This article was originally published here by Inspire Investing.

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by Dr. Erik Davidson, CFA

Peace I leave with you; my peace I give to you. Not as the world gives do I give to you. Let not your hearts be troubled, neither let them be afraid.

John 14:27

As a follow-up to my piece, Troubles, a few weeks ago, I offer you some of my further thoughts on navigating the current market environment as a biblically responsible investor.

From an economic perspective, the Coronavirus pandemic is both a demand-shock and a supply-shock. So, as opposed to a significant hurricane or blizzard or even the 9/11 terrorist attack, this exogenous event may not simply push back economic activity, but rather may actually destroy it. Therefore, it is highly likely we have already entered a recession. Monetary and fiscal stimulus are critical components for an economic recovery. They must be done. However, in and of themselves, these economic policy levers are not enough. The new health concerns that have emerged must be addressed over the coming months, into the next flu season, and for years thereafter. Further, consumer and business confidence must be restored. This will simply take time and there are no short-cuts around it. Lastly, while we all long for a return to “normal,” it is likely that when we do emerge from this crisis (and we will!), life and the economy will be different than it was before. Specifically, our day-to-day lives and the economic environment will be changed in terms of travel, social interaction, entertainment, health care, the social safety net, politics, globalization, etc.

As we face these challenges, we must remember that it is buried very deep within our human nature to want to take action in the face of adversity. Especially in times like these, our natural behavioral instincts (incl. survival and herding) activate into high gear and we rally under the banner of “Don’t just sit there—do something!” Against that instinct, however, the Bible gives us the challenging guidance to “Be still, and know that I am God” (Psalm 46:10). It is almost as if our command as believers is counterintuitively to “Don’t just do something—sit there!”

In our hearts, we know that this is wise instruction, but it is a tough pill to swallow as the stock market plunges. Fortunately, most investment experts wisely support this concept of prudence by advocating a mindset of calmness, resolution, and perspective. However, many times their advice is offered as a “To Don’t List,” e.g., “Don’t panic!” “Don’t sell!” “Don’t abandon your plan!” “Don’t capitulate!” or “Don’t liquidate!” All these are wise guidelines, but they go against our very strong human reflex to actually do something!

Therefore, in contrast to a “To Don’t List,” I share with you a list of proactive actions that can be taken by investors right now. This is based on my 35 years of investment experience, but equally on my 45 years of being a follower of Jesus Christ. This Bear Market “To Do List” is called “P.E.A.C.E.”

P.E.A.C.E.

Pray:

Before anything else, let’s be sure to pray. Let’s be on our knees crying out to God for healing, comfort, and provision for those who have been affected by the Coronavirus. Let’s pray and fast in support of the global forces of human ingenuity, science, and wisdom being brought to bear against this modern-day pestilence. Lastly, let’s pray that through this adversity, many will come into a personal relationship with God. Praying is something we can “do.”

Engage:

Engagement is something that we can definitely do in this environment. Even if they are not afflicted by the Coronavirus, so many around us have been impacted adversely. Within the proper protocols of “social distancing,” let’s engage with our family, friends, and community who need our assistance—neighbors who need to be checked on, seniors who need some shopping done, or maybe some health-care or emergency-services workers who need help with their out-of-school children. Let’s look for ways to support local businesses and their employees who are suffering dramatic downturns in their revenues. How can we support those in our communities who are most economically vulnerable? Engage is something we all can “do.”

Assistance:

Unfortunately, economic downturns often lead to a significant decline in charitable giving—just when the needs are at their greatest. Therefore, something that we can “do” is to maintain, if not even increase, our donations to our church, community organizations, medical-research charities, etc. They need it now more than ever. Assistance is something we all can “do.”

Cash:

In all market environments, bull and bear, one essential thing that investors must “do” is ensure that they hold an adequate amount of cash. This cushion mitigates the risk of having to “sell into a hole” during a market downturn when money is needed to cover expenses. Most financial planning experts recommend that anywhere from 6 to 24 months of living expenses be held in safe, low-yielding cash, savings, or money market accounts. If an investor does not currently have that amount of money set aside, then now is the time to do it, even though the market has sold off so dramatically. However, even in such a volatile market environment, investors should be cautious about holding too much cash, especially with current interest rates so low. Remember that at 0.25% per year, an investor is on course to double her money in 288 years! Having the right amount of cash—not too little, but not too much—that is another thing that investors can “do” in this market environment.

Ease into the stock market:

In these trying times, our “fight or flight” instincts are particularly pronounced. So while many investors are grappling with their “flight” impulses, others are engaging with their desire to “fight,” i.e., buy at these significantly depressed levels. Sometimes this is likened to trying to catch a falling knife. From our perspective, the stock market’s downside risk is still substantial. However, at -30% from the all-time high and with valuations much more attractive now, we believe that we are likely closer to the bottom than the top. Further, being a provider of investment capital in such dire times also meets a higher, noble purpose. Therefore, what investors can “do” if they have cash ready to be deployed is start easing into the market. A “dollar cost averaging” (DCA) strategy is a good method to minimize the emotional toils of a turbulent market by committing to invest a set dollar amount on a predetermined schedule, come what may. For those investors who are already fully invested, there is still something that they can “do,” namely rebalance. In rebalancing, investors make adjustments to their portfolio at the margin to bring it back to its target percentage allocations. In other words, trimming down (not selling out completely) some of those investments in asset categories that have done relatively well (e.g., bonds) and redeploying the proceeds into asset categories that have done relatively poorly (e.g., stocks). These are some prudent things that investors can “do” to ease into the stock market in the face of the sell-off.

In conclusion, I urge you to keep the faith as you grapple with your “To Don’t” and “To Do” lists under these stressful conditions. It affects all of us! Even Paul wrote, “For what I want to do I do not do, but what I hate I do” (Romans 7:15)!

And when grip of fear tightens, just remember the promise we have received:

Come to me, all who labor and are heavy laden, and I will give you rest. Take my yoke upon you, and learn from me, for I am gentle and lowly in heart, and you will find rest for your souls.

Matthew 11:28-29

FOR MORE INFORMATION ON COVID-19, PLEASE SEE OUR PAGE HIGHLIGHTING SOME OF THE BEST RESOURCES OUT THERE FOR FAITH DRIVEN INVESTORS & ENTREPRENEURS IN THIS SEASON.

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What could Scott Drew, the Coach of Baylor Men’s Basketball have to do with investing? Well, we’re excited to announce that we’re launching a new initiative—The Faith Driven Athlete. Our passion is to show how God moves in all of our work, as entrepreneurs, investors, athletes and this is the next step in that.

We’re bringing you this special episode because, had it not been for COVID-19, this weekend would’ve been the start of the NCAA Final Four. And Baylor is one of the teams who likely would’ve been competing for a title. In our conversation, Scott Drew let us in on the challenges he faced early in his career, the faith that carried him through it all, and how he’s responding to life’s most recent curveball.

So if you enjoy this episode, be sure to subscribe to the Faith Driven Athlete podcast to hear from athletes like Kirk Cousins, Jeremy Lin, Adam LaRoche and more in the coming weeks. As always, thanks for listening…

Useful Links:

Scott Drew’s Long Journey to Success

FCA Recognizes Scott Drew with John Lotz Award

Scott Drew Remains Focused on Faith as Baylor Remains #1

This article was originally published here by TechCrunch.

by Connie Loizos

Venture capitalists have raised record-breaking funds in recent years, but that doesn’t always mean the money is there for them when they want it. In extreme downturns, the people and institutions that promise capital to venture capital firms, and then wire it when the VCs need it for their startups, have little choice but to answer the phone less. The alternative is to sell others of their positions — including in publicly traded stocks —  at a steep loss, and they’d really prefer not to do that.

“The public markets end up being the ATM for the illiquid stuff,” says Chris Douvos  of Ahoy Capital, one such limited partner who has backed such firms as First Round, Data Collective and True Ventures. When the markets are in free fall as now, the collective reaction of asset managers, he says, is: “Holy smokes, this kind of sucks.”

What happens next depends on how sustained and deep this downturn proves. But LPs seem to agree that the the industry could be in for a reckoning this time, and if so, they’ll have to get practical, fast.

Already, newer managers are seeing LP interest dissipate before their eyes. Though Douvos says he doesn’t “think we’re there yet,” he also shares the story of a fund manager who has been struggling to close a $50 million fund and on whose behalf Douvos has been “pinging a bunch of my LP friends.” The response he is getting is, “‘We’re not investing in new relationships right now. We’re not even investing the time.’”

Joanna Rupp is a managing director at the University of Chicago’s  Office of Investments, which has stakes in many smaller venture managers with whom it has strong relationships, like Pear in Palo Alto. She echoes what Douvos is seeing, explaining that, “Everyone who is currently in our pipeline and who we committed to invest in three weeks ago, I’m still investing with them.” But given the financial gut punch the economy has taken, “some [new managers] who we wanted to build relationships with, and who could be interesting to invest with, I now don’t have the capacity to add them.”

Rupp adds that “it’s going to be very difficult for newer managers without established LP bases to raise.” But perhaps more relevant to the broader startup industry is that — absent a quick economic rebound — older relationships could also start to receive the cold shoulder.

The end result would mean fewer dollars for the venture firms that have already closed their funds, and less capital for startups that might need it.

“At some point,” says Douvos, fear and uncertainty starts to “creep into your existing portfolio, and you start doing portfolio triage, and you’re like, ‘Wait, I have 24 venture managers and I’ve got to cut somewhere.” The questions begged are: “Do I make smaller commitments to each of them? Do I start saying sayonara to the bottom third?”

It’s precisely the scenario that played out exactly 20 years ago, when following the dot-com boom and bust, limited partners — from pension funds to charitable foundations to school endowments — saw their overall assets shrink, compelling venture managers to whom they’d committed capital to slow their investments.

Some venture firms were eventually forced to shut down. Others had to downsize their ambitions. Accel,  for example, not only reduced a $1.4 billion fund it had raised, but its team at the time actually cut back the fund twice, in both 2002 and 2003, releasing some of their backers from their obligations.

Certainly, many of today’s circumstances feel familiar to those who’ve awaited some kind of a correction — one more dramatic than the 2008 financial crisis, which hit Wall Street far harder than Silicon Valley.

With record amounts of venture capital raised, a market peak, and now a sudden plunge, the moment feels very much like it did in the spring of 2000 when the high-flying market, rife with young internet companies, abruptly nose-dived, wiping out thousands of startups — and hundreds of venture firms — over the following three years.

At least some lessons were learned in the aftermath of that earlier crash. For one thing, says Rupp, in these “unprecedented times, people will show their character. You get a sense of who people are and how they think about the world, and GPs need to be really mindful of that and of how supportive they are in communicating with their portfolio companies.”

Rupp also suggests that LPs, like savvy VCs, can sometimes use downturns as a way to ease out of some positions and double down on others. Even faced with possible budget cuts, says Rupp, “Some folks we wouldn’t cut back, while you hope you might get additional allocation as other LPs become more conservative.”

Elizabeth “Beezer” Clarkson, who has led Sapphire Partners investments in numerous venture firms, further posits that companies might realize now that IPO “windows aren’t opened forever.”

While a generation of startups has subscribed to the notion that should stay private as long as possible, many of these same companies could have made their employees, venture investors, and the industry’s limited partner more money had they moved faster to go public.

“Can everyone be made a millionaire from secondaries?” Clarkson says of secondary stock sales, which private companies have used to buy the patience of early investors and employees who want some liquidity. “It must be harder.”

Of course, much remains to be seen. Coronavirus vaccines are being researched around the world, and should something work sooner than later, economies around the globe could spring back more quickly. In the meantime, VCs — who’ve raised bigger funds faster than ever in recent years — might want to give their whipsawed LPs a break. They likely have other fish to fry.

“Everybody believes that, ‘Oh my gosh, all of a sudden, entrepreneurs are willing to accept term sheets at like 10% less,’ The [VCs] see this as a value,” says Douvos.

“What they don’t realize is that [right now], there’s so much more value out in the rest of the world. All things being equal, you’d rather buy a public stock that you can buy on sale and get out of when it runs up again than a private company that you have to hold for eight or nine years.”

Especially after watching the IPO window slam shut, Douvos says “being asked to lock in losses to buy illiquid assets doesn’t feel that great.”

FOR MORE INFORMATION ON COVID-19, PLEASE SEE OUR PAGE HIGHLIGHTING SOME OF THE BEST RESOURCES OUT THERE FOR FAITH DRIVEN INVESTORS & ENTREPRENEURS IN THIS SEASON.

It’s no secret that everyone’s day-to-day lives have been turned upside down by the coronavirus. While this particular pandemic is new, there’s much to learn from Scripture and other believers. Many difficult decisions await in the days ahead. And we should remind ourselves that as believers, “Worry is not our friend and panic is not our way.”

As we all do our best to hold fast to the truths of Scripture, we wanted to spotlight a few of the best resources that touch on our current events. We created this page on our site as well as the Faith Driven Entrepreneur site. These have all been referred to us by people like you, so as you discover others, even those more specifically related to Faith Driven Investing, please share them.

The first of these resources is our latest podcast. In light of present times—the pandemic, along with its economic and social effects—we wanted to quickly produce a podcast to speak into what we’re all experiencing. That’s what brings us to Mark Sears, Founder and CEO of CloudFactory. Early on in his entrepreneurial journey, he faced a global crisis, and the way he led his business during that time is an example for Faith Driven Entrepreneurs everywhere.

So, if you’re feeling a bit lost, overwhelmed, confused, or scared during these trying times, let Mark’s words be a source of encouragement… Stay tuned for others we’ll be releasing in the next few weeks.

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We’re combining the Faith Driven Entrepreneur and Faith Driven Investor audiences today to continue to address the current events we face. Todd Wagner joined us to speak into how we as believers can respond to the fear and worry surrounding COVID-19. 

Todd is the lead pastor at Watermark Community Church in Dallas, Texas. If that name sounds familiar to you it’s probably because you’ve heard Henry mention it in the intro to this podcast as the location for where we will be hosting our Faith Driven Entrepreneur and Investor Conferences this fall. In addition to being our host and a speaker at the event, Todd is also a great voice in the faith-driven conversation. 

His words of wisdom—or as his Twitter handle calls them, words from wags—are encouraging, challenging, and uplifting to all who hear them. And with our current events, we could all use encouragement. Like Todd shared, “worry is not our friend and panic is not our way…”

Useful Links:

Should Christians Be Anxious About Coronavirus?

Coronavirus is redefining the words Church and Worship

Real Truth. Real Quick

@wordsfromwags