benefit shareholders financially in the short run.
As a founding member of B Lab, I was able to speak to the 500 or so assembled on behalf of Benchmark Asset Managers, along with 12 other pioneers, from Seventh Generation to Indigeonous Design. Our reason for supporting this initiative is to be part of the healing of a world economy fractured by competition. As more companies commit to benefitting society, and more cities commit to local living economies, we can gradually change the paradigm from dog eat dog to a mutual licking of wounds! I'm convinced that there are already many beneficial companies; what we need to do is to continue our research process to find such companies, then help create a market for them, because only a few of these are followed by analysts. There are others who want to join this effort...more on this later.
G. Benjamin Bingham
June 2007
There seemed to me to be a lack of clear direction in the choice of investment opportunities at the semi-annual Investor's Circle. Benchmark's High Impact Portfolio, as you know, looks at diverse industries with differentiated principals for each. The panels that chose winning companies to present to this eager gathering of idealistic investors had no such guidelines, so there were several that I felt missed the mark. Since Wellness is what I want to invest in if looking at Healthcare, for example, I would not promote companies that are using the established aleopathic paradigm (eg vaccines for Africa), but might rather look for companies that promote health and prevent illness (e.g. innovative fitness programs, mosquito nets or natural supplements).
The important thing in social investing is to promote those companies that you as an investor think will benefit the world, and this requires some guiding principals.
At the BALLE conference this approach was supported by the public "coming out" of B Lab, a non-profit led by Benchmark investor, Jay Coen Gilbert, whose goal is to differentiate good companies from good marketers by providing a self regulated but transparent rating system online. By taking a survey companies publicly commit to principals in their practices, knowing that even if they are not audited, consumers can check out if they are following through with what they have submitted. The second piece of this initiative is to assist companies to amend by-laws so that all investors are given notice that, as a "B" or "For Benefit" Corporation, decisions will be made for the good of all, and not just to benefit shareholders financially in the short run.
As a founding member of B Lab, I was able to speak to the 500 or so assembled on behalf of Benchmark Asset Managers, along with 12 other pioneers, from Seventh Generation to Indigeonous Design. Our reason for supporting this initiative is to be part of the healing of a world economy fractured by competition. As more companies commit to benefitting society, and more cities commit to local living economies, we can gradually change the paradigm from dog eat dog to a mutual licking of wounds! I'm convinced that there are already many beneficial companies; what we need to do is to continue our research process to find such companies, then help create a market for them, because only a few of these are followed by analysts. There are others who want to join this effort...more on this later.
G. Benjamin Bingham
June 2007
04/06: BALLE
Hey Ben!
Tell us about the BALLE conference (Businesses Allied for A Local Living Economy).
Welcome back.
OSF
June 4 2007
Tell us about the BALLE conference (Businesses Allied for A Local Living Economy).
Welcome back.
OSF
June 4 2007
