Article originally posted here by Paradiem

by Eric Dunavant

You may not realize this, but bear markets are like a bad horror movie.  You know, the ones that are so bad they end up on parody shows like Mystery Science Theater 3000?  Once you’ve seen it, you can end up losing sleep for countless nights because although you know the movie is over, you can’t shake the bad thoughts and memories from the event.

Our memories often confuse us and leave us in a place of being more fearful than we should be.  Each movie is unique, just as each bear market is unique, but in the end, most of them follow similar formulas.  One thing I’ve learned is, the fear of something begins to go away when I know the formula and how the movie (or bear market) turns out.

I cannot tell you how many times people begin conversations with how devastating bear markets are. If you know what you’re getting into, you can prepare and survive any bear market. If you know what to expect, the overall effect of a bear market is less devastating than your memory or the media might lead you to believe.

There are three perspective shifts that are important to preparing your mind to survive any future bear market.

First, an investor should set aside enough cash from the portfolio to survive five years of expenses. Said another way, you should never invest any money you know you might need access to in the next five years.

Bear markets are not predictable, but we find they typically happen one year out of every five.[1] By setting aside the cash for that five‑year period, you give yourself an opportunity to create a reserve that will allow you to survive when an unexpected bear market happens.

Second, you must carefully manage the cash reserves through the post-bear market recovery period. You’ve set aside five years’ worth of cash so you don’t have to sell your stocks when they’re at their low. As the market drops, you can live off the reserves until your stocks have time to recover.

Five years is not a hard‑and‑fast rule, but I’ve found that it gives you the flexibility to survive the uncertainty.  As the recovery begins you can wisely determine how to replenish your reserves.

I remember specifically using this strategy in the 2008 market drop. Many of our clients had consumed four years of cash and were down to their final year before we saw enough recovery to begin selling stocks.  We didn’t re-build the cash position over night, but over the next three years we were able to use the increasing market to re-create five years of cash position as the market continued its recovery.

Third, you must realize most bear markets recover faster than anyone expects. Historically, the average recovery from peak to peak of a bear market is 40 months.[2]

This means when you are at a peak and things begin to go down, the market will, on average, begin new highs again in a little over three‑and‑a‑half years. If you have five years of cash on hand during that period, you certainly have enough cash to survive the average bear market.

Despite what the distracted media will tell you, we’ve had two bear markets since 2008.  In 2011 and 2018 the markets dropped more than 20% from their peak. In each instance, those markets had recovered all their losses within six months.[3] The memories of most bear markets are often more devastating than the reality and most investors are surprised when they hear how quickly these bear markets recover.

The news media wants you to believe bear markets are so devastating that you would never be able to survive one, and therefore, you need to do act to avoid them. As you can see, surviving a bear market is easier than most would expect. Just like watching a bad horror movie, once you know the formula, the fear begins to subside.  The secret to your long‑term success will be driven by owning great companies and knowing how the movie ends.

At Paradiem, we hate “investing” and think you should too! We are not just investors; we are OWNERS and we believe WHAT you own and WHY you own it is a much more important consideration. If you would like more information on the importance of understanding what you OWN, email info@paradiem.org with the subject “Ownership” or give us a call at (985) 727-0770.

[1] https://www.wesmoss.com/news/understanding-market-corrections-frequency-length-recovery-time-and-depth/

[2] https://blog.wealthfront.com/stock-market-corrections-not-as-scary-as-you-think/

[3] https://finance.yahoo.com/quote/%5EGSPC/history/

Article originally posted here by Denver Institute for Faith & Work

by Denver Institute for Faith & Work

On Friday, January 31, Denver Institute for Faith & Work hosted more than 300 guests from across the nation at “Business for the Common Good,” a one-day event for business leaders passionate about professional excellence and using their gifts and resources for lasting impact.

In this powerful presentation, Aimee Minnich and Alan Barnhart discuss: What does it mean to be a truly generous business leader? How does this impact our sense of identity and ownership? How much money should we give away, and how much should we keep? Do ancient Old Testament practices like gleaning have relevance for how we think about hiring, investing, and “successful” businesses? What kind of investment returns should we target? This session considers how a deep sense of generosity transforms our culture as well as our hearts. Please visit their website to see more great content from the “Business for the Common Good” event.

by John Silverling

Two recent articles I came across about capitalism and faith made me think about how most of us really view economic theory.  For most, we hear capitalism or socialism and immediate images come to mind based on our own opinions and our own experiences.  We have pre-conceived ideas whether it is good or bad, and most of us that are not economics professors or philosophy majors don’t usually consider the terms more deeply.   Maybe we should, if only to more consciously integrate our faith into our work, our money, and our investing.  So the question – Is Generous Capitalism possible, or is capitalism only about greed?

Eventide Funds wrote about “Generous Business: A Divine Blueprint“ in their Faith and Business series.  They took up the question of whether businesses could, or perhaps should, be generous, and whether this concept for businesses fit within the concepts of capitalism and its underlying economic philosophy?  The point of the article was to present information of how businesses can be generous (“Blessing Businesses”), and why that aligns with the Bible’s teachings, but it also suggests there is a conflict between being generous and capitalism.  This conflict was highlighted through the main character in the article, Arthur Brooks of the American Enterprise Institute .

The article from the New York Times mentioned in the piece seemed not intended as advocating for or against capitalism, but rather about generosity and happiness.  In fact, the content of Mr. Brooks article seems very much in alignment with the writings from Eventide.  Here is a video of Arthur Brooks talking about “The Moral Case for Capitalism” at a QIdeas event, and in it he goes further into the alignment between his view of capitalism and his NYT op-ed.

The second article was a blog from the Institute for Faith, Work and Economics (TIFWE), called “Christian ‘Hipsterpreneurs’ Work to Redeem Capitalism” .  TIFWE come from a very similar viewpoint as Arthur Brooks AEI in economic theory, and their preference for free market capitalism as the economic driver for a flourishing culture.

Each article conveys a different sentiment towards capitalism, but what I find interesting is their descriptions of what they envision as the solution are nearly identical.  Even the language they use is similar.

Here is a section from the TIFWE blog:

“While Christian hipster entrepreneurs recognize a capitalistic society can create temptations toward greed and selfishness, and that it is easier for a camel to go through the eye of a needle than for a rich person to enter the kingdom of God, they see business as a God-given opportunity to love their neighbors through their work. They trust the profits will come if they work with a heart to serve others.” (“Christian ‘Hipsterpreneurs’ Work to Redeem Capitalism“, April 15, 2015)

And here is an article from Eventide’s Tim Weinhold (Director of Faith & Business) :

“… Let me have Tim Keller explain.  Teaching about the watershed significance of God’s command to ‘Love your neighbor,’ Keller says, “There are only two kingdoms and each has a foundational operating principle. For the kingdom of God, that principle is Serve. For the ‘kingdom of this world,’ that principle is Be Served.” In other words, the way we fulfill or violate the ‘Love your neighbor’ First Principle of God’s moral universe is by choosing either to serve others, or to serve ourselves at others’ expense.”

“Business is meant to love and serve by creating value first and foremost for customers, employees, and its other neighbors. When it does so, people flourish . . . and so does business. But when business makes creating value for itself paramount — when it’s primary objective is earnings per share, or operating margins, or share price — it selfishly prioritizes its own success over the human flourishing that God desires. In so doing, it embraces both the Be Served principle of the enemy’s kingdom and the decay and dissolution that inevitably ensue.”  (“God and Money“, Dec 8, 2014)

I suspect that TIFWE and Tim Weinhold would not see themselves as having the same opinion of capitalism.  TIFWE would certainly side with AEI from a political and even economic theory foundation.  But maybe TIFWE, Tim, and Arthur Brooks really are all still describing the same thing – but from different sides and preferring different names.

Someone recently said to me that he prefers the term “Kingdom Capitalism” to describe this common ground between these viewpoints.  Whatever term we use, or names we use to label it, the vision and concepts are shared.

Our responsibility, and our opportunity, is to see the common ground that honors God and his creation.  There doesn’t need to be a barrier between our Christian faith and capitalism as a means for all of us to flourish.  It means we have to do more to integrate that faith into our work directly, resist the temptations we are drawn towards, and see the good that can multiply from it.

by Amanda Lawson

God designed humans for community. You already know this. Scripture uses the metaphor of one body with many parts everywhere—each part with different roles and skills and all of them supporting the overall mission of the body. A hand on its own cannot throw a ball and your right big toe is pretty purposeless without a connection to the rest of your foot. 

But when connected and supported properly, you can pitch a curveball and run a marathon.

The same applies for faith-driven business endeavors. Investors need entrepreneurs, and vice versa. Everyone needs knowledge, wisdom, and support—all three of which often come through community and relationships. 

The Global Collab is a community of people who work with incubators, accelerators, and capacity builders, dedicated to supporting Faith Driven Entrepreneurs around the world. As they support entrepreneurs, Global Collab provides a place for them to receive similar support from one another. It has grown to include 32 members from around the world who believe in the power of community and discipleship as crucial elements to effective kingdom-based entrepreneurship. 

Philip Geldenhuys, one of the founding members, explained that as a faith-driven support system, the Global Collab encourages members to openly share their questions and struggles, while surrounding them with a community of understanding friends who can offer solutions or access to networks that would have otherwise gone untapped. 

Geldenhuys also helps to lead Triga, an accelerator in South Africa, where he knows firsthand the value of a faith-based support system for entrepreneurs. A graduate from Praxis Labs, he took his passion and knowledge to Africa to bring a similar program to African entrepreneurs, connecting budding entrepreneurs with experienced mentors who will support and affirm them on their journey. 

Recognizing the challenges to African entrepreneurs—significant opportunity and wealth gaps, educational disparities that fall along racial lines, and difficulty accessing resources—Geldenhuys knows as well as anyone the importance of a solid community of wisdom and support. 

But regardless of geography, some universal struggles challenge all entrepreneurs. Geldenhuys noted that one of the biggest problems for entrepreneurs in this space is finding funding and leveraging resources effectively—especially for those operating in emerging or frontier markets. The Global Collab functions as a working group that enables growth for entrepreneurs both professionally and personally—through a supportive network of seasoned entrepreneurs with a variety of experiences. 

The Global Collab provides a level of discipleship and mentorship for entrepreneurs around the global. There is accountability and encouragement to be found when believers get together.  We see throughout Scripture that discipleship and accountability are important components of these relationships, useful for edification, teaching, and comforting. And these benefits are not limited to the functions of church congregation but reach the Body of Christ globally and in diverse industries. 

Geldenhuys noted that one of the most significant benefits to the Global Collab is simply the recognition of a shared story. CS Lewis once said that “friendship is born at that moment when one person says to another: ‘What! You too? I thought I was the only one!’” Being a part of a working group like Global Collab is the same; a group of faith-driven professionals who can support one another as they press on toward the goal, even if that is simply saying “I understand; I’ve been there, too.” 

Article originally hosted and shared with permission by The Christian Economic Forum, a global network of leaders who join together to collaborate and introduce strategic ideas for the spread of God’s economic principles and the goodness of Jesus Christ. This article was from a collection of White Papers compiled for attendees of the CEF’s Global Event.

by Mats Tunehag

God’s Investment and Ours

By Peter Heslam

The Bible uses rich figurative language, and a variety of metaphors and analogies, in its depictions of God. Many of these are well-known, such as king, shepherd and judge. But one that is almost unknown is God as investor.

Yet it occurs right at the start of the Hebrew Bible. There we find God investing a formless, dark and empty earth with light and a profusion of plant and animal wildlife. God then invests this creation with human beings. And in them – them alone – God invests his image (Genesis 1).

Later in the Hebrew Bible we find God advising Jeremiah on a property investment – the prophet is to buy a field (Jeremiah 32). But God clearly shuns the ‘location, location, location’ precept of today’s real estate experts. For the field in question is situate in territory occupied by the invading Babylonian army! Whatever happened to due diligence and caveat emptor (buyer beware)?

When we turn to the New Testament, we find that the use of wealth is a major theme in the teaching of Jesus. Yet here too, conventional wisdom is turned on its head. He does not, for instance, advise the rich young ruler to invest his wealth wisely and responsibly to optimise social impact. Instead, Jesus tells him to sell all he has and give to the poor (Lk 18.18-25), an action that would have added the man to the number of poor people needing help. And the parabolic rich man who builds bigger warehouses to invest for the future is not called prudent but a fool (Lk 12.13-21).

Similarly perplexing is the parable that addresses the issue of investment most directly – the parable of the talents (Mt 25.14-30). The reader is left to work out its meaning. What is it about the three servants in that story that makes them so different in the investments and returns they make, and in the rewards and punishments they receive? Could it really be saying that all God cares about is the return on God’s investment?

We also find Jesus investing a good deal of his time and energy – during his prime years – in a pretty flaky and shaky collection of prospects. It amounts to a motley crew of largely unschooled, hapless, and unreliable followers, all drawn from a relatively deprived region of the Roman Empire, and who end up abandoning him. When the crunch comes, they liquidate whatever investment they had in Jesus’ ministry, one of them receiving a shoddy dividend of 30 pieces of silver (Mt 26.15).

The Apostle Paul shares in the apparent recklessness of Jesus’ investment strategy. He pours his life into small and fragile communities of persecuted

Christians dispersed around the eastern fringes of the occupied territories of the Roman Empire. In doing so, he admits to acting ‘like a madman’, for it cost him heavy toil, imprisonments and near-death floggings (2 Cor 11.23).

In fact, anyone currently considering whether or not to invest their lives in the service of Christ may first want to read the preamble to Paul’s investment proposal:

Five times I have received from the Jews the forty lashes minus one. Three times I was beaten with rods. Once I received a stoning. Three times I was shipwrecked; for a night and a day I was adrift at sea; on frequent journeys, in danger from rivers, danger from bandits, danger from my own people, danger from Gentiles, danger in the city, danger in the wilderness, danger at sea, danger from false brothers and sisters; in toil and hardship, through many a sleepless night, hungry and thirsty, often without food, cold and naked. And, besides other things, I am under daily pressure because of my anxiety for all the churches (2 Cor 11.24-28).

Neither Jesus not Paul made such costly investments, of course, without hope of a return. In the case of Jesus, it was ‘for the sake of the joy that was set before him’ that he ‘endured the cross, disregarding its shame’ (Heb 12.2).

Following his conversion, Paul shunned the return on investment (ROI) he had been making from his training to become a learned Pharisee. The ROI he now looked for was ‘to know Christ and the power of his resurrection’ (Philippians 3.8-10). And he considered the church communities in which he invested to be adequate ROI in themselves; he refers to them as his ‘joy and crown’ (Phil 4.1; 1 Thess 2.19).

Some of the biblical material will be revisited later in this series, in order to explore its ramifications for our investment in our work and in the people around us. Faith in Business, the co-publisher of FiBQ, is exploring this question in 2022. It will consider God’s investment in the world and what implications that has for our investment strategy.

This exploration began with the Faith in Business Monthly online seminar on 6th January. In that seminar, a panel of experts approached the theme of investment from different angles. In doing so, they provided rare insight on how scriptural principle relates to everyday practice. As part of Faith in Business’ attempt to bring the quarterly journal and the monthly webinar closer together, subscribers can expect to read within these pages some of the theory and practice that is shared and discussed in these webinars.

I opened that seminar by noting the point I make at the start of this article about the picture of God as investor that is presented in the creation narratives. To elaborate here a little, this picture

is reflected in God’s ‘investiture’ of Adam and Eve as those appointed to name the animals and to rule (or ‘have dominion’) over God’s creation (Gen 1.28). God thereby elevates them to the role of prophet, priest and king – three offices symbolized in ancient Israel by the wearing of a mantel, or vestment.

Investiture, vestment, investment – all these words derive from the Latin vestire, meaning to clothe. Solomon, Jesus tells us, was vested (clothed) with splendid garments, yet God vests ordinary wild flowers with even greater splendour. How much more splendid, Jesus continues, is the way God vests ordinary human beings (Mt 6.28-30).

Made in God’s image, Adam and Eve and their descendants are vested by God with dignity and authority. In other words, we need to regard ourselves, and all those around us, as God’s investment.