By Sam Skaggs, Roundtable Core member
Resiliency concepts helped me to integrate my layman’s knowledge in ecology and my conservation experience with my profession as an investment advisor. I come to this workshop looking for more ways to practice resiliency and to expand what I have learned toward applications to promote community resiliency.
As a way of background: when I began my investment business in Fairbanks over 30 years ago, I was one of the early advisors that tried to screen for companies that recognized the value of the commons and tried to avoid those that profited from passing on their external costs to the public. You can tell what side of Garrett Hardin’s Tragedy of the Commons argument I came out on.
In the last ten years I began looking at clients’ financial needs much like I would look at how an ecosystem functions. After the crashes of the 90’s tech boom, 9/11, and the financial meltdown of 2008, I began to realize that our economic system and therefore our investment options are becoming increasingly vulnerable to structural shock. By this I mean our current capital market structure. Investing now is becoming a competition with, and between, predatory algorithms; high-speed trading is the game and it is created by some of the brightest engineers and physicists in the country. They used to build rockets and bridges; now they build code to extract fractions of a penny, billions of times in a day. This High Frequency Trading has turned Wall Street into a casino unhinged from what our capital markets were designed to provide—startup capital to create a new business ( read jobs) and transparent access to accumulating wealth from investment.
Today, at our firm, we try to square our knowledge of ecology with our financial experience and build models of investing and financial planning around resiliency. Brian Walkers and David Salts’ Resilience Thinking was one book that gave us the intellectual underpinning to make the changes we felt we needed to help make this transition. In this little book, the concept is simple: Expect shocks when you have this complex of a world we have created today, and that ability to absorb shock without dramatically changing the regime that supports you, is one definition we have applied to our investment practice. We screen stocks and bonds based on each company’s resiliency along with number of other values to make up our screens. We also spotlight each client’s financial picture, and we suggest one of our model allocations as well as ways to strengthen each family’s financial resiliency. This is our work and each day we are challenged by understanding what is really going on and having the conviction to execute on this knowledge. Our resiliency strategy gives us the keel we need to keep sailing in troubled waters.
We are in a period of time of great upheaval. We are at peak-easy to obtain oil, peak capital (we are swamped with debt by any historic measure), peak public stock ownership (there is de-equitization going on) peak pensions, peak soil, peak water, etc. I believe these “bumping up against limits” create a great opportunity to use our local knowledge to build resiliency into our communities. I believe the future will hold investment opportunities where we live and where our money will have the most value to our lives. Another new book that pushes the front of this thinking is The Resilience Imperative-Cooperative Transitions to a Steady State Economy by Canadian’s Michael Lewis and Pat Conaty.
I hope our Roundtable discussions can add ideas to Sitka’s blueprint to become a resilient community. This place has all the ingredients needed to be successful: scale, hydro power, a location on the ocean’s edge in a pristine environment, diverse economic opportunity, motivation of highly skilled citizens, indigenous knowledge and practice, and I must mention- a twenty-acre campus in the heart of town providing a regional base for art, culture, the humanities, and science.
Non Satis Scire. (To Know Is Not Enough)