Doing Good While (Hopefully) Doing Well

Each year, BlackRock’s Chairman and CEO, Larry Fink, writes a letter to CEOs of “leading companies” in which BlackRock’s clients are shareholders.  Last year’s letter encouraged long-term thinking in the context of a world that is increasingly focused on short-term volatility.  This year’s letter strikes a similar tone, but goes a step further in mentioning environmental, social, and governance (ESG) matters as factors CEOs should be considering in their long-term strategies.  Socially responsible investing (SRI) is gaining traction among investors.  Is this just kumbaya investing or is it for serious investors, too?  Why would anyone do this?  On the other hand, why would anyone NOT do this? The Basics ESG and SRI are sometimes used interchangeably, but they are different.  SRI is the broad overarching investment thesis of the movement.  ESG filters this mandate through three lenses, environmental, social, and governance.  SRI is open to personal interpretation just like the…

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Reese is a good dog!

Who is Holding Your Leash?

On PIMCO’s blog, Gene Frieda writes that “markets do not explode every time volatility is low, but volatility has always been extremely low when markets have exploded.”  This reminded me of the variable or intermittent reward system I stumbled upon when researching training techniques for my dog. The idea is that instead of getting a reward every time the dog performs the desired behavior, you reward on a variable schedule.  For example, you’d reward a treat for every 5 times the dog performed the ‘sit’ command properly.  Sometimes you reward after 3 sits, sometimes you reward after 7 sits, but it averages out to every 5 sits.  Here’s the crazy thing: it works on people, too.  Casinos have understood this for a long time.  This is also why your significant other is on social media during dinner.  They are looking for that dopamine hit that social media provides randomly. I…