Article originally posted here by Inspire

by Shane Enete

Let the Good Times Roll

When I first began investing in the stock market, the year was 1995, and it was one big money-making party.   

slickcharts.com/sp500/returns

During this time, when I purchased a new stock, my two biggest questions were “how much will this go up?” and “should I sell half of my position now (locking in my gains), or let it ride, baby?” 

Fast forward to today. 

  slickcharts.com/sp500/returns

Over the last two years, a similar surge of good stock market returns have left many people exuberant about their stock market portfolios.

So exuberant that one particular billionaire investor, Chris Sacca, tweeted this: 

“To everyone who got into trading stocks this year, I have a little hard truth for you: You’re not actually that good at it….You just caught a wild bull market. Take some money off the table.”

This tweet received a backlash from angry new investors, leading to this follow-up tweet by Chris:

“To the angry Robinhood bros who got into trading stocks this year: I was wrong. You’re amazing. This has nothing to do with the market. It’s all you and your mad skillz. Don’t take profits off the table. Double down, on margin. Borrow everything you can. Stocks never go down!”

Robinhood Bros

The term “Robinhood bros” refers to the aggressive trading culture within the popular free trading app, Robinhood. 

Robinhood allows investors to buy and sell stocks with $0 commission. A recent New York Times article found that Robinhood investors traded 40 times more shares than Charles Schwab customers, sold 88 times more risky options contracts as Schwab customers, and over half of Robinhood customers were new to the stock market (average age of 31). 

This high trading culture is likely bad for portfolio returns. Numerous studies have shown that over-trading causes individual investors to woefully underperform the stock market. Dalbar institute found that the average investor’s stock market investment return was 5.5% while the historical average annual return of the stock market (S&P 500 since 1929) was 9.9%.

The biggest contributor to that performance differential being investors’ failed effort to “time” the market, oftentimes being sucked into the market’s euphoria near market tops and “buying high” while subsequently succumbing to despondency near market lows and “selling low”.

Inferior returns for the average investor

A Slippery Slope

While the $0 commission fuels a temptation to over-trade, there is another, far more dangerous, temptation that is awakened: gambling addiction.  

It was late into the night and Alex Kearns, 20 years old, collapsed into his bed and fell asleep. He had spent most of the evening trading his stock portfolio. When he awoke, his habit was to check his Robinhood balance, and so he opened the app. He had to blink a few times to recognize the balance: -$730,000. Upon seeing this horrifying result, Alex decided he had no way out and committed suicide.

While this true story may seem extreme, frequently trading stocks online has been shown to exactly mirror how gambling addiction works. In fact, frequently trading stocks online has been shown to meet the criteria for addiction according to the DSM-IV classification of psychiatric disorders. 

According to another study, stock market gambling addiction starts with a number of small early wins followed by larger and more riskier investments. Trading, then, becomes the main activity of daily life. Financial losses tend to exacerbate this behavior since these traders are under the illusion that they are able to restore control and recover losses.

Unfortunately most of the current investors on Robinhood have experienced a number of small early wins (e.g., stock market, Gamestop, FAANG stocks). This has likely sown dangerous gambling addiction seeds. It is sobering to think about what is going to happen to this young generation of online stock traders when bigger stock market losses finally come due.

Stock Market Redemption

In today’s raging stock market, many investors assume that the stock market is a place where stocks only go up (just like my 90’s self). However, there is one crucial difference between the 1990’s and today: $0 commission. My 90’s self could only buy a position in a stock occasionally because brokers assessed a heavy commission on any odd-lot trade (a trade less than 100 shares). This commission made me trade fearfully and infrequently, knowing that it could wipe out all of my gains. 

It was this fear of trading that was the key for me avoiding overtrading and gambling addiction. 

But, how can an investor today develop this fear when there are no commissions? There are two key behaviors that need to happen:

1. Change your mindset to investor-owner

The four criteria of gambling are: money betting, irreversible betting, a binary win or lose outcome, which depends entirely or partly on chance. 

When you invest in the stock market, how much of what you are doing is dependent entirely on chance? If your time-frame is one day, one week, or even one month, it is very likely that most of what you are doing is entirely based on chance. Avoid this way of thinking by becoming an investor-owner. 

An investor-owner thinks in terms of years, not days. They try to find productive assets to purchase that will most likely earn a sufficient rate of return. They understand that when you pay too much for something, you will likely have lots of risk with a very low expected return. 

So, regarding the highly traded stock, Gamestop, a gambler will mostly look at the past return (+1,800%) and will relish the thrill of becoming a part of that fun ride. An investor-owner is a business-man who sees an increase in the stock price as a bad thing (paying more is bad). They will only purchase Gamestop shares if they are trading at a reasonable price given its level of expected revenue growth, earnings potential, and competitive advantages.  

2. Only look at your portfolio once-a-month 

Every time you open up a trading app and see red, it sends a signal of pain into your brain.

Behavioral finance has shown that a portfolio loss is twice as painful as a gain is pleasurable. This creates a gambling-type behavior known as “loss aversion” where people “double-down” on losing positions in order to avoid the painful sensation of losing money. 

I don’t know about you, but I don’t like pain, so I simply only look at my portfolio values once-a-month. Since I am an investor-owner, and my investments are long-term investments, this works great for me. Stop-loss orders, or alerts, can always be added on certain positions. 

By checking my portfolio just once-a-month, I feel so much less pain and I am much less likely to obsessively trade, in general. But, if your mind-set is anything other than an investor-owner, this discipline will likely not be possible for you.

One final thought: our role as investor-owner towards companies imitates’ God’s role as investor-owner towards us. God gives us His resources and asks us to manage them in a way that lets others know of His goodness, over a long period of time. When we invest in other companies, we should do the same. We are taking God’s money and letting the managers of companies manage it, with the hope that, over a long period of time, the products and services that we are helping to produce will help others know of God’s goodness.

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Sources:

1. Robinhood Has Lured Young Traders, Sometimes With Devastating Results. New York Times. December 17, 2020. https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.htm

2. https://www.capitalspectator.com/investor-returns-vs-market-returns-the-failure-endures/

3. Robinhood Has Lured Young Traders, Sometimes With Devastating Results. New York Times. December 17, 2020. https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.html

4. Marković, H., Nikolac, N., Tripković, M., Haluga-Golubović, I., & Ćustović, Z. (2012). Connection between addictive behavior and investing on the stock market in Croatia. Alcoholism and psychiatry research: Journal on psychiatric research and addictions, 48(2), 69-80.

5. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5422017/

6. Grall-Bronnec, M., Sauvaget, A., Boutin, C., Bulteau, S., Jiménez-Murcia, S., Fernández-Aranda, F., … & Caillon, J. (2017). Excessive trading, a gambling disorder in its own right? A case study on a French disordered gamblers cohort. Addictive behaviors, 64, 340-348.

Video originally posted here by TED Global

by Ndidi Nwuneli

Ndidi Nwuneli has advice for Africans who believe in God — and Africans who don’t. To the religious, she advises against using God to outsource responsibility for what happens in their lives. To the non-religious, she asks that they keep an open mind and work with faith-based organizations, especially on issues like health care and education. “There’s so much potential that can be realized when we walk across the divide of faith and, hand in hand, try to solve many of our problems,” Nwuneli says.

[ Photo by nappy from Pexels ]

Article originally posted here by The Bridgespan Group

by Jeri Eckhart Queenan

Executive Summary

“There are two rivers [faith-inspired and secular human service organizations] running in parallel, and the separation is not to the benefit of progress.”

Rosanne Haggerty, President and CEO, Community Solutions

As varied as faith traditions are, many share a common concern with fighting poverty and elevating recognition of our shared humanity. Indeed, faith-inspired organizations serve as the bulwark of the social safety net for the most vulnerable among us.

Our research found that they account for two out of every five dollars spent on safety net services across a sample of six representative US cities. And while some funders, including government agencies, recognize faith-inspired organizations’ role in the social safety net, that perspective has not translated into funding from the largest institutional philanthropies. Among the 15 largest private foundations, faith-inspired human services nonprofits represent only 12 percent of safety net funding, much less than their 40 percent share of the sector.

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Large institutional philanthropy’s discomfort with faith-inspired nonprofits is often grounded in both searing personal experiences and a complicated historical relationship between faith traditions and many areas of social justice. Throughout history and into the present moment, major faith traditions have also been the source of harm, trauma, and hardship in the areas of gender equity, reproductive health, and LGBTQ rights among others. At the same time, faith-inspired impact has been at the core of social movements that have transformed the United States—ranging from Quakerism among white abolitionists to the Christian temperance movement in women’s suffrage to the interfaith organizing (principally led by Black preachers, Catholic priests, Jewish rabbis) that formed the core of civil rights era organizing. This complex history—with its various tensions of conservativism, charitable humanitarianism, and progressive social justice liberation—can make it hard for funders to discern which faith communities are aligned with their equity values, let alone with their impact objectives.

As mission-driven leaders and researchers, we seek to contribute to a robust dialogue about the role of faith-inspired organizations in driving social change. This article reflects independent analysis of data, interviews with field experts, and perceptions of the social sector honed over the 20 years of Bridgespan’s work in the sector.

Our research has identified three myths that leave impact on the table:

Myth #1—Secularism is the dominant frame for America.
Reality: Despite recent declines in religious affiliation, nearly three out of every four Americans remain religiously affiliated – with Black, Latinx, rural and low-income communities actively engaging in their faith at higher rates.

Myth #2—Faith-inspired organizations are a small portion of the social sector.
Reality: Giving to religiously affiliated organizations (which includes donations to congregations) represents nearly one-third of all giving in the United States. Roughly a third of the 50 largest nonprofits in the country have a faith orientation. And, 40 percent of international nongovernmental organizations are faith-inspired.

Myth #3—Faith-inspired organizations are stodgy and lack innovation.
Reality: Many faith-inspired organizations are at the forefront of innovation in service delivery and the ability to meet the needs of the communities they serve.

As we collectively look out on the crises of a global pandemic, our country’s racial reckoning, and increasing threats to democratic norms, it is all the more imperative that we look for ways to more deeply engage with the systems and institutions that motivate, convene, and establish a sense of community across the lives of millions in this country and billions of people abroad. Highlighting exemplary organizations grounded in faith-based traditions, this study suggests that one way might be to build bridges across secular-anchored funding and faith-inspired impact. Here are a few thoughts on how to get started:

• View faith-inspired organizations as brokers of trust within communities. “As a means for intersecting with communities that are rooted in race and ethnicity,” says David Dodson, who is active in the interfaith community in North Carolina and recently retired as president of MDC, a catalyst for social change in the South, “faith-inspired organizations that are governed, run, and accountable to the people they serve can be excellent partners for funders who wish to build authentic connections and partnerships with underrepresented communities.”

• Extend trust through meaningful dialogue. Successfully engaging with these organizations hinges on trusting the roles they play in their communities, and embarking on a frank, mutual dialogue with faith-based actors about the funder’s motivations. The need to align on values goes both ways, with both funder and organization open about what drives them and where they won’t go. Some leaders we spoke with cautioned anyone hoping to partner with congregational communities to center the communities, not themselves.

• Complement faith-inspired organizations by collaborating on solutions. “Churches are really key anchors in underserved communities,” said Kathryn Pitkin Derose, senior researcher at RAND Corporation, a policy think tank. “They excel at responding to critical needs, and they know those needs in their communities very intimately. When you start to combine efforts with churches, you can really have an important impact on the community as a whole.”[1]

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Jeri Eckhart Queenan and Devin Murphy are partners in The Bridgespan Group’s New York office, where Peter Grunert is manager. The authors also thank Bridgespan former Consultant Liz Calder, Editorial Director Cora Daniels, Associate Consultant Erica Lezama, Case Team Leader Asimina Pantazelos, Manager David Washer, and Senior Editorial Director Larry Yu for their essential collaboration on this article.

At the end of every podcast, we like to ask our guests what they have been experiencing with God. Here’s Mike Arrieta with his lesson from the book of Daniel.

by Mike Arrieta

I remember when I first moved to Silicon Valley, one of my friends and mentors, Joie Chen, told me he was a venture capitalist. And he told me every single day he leaves the office around 5:30. And the reason why he leaves the office of 5:30 is because he’s exemplifying exercising his faith. It takes faith to leave the office at 5:30, go home to dinner with your family and then get back on at 9 or whatever else it is. And I asked him: How in the world can you do that, you know, like how can you get the best deals and still provide the best returns? He goes: Well, if I’m only working just as hard as everyone else, but I’m saying that I’m a believer, God’s basically just like a cheerleader for me. But I’m not truly trusting in what faith does it take for me to try to be the best investor but to work just as hard as everyone else?

So he pointed me to Daniel, and I never really studied Daniel, ever since then and probably never spent some time in it, until last week. We had a company that we were about to go into LOI with, and last minute he tells me he gets an offer that’s significantly more than ours. And I had a moment to realize what to do. I could either be like the rest of the world and compete on price alone, which the price is all predicated upon debt. If you’re competing as a secular buyout investor, or I exercise my faith and I trust wholeheartedly on God. And so I’ve been eating the book of Daniel like crazy over the past five days. I’ve been studying it in such a way of how a man trusted that God would legitimately save him multiple, multiple, multiple times, and how he eagerly prayed for God to intervene in his life and all the circumstances that he found himself in. So I am currently in the season of Daniel and just trusting the Lord like I never have before to get a place to trust.

Daniel 6 (NIV)

7 The royal administrators, prefects, satraps, advisers and governors have all agreed that the king should issue an edict and enforce the decree that anyone who prays to any god or human being during the next thirty days, except to you, Your Majesty, shall be thrown into the lions’ den. 8 Now, Your Majesty, issue the decree and put it in writing so that it cannot be altered—in accordance with the law of the Medes and Persians, which cannot be repealed.” 9 So King Darius put the decree in writing.

10 Now when Daniel learned that the decree had been published, he went home to his upstairs room where the windows opened toward Jerusalem. Three times a day he got down on his knees and prayed, giving thanks to his God, just as he had done before. 11 Then these men went as a group and found Daniel praying and asking God for help. 12 So they went to the king and spoke to him about his royal decree: “Did you not publish a decree that during the next thirty days anyone who prays to any god or human being except to you, Your Majesty, would be thrown into the lions’ den?”

The king answered, “The decree stands—in accordance with the law of the Medes and Persians, which cannot be repealed.”

13 Then they said to the king, “Daniel, who is one of the exiles from Judah, pays no attention to you, Your Majesty, or to the decree you put in writing. He still prays three times a day.” 14 When the king heard this, he was greatly distressed; he was determined to rescue Daniel and made every effort until sundown to save him.

15 Then the men went as a group to King Darius and said to him, “Remember, Your Majesty, that according to the law of the Medes and Persians no decree or edict that the king issues can be changed.”

16 So the king gave the order, and they brought Daniel and threw him into the lions’ den. The king said to Daniel, “May your God, whom you serve continually, rescue you!”

17 A stone was brought and placed over the mouth of the den, and the king sealed it with his own signet ring and with the rings of his nobles, so that Daniel’s situation might not be changed. 18 Then the king returned to his palace and spent the night without eating and without any entertainment being brought to him. And he could not sleep.

19 At the first light of dawn, the king got up and hurried to the lions’ den. 20 When he came near the den, he called to Daniel in an anguished voice, “Daniel, servant of the living God, has your God, whom you serve continually, been able to rescue you from the lions?”

21 Daniel answered, “May the king live forever! 22 My God sent his angel, and he shut the mouths of the lions. They have not hurt me, because I was found innocent in his sight. Nor have I ever done any wrong before you, Your Majesty.”

23 The king was overjoyed and gave orders to lift Daniel out of the den. And when Daniel was lifted from the den, no wound was found on him, because he had trusted in his God.

24 At the king’s command, the men who had falsely accused Daniel were brought in and thrown into the lions’ den, along with their wives and children. And before they reached the floor of the den, the lions overpowered them and crushed all their bones.

25 Then King Darius wrote to all the nations and peoples of every language in all the earth:

“May you prosper greatly!

26 “I issue a decree that in every part of my kingdom people must fear and reverence the God of Daniel.

“For he is the living God
    and he endures forever;
his kingdom will not be destroyed,
    his dominion will never end.
27 He rescues and he saves;
    he performs signs and wonders
    in the heavens and on the earth.
He has rescued Daniel
    from the power of the lions.”

28 So Daniel prospered during the reign of Darius and the reign of Cyrus[b] the Persian.

Article originally posted here by Eventide

by Jason Myhre