understand the times.” eleven guiding eleven guiding

The Mulberry Ministry, publishers of Eternal Value Review. All rights reserved worldwide. One-time reproductions and excerpts are encouraged without permission. For multiple reproductions please provide and acknowledgement to The Mulberry Ministry, P.0. Box 2609, Station R, Kelowna BC, Canada V1X 6A7. The use of this publication for the promotion of any other commercial activity or pursuit is expressly prohibited. The Mulberry Ministry does not endorse any third-party financial product, service or any promotion of an investment scheme. If not otherwise noted, all scripture references are taken from the New International Version (NIV) of the Bible.

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Wilfred J. Hahn is the founder of The Mulberry Ministry, and publisher of Eternal Value Review, written for “thinking Christians seeking to understand the times.”

An executive and chief investment officer in the global financial industry, his views and research are particularly relevant to Christians living in the endtimes, a time of great prosperity, financial slavery and economic injustice. Wilfred J. Hahn

Money Matters: Money Matters: Eleven Guiding Eleven Guiding

PerspectivesPerspectives

www.eternalvalue.com

Wilfred J. Hahn

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THE MULBERRY MINISTRY

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Money Matters: Eleven guiding perspectives

Wilfred J. Hahn Copyright ©2001, Mulberry Press Inc.

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Money Matters: Eleven Guiding Perspectives

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MoneyMatters Column #1 Work out your faith ...Column to wrestle with material issues.

W e are told we cannot serve both God and mammon, yet we find ourselves striving to serve God while living in a physical world under the tight grip of money. That means we run into

thorny dilemmas as we try to live as wise, faithful stewards without falling prey spiritually to the wiles of mammon.

It is not an easy, disengaged task. Nor, was it ever meant to be. The issues that challenge the definitions of right and wrong, godliness and excellence are rarely black and white. Most come to us in shades of gray every day whether we are aware of them or not.

And rarely will we find “one size fits all” answers. As the Apostle Paul says, we must each individually “work out our faith” — in other words, grapple with the challenge of living out our spiritual values in a material world. And who can doubt that in this day and age, financial wealth and consumerism increasingly suffocate these personal sojourns of faith and spiritual purity.

It is in this spirit of “working out” that I begin this column. I propose to deal with the thorny challenges of living as faithful stewards in an age of booming financial wealth. I plan to deal with real-life questions such as:


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I asked the individual I introduced earlier, “Tell me, what reasoning do you use?” His reply revealed that there wasn’t any. There was no appeal to any truth or bedrock value. Stocks went up and down, driven by rumors and random market action. He was simply good at getting in and out, he said. The “evidence” driving his decisions were either non-existent or nonsense. It was really no different than playing roulette in Las Vegas.

What about risk? We face it in our lives in many places whether walking up ladders, climbing into cars or investing. But when is risk-taking inappropriate? Again, there is no hard and fast rule that can apply to everyone. Is an inordinate desire for a quick and easy gain driving the decision to make an investment? Would the consequences of an investment gone sour place an onerous financial burden on one’s family or financial stability? An affirmative answer to these questions suggests that true stewardship isn’t being practiced.

Christian stewards, whether they are financial investors or not, show a characteristic of humility. There is a rational process at work, their minds engaged, seeking knowledge and finding good stores of value. They show a similar attitude of care with their savings as with other important decisions — the purchase of an automobile, or choosing their spouses, careers, or churches. They look for as much evident truth as possible as they work out their faith and decisions of daily life. No idolatries or lusts cloud the decision. Though there still might be unknowns or risks, they are measured and reasoned. The lives of these individuals are not unduly ruled by the gods of chance.

Does that mean that day-trading is bad? If you like to day-trade with a little bit of play money, you may so choose.. Can you make money speculating in the stock market or can you win the lottery? Yes, very definitely. But these activities are not stewardship nor investment. At best, they are entertainment.

Originally published in Christian Week, April 2001.


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MoneyMatters Column #11

Sound investment requires humility and reason. “Bald speculation” has no part in godly stewardship.

F inancial markets trends as he does every so often. I wonder why he searches me out since we usually reach an impasse in our conversations. He rarely agrees with any of my perspectives. As a novice investor heavily

engaged in day-trading, he was sure that he has found a quick and easy way to riches. Apparently, he didn’t suffer any great losses as did the vast majority of hapless stock market speculators. While I was glad for him that this was the case, I remained concerned that he may suffer the same fate eventually. Yet, blinded by an obsession with quick profits, he refuses to heed any cautionary comments I might make. And now, heady with his modest success, he has an outsized confidence in his ability to buy and sell stocks. To him, every other approach to stewardship is boring.

The major point of disagreement I have with this person has to do with the difference between speculation and investment. Confused, he believes they are one and the same. They are not. It is important for Christians to ponder the difference. Why? In my view, bald speculation finds no part in a godly stewardship. Simply engaging the laws of chance without any logical reasoning doesn’t fit. Rather, the fruits of our labors and God’s provision should be under our purposeful direction, not subjected to the caprices and vagaries of godless, immoral financial markets. If so, then what is speculation? There is no “one-size-fits-all” answer.

Yet, most people would have no trouble defining the meaning of speculation. Common definitions include these: “an opinion based on incomplete information or evidence”; or, “ …a financial transaction that involves risk.” The key words to focus on are “evidence” and “risk.” They are subjective concepts, not applying in the same way to all people and every investment situation. What may be a speculation to one person could conceivably be a rational investment to someone else.



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Should I invest in a mutual fund? How much should I save, spend or donate? To what extent am I responsible for how my savings are

used? What is the biblical perspective on preparing for retirement? Am I accountable for the sins of my financial advisor? Will I open up myself to complicity in any potential evil if I

buy a stock or bond? You will not always agree with my views and answers, but I

value your feedback. Send your responses and questions to my e-mail address and hopefully we will together progress in working out better answers. I promise to pass along any helpful insights to readers at large. Working it out

Before we launch into any messy stewardship issues, however, a bit of context is necessary. Money is a sly chameleon that is constantly on the move, changing its colors and capable of great speed. Money is playing an ever-increasing role in our economy, and wealth is heaping up as never before.

Trends in financial markets demonstrate this growing role of money. World stock and bond markets have been doubling in value almost every seven years since the mid-1980s. The sphere of money has so infiltrated our lives that today one out of every 6.5 workers (in the high-income countries) works in some type of money industry, such as banking, insurance or investing. Money and its relationships are so complex that even with computers it still requires so many people to reshuffle and reconfigure our financial wealth.

Perhaps these statistics are also revealing trends other than human progress — things closer to the heart. Might they also reflect an increase in greed, discontent and financial oppression ... of worldliness? Can increasing prosperity also be a curse?

We will examine these questions for ourselves as we grapple with the practical issues of Christian stewardship in a modern financial world. Stay tuned. In the next column: Who should have accountability for our money-—you or the stockbroker?


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(Originally published in Christian Week, September 2000.)

MoneyMatters Column #2 Am I my money’s keeper? We too willingly put accountability for our money into other hands.

I live with a family member who is very health conscious. You might recognize the type — the person that is very finicky about what they eat … no animal fats, no polyunsaturated oils, minimal amounts of bleached sugar.

They pop vitamin supplements, go heavy on the roughage and are always toting around a bottle of mineral water. Nothing goes into their gullet before first checking the label. While I’m not so selective with my diet — for better or worse — I support this level of vigilance. After all, it’s important that we be discriminating about the contents of virtually anything we consume, whether orally, visually, financially or any other sensual channel.

Yet, I am struck how few practice that principal when it comes to financial services, particularly investments. Most people judge them by their packaging, not the actual contents. Last year’s "moonshot" investment return, a razzle-dazzle multimedia sales pitch or the sage forecasts of a financial professional usually clinch the sale. Few inquire about what’s under the hood. The prevailing attitude seems to be that if it promises good investment returns, there’s little need to know anything more. While that’s convenient, in my view it is an abdication of our obligation to responsible stewardship. How our money is used matters whether we use it buy things that we consume orally or stoke the capitalist economy through investments that support commercial activities.

In the financial world these days it is usually a financial professional that makes decisions for how our money is being invested. For example, when we buy a mutual fund, a portfolio manager decides how and what securities to buy. In the case of investment counselors are paid a fee to manage our financial affairs, we may only discover what they did with our money once



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Though moral persons can and do become wealthy, the point is that the heart can only wholly serve one of these two objectives. Therein lies one of the problems with the idea that Christians must be successful investors to be good stewards. We are subject to falling into the trap of measuring morality — good stewardship in others words — with money. It can’t be done. Not only is the performance of one’s investments far too narrow of a measure of stewardship, it is also an unreliable one. It says nothing about the means. “Successful” professional investors may give little attention to the concept of morality. I know a number of them who would openly agree that their investment record would suffer if “morality” was allowed to be a serious concern.

This whole idea of rating one’s stewardship through financial performance or some other wealth measure is a relatively recent phenomenon. Time was when the pursuit of wealth for itself was considered a rather lowly objective. It was widely believed that people such as these could not be trusted and had no interest in higher things — truth, for example. A number of world religions today still reflect this thinking.

Here are some steps that can help you avoid falling for society’s definition of good stewardship.

· To begin, realize that wealth or investment prowess alone says little about your success as a godly steward. Good stewardship is a personal thing. Don’t allow worldly financial indicators to pull you off your track of stewardship. One shouldn’t lose sight of other indicators of success — wisely using one’s gifts, the pursuit of eternal riches, good friendships and relationships, well nurtured children … etc.

· The savings that you do have can be invested morally. There’s no need to speculate irresponsibly or to give in to the lure of unsubstantiated expectations. Think about how your money will be used by those you are either lending to or are investing with.

· When considering different savings alternatives, research them well. Solid investigation is as least as important as the honest work and balanced budgeting that gave rise to the fruits of your labour that you now seek to store in financial form.

Originally published in Christian Week, June 2001.


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MoneyMatters Column #10 Is successful investing the same as good stewardship?

D o you know a successful investor? Likely, you’ve met or heard of an individual who has a reputation for having the “Midas Touch.” Anything and everything that they touch prospers. Somehow they have an

ability to discern trends, identify opportunities … know when to “hold them and fold them.” They start profitable businesses, wheel and deal properties, or pick the right stock market investments. Oh, if we could demonstrate the same success, we may think.

In the professional leagues, the fixation with successful investors is even more obsessive. Portfolio managers are intensely scrutinized for any evidence of above-average-investment skills. Their investment records are measured by the month — even by the day and hour — against the average financial market trends. A large number of consulting firms make it their business monitoring these investment managers. If one of these fund professionals accumulates five or more years of an above-average investment record, they will be venerated as superhuman beings. They soon stand to earn millions a year as consultants and clients clamor to have money invested with them. These money managers become stars, known far and wide. When they talk, people listen.

Let’s face it: People are widely considered to be successful human beings in our day because they may have demonstrated above-average investment skills. Can we also conclude that they have been good stewards? It’s a question that’s very relevant to Christians. There are more than a few who endorse a version of this idea, believing that successful investing is evidence of good stewardship. I have come across a few advertisements from Christian investment advisors who heavily promote this connection in order to sell investment services.

Definition of Good Stewardship is Much Wider. I am continuing on the theme of morality and money begun in previous column. Can the two be mixed? We concluded that one objective can only be pursued at the expense of the other.



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we get the next quarterly statement. Or, if we choose a deposit certificate that promises an attractive yield, we may not inquire how the issuing financial institution is able to earn the high return that they promise to pay. In each of these examples the accountability for how our savings are being employed in the world are being willingly handed over to someone else.

There are now a lot of people working in the wealth management business who seek to earn their living by taking accountability for other people’s money (OPM). It is an industry that has boomed over the past few decades as financial wealth has soared around the globe. Who are these money professionals? They include everyone from stockbrokers, portfolio managers, financial planners through to the mutual fund representatives in a local bank branch. In my experience, very few of them are qualified practitioners of good Christian stewardship principles. Working Ethics. “We make your money work hard for you” is a common slogan these days. But it says nothing about the “work ethic” of our savings. If you knew what your money was being used for, you may not be pleased. When considering wealth management services, here are some of the questions you should ask:

• Why is one financial institution able to offer much higher returns than another? Are they doing so by subjecting me the investor to inordinately high risks?

• What company stocks does my mutual fund own? By owning them, am I opening myself to complicity in some type of immoral activity?

• For what reason am I buying securities (bonds or stocks) at all? Am I making a speculative coin toss or a reasoned stewardship decision?

• Am I choosing a solid storehouse for my eventual retirement needs? Is it possible that I am being lured into a greedy investment mania?

These are only a few of the questions we could pose. (We’ll tackle some of them in future columns.) My conclusion for now? Though we may seek the services of financial professionals, we shouldn’t give up accountability for


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the “work ethics” of our money. Past the pearly gates, there’s little doubt that we as individuals will be called to account as the “keepers of our money.”

(Originally published in Christian Week, October 2000.)

MoneyMatters Column #3 Mutual funds can serve a useful function. But look at the contents, not the wrapping.

S hould you buy a mutual fund? Many people have done so in recent years. As such, the funds business has boomed. The number of mutuals on offer has skyrocketed as has the average size. What I considered

to be a good size fund ten years ago would hardly amount to a month’s worth of fund inflows today. When it comes to investing there’s little question that the “wide road” these days invariably leads to a wealth management company, a financial planner or a stockbroker offering mutual funds.

Recently a close relative reacted with surprise to a recommendation I had made. “I thought you didn’t like mutual funds,” she said. I had suggested that a mutual fund might be an appropriate savings vehicle for her to consider. Apparently, I was contradicting myself. In recent years she had heard me express my deep concern for the many investors who have been caught up in what I saw as a financial mania. Mutual funds have played a key role in this phenomenon.

As well, I have been uncomfortable with developments within the mutual fund industry itself, especially with the misguided expectations that have been promoted to the investing public at large. The fund business had become no different than any other promoted consumer product … detergent, for example. It was all about marketers selling the product of easy gains … lots of it … and less about real investment and promoting a savings ethic. Knowing my concerns, my relative had assumed that I didn’t like any mutual funds. That’s not the case. I do think that mutual funds can serve a useful function.



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principles will lead to above average investment performance. It is not always clear what is meant by this claim. Some suggest that a Christian investment advisor will make more money for you because they are “spirit-led.” (That’s a hot potato I won’t tackle in this column.) Others may simply mean that God will bless people financially if they pursue Biblical-based stewardship principles. Is that really so?

What if financial markets are fundamentally immoral? In essence, this is true. Even George Soros, the legendary billionaire hedge-fund manager admits this perspective. Is it then reasonable to expect that Christians as a group should demonstrate above average success with their financial investments? There are no hard and fast answers. There will be situational exceptions to every one. Yet, one thing must be true. Morality cannot be measured in terms of financial return. Christ could not have been clearer on this point. The two do not mix. One must be first pursued at the potential cost of the other as it is impossible to serve both God and money. How can money then be used to measure what is of God?

There are organizations that offer “ethical” funds. They raise an example of this dilemma though these should not be confused as being “Christian.” I believe many of them pursue worthwhile objectives. Yet, should investors expect that “ethical” funds also outperform other funds? Many investing in them believe that they “can have their cake and eat it too.” The truth is ethical funds would quickly lose their attraction if they were sold on the expectation of below-average investment returns. That’s why many of these funds find their objectives comprised in order to remain commercially viable.

In my experience, investing morally can carry a steep price at times. If Christian holiness is your objective, you have no business comparing the outcome of your financial stewardship with worldly market indicators. Of course, that’s not to say that investment decisions born of a stewardship attitude will not prosper. It’s a matter of attitude. First serve God. The money may follow.

Originally published in Christian Week, May 2001.


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Originally published in Christian Week, April 2001.

MoneyMatters Column #9 Serving both money and God will lead to conflict. Investing morally can carry steep price.

R ecently I accompanied a friend to a meeting with a respected investment management firm. He was in the process of selling his business and wanted to structure his financial affairs in preparation for semi-retirement.

Though he had a graduate business degree and was obviously capable of running a sizable business, he felt on thin ice when it came to financial investments. Who wouldn’t? With the myriad of investment products available and the barrage of high-sounding investment language, most people would be confused and perhaps easily bamboozled. Given my friend’s situation, I offered to accompany him to an exploratory meeting with an investment advisory firm to begin the search process.

Listening to this firm’s presentation with my friend was a worthwhile experience. Normally I am on the other side of the table. We listened to the representative’s outline of his company’s skills and products. It was fairly typical as these meetings go … until near the end, at least. Then, my friend rejoined the advisor with the comment, “I’m not just interested in good investment performance. It’s secondary. I want my money to be managed morally.”

I was both enthused and deflated at the same time when my friend said this. I was impressed that he was intent on taking responsibility for the use of his assets —what God had given him. Yet, I was also dejected because I know how difficult it is to have one’s financial affairs truly managed in a Christ-honoring way in our secular financial world.

A number of issues worthy of examination are triggered by his response. Let’s deal with just one of them in this column. Is moral investing incompatible with good financial returns?

One of the messages sometimes implied by Christian teachers and investment advisors alike is that applying Biblical



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My relative had confused content for wrapping. To say that I am against mutual funds is like saying that I disapprove of all magazines in paper wrapping. That wouldn’t make sense. My National Geographic subscription and some Christian publications — quality publications — are mailed in wrappers. Check the Contents. When considering mutual funds, Christian stewards should be looking at what’s inside the wrapper. Good stewards will care about the content of the funds that they buy. For example:

• When considering a stock or bond fund, just how cheap or expensive are the securities that will be owned mutually? Good stewards apply the principle of value to the content of their grocery bags. The same should apply to savings and investment “bags” as well.

• What is the portfolio manager doing with our money? Just what types of companies, industries or governments is this professional choosing to finance with our money? For example, most Christians would feel that an investment in the stock of a media company that promotes immorality wouldn’t be appropriate.

• How is the money manager investing? Is he or she simply gambling … serving the gods of chance? Stewards instead pursue a life of industry and thoughtfulness. The use of their money should reflect these character traits.

In short, it’s the responsibility of stewards that they know the answers to these questions. Here’s how you can begin to find answers.

Before buying a fund, read its prospectus and investment guidelines. (A recent survey suggests that only 1 in 20 mutual fund investors actually reads the prospectus.) If possible, view a recent statement of the fund’s portfolio holdings. Some companies also regularly publish comments from the portfolio manager responsible for a particular fund.

Of course, more information is needed to make a thorough assessment. Yet, these materials will at least provide you with a sense of the suitability of a mutual fund’s content. Beyond that,


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an investment professional can provide further help if asked the right questions.

As concluded in a previous column, we are our money’s keeper ... no matter how it’s wrapped.

(Originally published in Christian Week, November 2000.)

. MoneyMatters Column #4

When does saving become hoarding? Wealth accumulation is not always good.

O ne of the distressing aspects of our world is evidence of an enormous and widening wealth gap. The “haves” have more than ever before relative to the “have nots.”

This gap is hard to ignore. I see it in my travels in many places. Overwhelming opulence can be found in the unlikeliest places — the poorest countries in the world. In some parts of the globe, it is not unusual to see cocooned, wealthy neighborhoods comprised of huge mansions situated in full view of dirt-bottomed shanty-towns. Granted, my itineraries are usually pretty sheltered — centering in the comfortable hotel districts of major, modern cities. Even so, in some places — Brazil, for example — the squalor of the poor can meet you at the lobby door of a five-star hotel.

Income and wealth statistics both here and elsewhere suggest that a wealth skew may now be the widest in thousands of years of human history. It is a fact of our day: There are no shortages of hoards. The rich continue to get wealthier, the poor ever more burdened.

Not only is this true around the globe, it’s occurring at home … right here in North America. The “prince-to-pauper” ratio is far out of whack here and abroad despite all the helpful work of benevolent organizations such as the World Bank (“Our wish is a world free of poverty” is its slogan) and others like it. Why is this the case?



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They're the ones that bring in the business. Inventive advertising, market positioning and glossy brochures have taken precedent over substance. These firms benefit greatly by perpetuating unrealistic figments in the minds of the customers.

In that sense the investment business has become a little like that of diamonds. I may be stretching the analogy at little. Consider that at the beginning of the twentieth century there was little demand for small diamonds. Along came Cecil B. Rhodes, the founder of the company that gave rise to DeBeer's, the big South African diamond conglomerate. Its marketing hype literally transformed the world view of these little stones, convincing couples in the Western world that love could hardly be expressed without them. Diamonds became eternal and by the mid-century they were "a girls best friend." With the aid of a monopoly tightly-controlled by DeBeer's, the prices of these cheaply-produced gems soared and have remained expensive every since. A bit of this same phenomenon has happened to investment products.

The marketing hype associated with investment services — mutual funds and others — has created idealistic (idolatrous?) images and inflated expectations in the minds of many consumers. As a result, consumer investment activity has become an extension of these figments of the imagination and not something related to any underlying fundamental value or cost. The recent boom and bust in technology and Internet stocks is a testament to the notion that theses images can have a great influence on the perceived value of investment services.

Ignore the come-ons of the wealth management companies. They provide hardly any advice worthy of the attention of a Christian steward. Instead, keep your eye on real value. One good way of doing this is to always relate your investments to underlying income. If there is little or no income being derived from your investments in the form of dividends or interest payments, it's good reason to examine your investments very closely. Particularly in the case of stock markets investments, make sure that the company you are investing in has a strong earnings outlook. Above all, don' t let the marketers have anything to do with your view of markets.


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(Originally published in Christian Week, March 2001.)

MoneyMatters Column #8 Advertising: the market’s best friend? Markets and marketing shouldn’t mix freely when investing.

M y eyes often glaze over when I view financial service ads these days. An increasing amount are inane. Surely most people must feel the same way I do. Here are a few examples of various slogans

and come-ons enticing readers to various financial services: "Be self-centered. Trade stocks yourself.” "You're Rich, Now it's Time to Get Wealthy." "Become Wealthy Enough to be Despised." “Sex is Good. Finding a Stock at $5 That Goes to$200 is Better." What do all these slogans imply? Largely, they are just non-

sensical. The attitudes promoted are hardly respectable ... or at least, the kind that once used to be respectable. Nowadays, brazen greed, self-interest and self-centeredness are being shamelessly idolized. What the slogans signify is that the money business has largely become a marketing operation.

Let's face it, money is big business. Canadians especially sense this as Canada has few, but large banks. Their quarterly financial reports show enormous profits, revealing high profitability. Banks do perform very valuable services such as lending and deposit-taking to mention a few. But these aren't the high-profit businesses. Rather, it's those that are related with financial markets — brokerage, investment management and mutual finds ... etc. — that are the big money-makers these days. These operations, often called "non-bank" businesses and reputed for high profitability and rapid growth, are now the financial goliaths of the world. This wasn't the case twenty years ago. Then, traditional banking-was still the largest financial sector.

What has happened is that the marketing departments of financial and investment firms have become very powerful.



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I don’t pretend to have a full answer. Yet, it’s a pretty safe conclusion that much of the blame can be pinned on hoarding. If it wasn’t human nature to accumulate wealth, the world would surely be a better place. Spiritual and Material Consequences

Christian stewards place a high value on the ethic of saving. Indeed, the fruits of capitalism would not be possible without saving. The Bible encourages industriousness and wise budgeting of all of our resources and gifts. But when does saving become hoarding? Hoarding is destructive in the long run. Economic studies show this to be so.

Where is the line between virtue and idolatry? It is somewhere in our hearts. Whether or not we come out on the right side of this line is mostly a personal question. Though the nature of this challenge to the heart is the same, practical applications will differ because each of us are given different positions and roles. Some are employers, others laborers. Some are capital providers and philanthropists, others are borrowers.

All the same, there are a number of attitudes that can help good stewards avoid the destructive snare of hoarding — both spiritually and materially:

• Plan ahead and save for foreseeable needs (retirement, for example.) Practical skills come to bear here — budgeting, balancing wants and needs, and finding good store houses for our savings.

• Free ourselves from the love of money. A hoarder serves money. A faithful steward seeks to have their possessions serve God.

• Remain open to use money in helpful ways to the service of others whether as a lender, employer or giver. “Command them to do good, to be rich in good deeds, and to be generous and willing to share. “(1 Timothy 6:18).

If our world were entirely populated with godly stewards, would it look any different? Yes, in many ways, I imagine. Financial hoards would subside even as prosperity for the world would increase. Economic slavery and poverty would diminish


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though some would undoubtedly still be wealthier than others. The blatant wealth gap that we see today would disappear.

Sound too idealistic and unlikely? Not at all. Even if only you alone live out these attitudes with your money, the world is guaranteed to be a better place.

(Originally published in Christian Week, November 2000.)

MoneyMatters Column #5 Who can retire comfortably? Popular advice could lead to disappointment.

“ If I don’t do it somebody else will.” It’s a familiar excuse. A while back a construction contractor I know beefed about the kick-backs that sometimes get passed under the table. He didn’t want to do it, yet if he didn’t he’d lose work.

A senior VP in the wealth management business faced a similar dilemma. If he didn’t follow certain “questionable” industry practices his mutual fund company would lose market share. If so, he could get squeezed on his year-end bonus … possibly even lose his job.

Neither could win. Either they’d be out of business or in bad conscience. Though they wished they could change things for the better, their individual actions were costly and fruitless. I raise this dilemma to illustrate a financial parallel: Planning for our retirement. Populations Dwindling: Let me explain. As most know, population growth is slowing rapidly around the world — particularly in the wealthy countries. Nations like Germany and Italy are actually shrinking. Why is this happening? In short, people are having less children. The United Nations Population Division recently predicted that world population will start declining by 2040-2050.

If this is correct — I think it will happen much sooner — it raises a dilemma for many of us who are baby boomers. How can we retire in comfort if there will be less workers to support us in our old age? No problem. The wealth management industry has a sure solution to this potential dilemma — invest in stocks and bonds and they will soar in value over time. Voila! The crisis is gone since the value of pension and retirement funds will have boomed.



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the idea that Christians should by nature be adverse to everything without critical thinking. To the contrary. What I am saying is that we shouldn’t be afraid of going against the grain … of taking the narrow road. After all, “wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it.” (Matthew 7:13-14)

This same truth applying to salvation is often observed in human affairs, most spectacularly in investment markets. The dramatic ups and downs of stock and bond markets are the result of little more than alternating “wide” and “narrow” roads. The mania in technology stocks of the late 1990s offers a good way of explanation. For a time everybody was on the wide road, buying these stocks without any critical analysis. The fact that so many people were traveling on this highway gave some comfort. “How can so many people be on the wrong road?,” investors may have reasoned.

As it turned out, this wide road led to a good deal of destruction. In the space of eight months, these stocks fell by more than 50% … many by 90% and more. Investors discovered that the way into this investment mania was well serviced with wide roads; the way out only through the eye of a needle. Financial market history is marked with countless examples of the same force of human crowd psychology at work.

What can you do to avoid getting trampled on the wide road with the hard-earned savings that you are entrusted with? For a start, pay little attention to the fact that a majority may be investing in a certain way. Instead, seek out the reasons for this behavior. In that sense, knowing what the majority believes can be useful. Acting like the mindless masses, however, is what can cost you big.

It’s not hard to diagnose whether there is delusion and untruth at work. Your broker’s marketing story can easily be scrutinized. Don’t be bowled over by opinions of so-called experts and technical financial jargon. Good old common sense will beat out an expert almost all of the time.

Is that narrow minded? Only the majority will tell.


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accountability for your own decisions. After all, that’s your vested interest.

Originally published in Christian Week, February 6, 2001.

MoneyMatters Column #7 Go against the flow. In financial matters, the wide road can lead to harm.

O n short notice, my wife and I decided to tour Egypt a few years ago. Admittedly we were opportunists, choosing to visit this country only three weeks after the Hatshepsut incident. Terrorists had murdered 55

tourists at this ancient temple, mowing them down in cold blood with machine guns. As a consequence, tourism plunged, many canceling their vacation trips. Somewhat a contrarian, I thought this would be a good time to visit. My wife wasn’t exactly thrilled with the idea though comfortable with the logic. As a rule, we always try to plan our trips on shoulder seasons or other such opportune times. In the late 1980s we even stayed on the very same floor of the Hilton hotel that had recently been blown up by feuding drug cartels in Cartagena, Columbia.

Are we foolhardy? Perhaps. On the other hand, consider the logic for our journey to Egypt. The major sites of Egyptian antiquity wouldn’t be jammed with tourists, travel prices would be attractive, and importantly, this shortly after the terrorist attack the country would be bristling with armed guards. Terrorists would be in hiding, therefore offering the safest time to visit in years. That proved to be the case.

As it turned out, we were able to enjoy our tourist guide virtually to ourselves. There were only eight in our group. In fact, the Nile tour boat which typically hosts up to 250 travelers only had 28 fare-paying passengers! And, on our Columbian trip we slept comfortably … at deeply discounted prices.

The point of all the above is illustrate the logic of contrariness. It’s an attitude that shouldn’t be unfamiliar to the Christian. The world’s endorsement doesn’t necessarily carry too much weight in our decisions and lifestyle. I am not promoting



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This may sound like a logical solution but it won’t work. While it will line pockets of the wealth managers, many of us future retirees will go wanting. The “big lie” underneath this idea is not so obvious. Does it make sense that a society places its hopes in self indulgence and financial bubbles rather than promoting the investment of its time and resources in healthy-sized families — the true source of future labor income?

We may live in an age of finance and fancy consumer investment products, but the prosperity of its older people always rests on the working productivity and size of the next generation. In times past, if you had few kids or none at all, there could be no retirement. On the other hand, if you had a big family, the more likely you’d be coddled and well respected in your old age.

Socialized pension systems and tax-advantaged savings vehicles like RRSPs and IRAs don’t change this fact of human life. Simply put, if there are less workers relative to the number of aged, there will be less income (workers) to go around to support all of the living. It doesn’t matter how many trillions have been shoved into pensions and other savings vehicles today. Simplistically, all that counts is how much income there will be when the world is full of retirees. Beyond the Catch-22: It’s like the situation with the contractor. Though most pension systems and individual investment vehicles invested in securities markets will surely come up short when the retirement crisis hits (certain to be case for us baby boomers today) we can’t change the system as individuals. If we don’t do what everybody else is doing financially, we stand to be worse off in our retirement years. What to do? Here are some suggestions (Baby boomers, are you listening?): • Set aside as much savings as you can. • Over time, try to buy claims on real income … earnings, dividends,

and interest. Capital gains are only good to retirees if they can be turned into income at some point.

• Consider other types of investments besides stock markets … bonds, good real estate properties, for example.

• Downsize your retirement lifestyle expectations. • Invest in relationships with your children. Who knows? You may

need to live with them some day.


8. Money Matters:

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(Originally published in Christian Week, December 2000.)

MoneyMatters Column #6 Who Are You Listening To? When seeking financial advice, note the vested interests.

H ere we are, stock markets have melted, economies are swooning, and currencies have turned course. If you listen to the received wisdom of many professionals, the financial palpitations of the past months — or any

other period, for that matter — have all been a surprise. The gods have been cruel without warning. Yet, financial pundits and the professional wealth managers continue to offer their advice without any reprisals. You see them on all of the business shows and in the “short takes” on the evening financial news spots. Their views are respectfully solicited as before. The interviewer hangs on their every word. Viewers hope to hear comforting news that great financial riches again lie ahead. And sure enough, the pundits rarely disappoint offering consolation by at least reconfirming the great shibboleth that the long-term market trend is inviolable and it is upwards.

What’s the problem with all this? A few things. For one, it’s emblematic of deep corruption in the wealth management industry. A second is that so many savers with hard-earned money actually listen to the gilded tongues of these professionals. It’s tragic. Though the record shows that the predictions and advice of the wealth management experts offers little or no advantage to investors, they remain in high demand … with compensation benefits way above that of the average saver to boot. In my unkinder moments, I say that allowing the wealth management industry at large to provide investment advice to clients is like allowing foxes to feed the chickens. Consider some of the evidence.

According to performance measurement consultants, the average portfolio manager does not outperform an appropriate index over longer periods of time … even before their fees are deducted. Stock market analyst almost never make “sell”



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recommendations. It used to be that brokerage firms would issue one “sell” recommendation for every ten “buys” even in down markets. Nowadays, it’s gotten much worse. A recent Wall Street Journal survey suggest that only one “sell” recommendation is made for every 50 “buys.” Why is this all so? It all comes down to vested interest.

My anecdotal experiences back up this statement. The highly-paid experts on a global strategy committee that I chaired for a large financial institution never once forecasted a down period for any investment asset whether a reasonable likelihood or not. Why not? They always took in mind what the marketing people and their clients wanted to hear. Another comical image comes to mind of an interview I once gave to a gaggle of financial journalists in Hong Kong. At least 25 of them were jammed into a small boardroom. Each time I said something encouraging for the then-sagging Hong Kong stock market they all nodded, furiously writing down my every word. When I said something cautious — something closer to the truth as it turned out — the pens were motionless. Sure enough, the newspaper article the next day made it seem to readers as if a bonanza was in the offing. All caution had been thrown to the wind.

Who are you going to call the next time you need investment guidance? Here is some advice on getting advice. To begin, try to take note of what side the bread is buttered on for the advisor giving you sage opinions. Will he or she get a big commission if you buy their mutual fund, for example? Do they work for a big financial institution that puts demanding sales quotas on them — “sell or die”? Is the seer divining your future prosperity in the crystal ball someone who can afford to always tell the truth? Granted, no one I know — whether corrupt or straight — can reliably predict future financial market trends. I, for one, certainly make no claims to this ability. However, that’s a forgivable flaw in my view. Only forecasting the “ups” and always denying the possibility of “downs” is not a flaw. It’s corruption.

So should you listen to my opinion? Check out my vested interest.

Here’s my final advice. Seek good guidance but always take

understand the times.” eleven guiding eleven guiding

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