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“We have a financial and Biblical responsibility to steward the money that has been entrusted to us.”

Mike Silvestri taught us a lot about social impact bonds on this episode, and if you haven’t heard of these—or maybe you’re already familiar—it’s something you simply have to hear about it. The way he describes them, it’s a chance for everyone to win.

At the very least, Mike got our wheels spinning and helped us to think about a conversation that we may not have previously been involved in. We hope you can join us in this conversation moving forward.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

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Henry Kaestner: Welcome back to The Faith Driven investor podcast. We’ve got a special guest with us, Mike Silvestri. Mike, is here to talk to us all about some new and innovative financial vehicles along the concept of paying for success. Career impact bonds. Social impact bonds. We’ve spent time on this program talking about some of the traditional asset classes, public equities, private equities, real estate. But God is an entrepreneurial, creative God and has asked us to be fruitful and multiply. And so Mike is going to push the envelope and how we think about investments and how we think we might deploy his capital as we make investments that we think might make an impact in culture. So we going talk a lot about that. We can tell you about Mike’s background. But before we get there, Mike, I want to ask you, where are you recording this?

Mike Silvestri: Thanks, Henry. I am recording this podcast from a dorm at Harvard College.

Henry Kaestner: Because you haven’t graduated yet? Your résumé would lead me to believe that you have.

Mike Silvestri: They do say college is the best times, but no my wife and I actually live with our two young girls at Harvard. We’re a resident tutors. So we’re advisors for students. Of course, when they are on campus and just help kind of mentor them and be by their side as they go through their undergrad journey.

Henry Kaestner: When I was in college, we made a T-shirt that said The University of Delaware. I went to Delaware University, the best five or six years of my life. And in your case, just doing the math, harvard. The best 15 or 16 years of your life.

Mike Silvestri: I just can’t get enough of it. Right.

Henry Kaestner: That’s awesome. It’s also just making my brain swell a little bit because I remember my time in the dorms and thinking what it would have been like for a family to be down the hall. I definitely would have been better behaved. And maybe that’s why you’ve done that. I’m sure that you also have an incredible opportunity to speak in the lives of a bunch of young future leaders. So I I think actually that that’s super, super cool. Mike, tell us. We consider you an expert in some fields of financial innovation. How did you get here? What’s your backstory? What’s your background?

Mike Silvestri: Yeah, I mean, I think the story honestly starts decades ago. I mean, I think my faith, my view of my vocation, my world view honestly started in hidden corners of the world. I spent a number of summers growing up traveling with my family and with my church just to remote areas on medical missions, strips serving the poor, those that lacked access to health care. And at a young age, honestly, it was sort of confronted with the reality that the world is much bigger than my small world that I grew up in and that the deck is stacked against so many. And so I think for many years that’s sort of been wondering how can I do something about that? I would say my faith, my values, the gospel inform a lot of that, my desire to bring out justice and help make the world a better place for God’s glory. But I’ve been in particular trying to think through how can I do that in my career and ask myself, you know, where do my skills and the passions that God has put on my heart align with the needs that I see in this world? So that led me initially into consulting. I was a strategy consultant for well over half a decade, starting in private sector consulting, shifted for several years into social impact consulting before heading back to Harvard or a graduate school program at Harvard Business School and Harvard Kennedy School, where I became really interested in impact investing. Read a lot about it was very intrigued by different investing models. And a few of those models were those that are being pioneered by social finance, which is the firm that I now work at. So I’ve been there for several months now and helping spearhead our work around bringing paper success to the broader impact investing field.

Henry Kaestner: So bring us back to the time right before you went back to Harvard, where you started getting some exposure to impact investing. Tell us about some of those stories. What were some of those experiences? How did they fit in with some of those earlier ministry experiences you had overseas?

Mike Silvestri: Yeah, it’s a great question. So my initial exposure to impact investing was through a lot of the coursework that I was taking. And I’ve been reading a lot of models on negative screening. Right. Let’s come up with a package of investments that sort of. Take out the bad companies, whether that’s, you know, cigarettes, firearms, etc., and I felt like that was good, but I felt like the bar could potentially be higher, at least in terms of how do we truly steward our capital to make the greatest impact possible. And so I came across social finance and the Pay for success model, which ties financial returns directly to social outcomes being achieved. And I was intrigued by it and kept in touch with the firm and eventually found myself in a role there. But I felt that it directly addressed a lot of the longings that were put on my heart a long time ago. I mean, seeing needs in health care and workforce development and just, you know, family stability, these are issues that our society has been trying to address for generations. And we spend a lot of money. Our government spends a lot of money trying to solve these problems. But what if we could leverage the private capital markets through papers, excess investment structures to actually take proven interventions to scale and actually start to move the needle in measurable ways on these problem? So that’s what excited me and brought me to this firm could.

Henry Kaestner: Give us an overview of one to one, if you will, of the pay for success model career impact minus social impact upon what is it? What’s the concept? And then maybe just give just a couple of very quick examples.

Mike Silvestri: So pay for success in general is a set of financing strategies that ties financial returns directly to outcomes being achieved. So regardless of the investment structure to these different deals, share a set of core principles, right. You have to have clear identification of outcomes. You have data driven decision making of strong accountability for those outcomes being achieved. In many cases, you cross-sector partnerships because that’s what it takes to scale up these proven interventions and you’re leveraging private capital for impact. So in a social impact bonds, there’s the investor and they’re the ones that cover the upfront costs of scaling up some kind of social service. So imagine nurse home visitation for first time moms or permanent supportive housing for homeless individuals or employment services for men and women leaving prison. So the individuals who go through these programs and as predetermined outcomes are achieved. The government then pays for success. They only repay the investors when those programs deliver their intended outcomes. So in many cases, it’s a win win win. Right. So when things go well, the investor gets a return on their capital. The individuals get put on a path to health, safety, economic mobility, and the government only pays for outcomes that have been achieved. So in that sense, they’ve transferred all the risk to the investor. And if the program doesn’t work and does not achieve those outcomes, then it’s still a win in many cases because the public dollar has not been spent on programs that are less effective. So in that sense, either side of the coin is a win in a career impact bond at somewhat different. So in the same way, the impact investor provides upfront capital to cover the costs of the job training program. In this case, these programs are high quality programs that we’ve bedded and the ideas that we’re scaling them up to low income individuals that have historically been priced out of these programs as individuals go through those programs. And if they get placed in the job, then they’ll repay a portion of their earnings for a fixed period of time and up to a maximum payment cap. But the catch is that if they don’t get placed into a job that gets them above a certain salary threshold, then they’re not on the hook to repay. So, again, it’s a win win, right? There’s downside protection for the student. And if the student does get put into a job for which they are strange, then they get placed on the pathway to economic mobility and the investor is made whole on their investment. So we’re super excited about both these models. They’re different, but they’re both incredibly important, particularly in today’s day and age where you have rising income inequality, rising wealth inequality, and especially today with the COBA 19 pandemic and millions now seeking unemployment assistance. There couldn’t be a more pressing time for these types of investment structures to be scaled up to measurably improve the lives of those in need.

William Norvell: Hey, Mike, William here. You said an interesting word, scale. Could you give us a little insight? What is the scale of social finance at the scale of each of those bond types, both within your organization and maybe globally, just by whatever metric that is? Just where is the industry right now?

Mike Silvestri: Yeah, great question. So social finance in the US has about 60 folks in our firm, but we’re part of a global network of sister organizations with offices in the U.K., the Netherlands, Israel, India. We together as a network have really helped bring this Nates an idea of paper success into a vibrant international movement. There’s now over 180 social impact bonds around the world. Almost 30 in the US alone. And these touch all sorts of issue areas, right? Criminal justice. Workforce development, health. Environment. And from the capital side. Social Finance US has mobilized well over a hundred million dollars an hour, close to 10 years of existence. And, you know, the average deal size can serve upwards of thousands of individuals and, you know, mobilize double digit millions of dollars, which is just extraordinary when you think that every dollar that returns, the investor behind that has some improved life at the end of it, which is what I find so inspiring. I’ll give you a specific example in Massachusetts where I’m based. We have a deal that’s taking two thousand refugees and immigrants and providing English language skills development, job training and placement services and helping them get on the path to economic mobility. This deal is mobilized over twelve million dollars and it’s already starting to repay investors and most importantly, is helping people change their lives and improving outcomes for those that are in need. Which is good for them. It’s also good for the businesses in Massachusetts that are realizing that they increasingly need to rely on immigrants and refugees for their own business success.

Henry Kaestner: Can you give us a little bit more detail behind this deal, Massachusetts? Or if you can’t there, maybe you come up with a fictitious example someplace else. I’m trying to figure out who’s paying who so I understand he purpose of this is to be able to get refugees with good paying jobs. But social finance presumably goes to the state of Massachusetts and says, listen, we know you’ve got this initiative to train up workforce. We want to help you to do it the best way possible. We want to increase your chances that this is a successful program and a good use of taxpayer money. So you should do the following. What is that? Who’s paying who? Who are the different players in here?

Mike Silvestri: Yeah. So in a social impact bond, there’s three main players. There’s the investor, there’s the service provider. And then there’s the outcomes payer. So the investors providing the upfront costs for the service to be delivered. And obviously, the service deliver it in many cases is a nonprofit with some sort of proven intervention and take that capital to scale up the service to those in need. And then at the end of the day, the outcomes payer, which had a social impact bond, is the government, in some cases multiple government agencies, is going to repay based on outcomes. Because what we’ve done as part of the deal structure is come up with the cost benefit analysis for those outcomes. Right. When you have individuals that are on the public safety net that are now getting meaningful employment, that are contributing to the local economy, that’s good for government. It’s good for the public wallet. So at the end of the day, you have the government making payments, but those payments are based out of this mindset that we’ve actually invested in prevention as opposed to remediation. Right. You’re investing in job training and placement and preventive services so that we don’t have to spend more money downstream.

Henry Kaestner: OK, we’ve got two thousand refugees. They need to get job training. I’m an investor so I’m now going to pay, say, jobs for life. Two thousand dollars to provide training for these workers. And then the outcomes payer is saying, OK, if you get our two thousand of them jobs, I’m going to pay back one point four million dollars to the original investor. But if the service provider doesn’t deliver, then I might have to pay something less than one million dollars, in which case the investor loses. You’d mentioned that in this case, the government of Massachusetts is the outcomes payer. Who is the investor and who is the service provider?

Mike Silvestri: Yeah, great question. So in this deal, this is the Massachusetts Pathways for Economic Advancement. Deal. And in this case, we actually have a number of investors who are deals bring in philanthropic capital, but also institutional investment. We have individuals that are investing through their donor advised funds accounts. So it’s really kind of braided funding across a number of different sources. And then, you know, to your point, you’re correct that the government of Massachusetts is the outcomes payer. And the way that we typically structure these deals is there’s multiple different outcomes to provide some staging. Right. You have interim outcomes. You have longer term outcomes. And so the idea is that at each point, as the project is being delivered, there’s a service is being delivered. You’re making those repayments gradually and the investor is gradually being made whole.

William Norvell: And what’s the optimal return? Are there different returns for each one or are you trying to is getting your money back the goal? Is getting a six percent return? Or does it change depending how what the different return profiles for the different types of bonds?

Mike Silvestri: Yeah, I mean, so social finance is a nonprofit. I mean, we’re mission driven and we bring on investors that share our mission. And that’s why we’ve involved over 100 investors at this point. But they also share our passion to mobilize capital to drive social progress. And nobody’s getting rich off of these deals. That said, we do target mid single digit returns. And, you know, when all goes well, senior and junior lenders are able to get not just their principal back, but a healthy return enough that these deals, we believe, are scalable. And, you know, this is a structure that has potential to be scaled across the country and even the world because of the way that it recycles the capital and aligns incentives.

Henry Kaestner: Okay. I’m still working on understanding how this would apply to me as an investor. So you come to me and say, look, I know that the state of Massachusetts is willing to pay fourteen hundred dollars for every refugee that ends up getting job and keeping it for six months. We’ve had experience with the service provider in the past that leads us to believe that we can provide you a mid single digit return if you front the money so that these refugees can actually get the program. And what is going to happen is six months afterwards, when they’re still employed, going to pay back money. And we’ve had, again, enough experience that we think that 10 percent of people going to fall out. But even with that, we’re going to go ahead and get this accomplished. Is that kind of the pitch to the investor? Exactly, yeah. Okay. And then a firm such as Social Finance will presumably charge a management fee. Is that management fee just on the project? Does it also have a success fee to it as well? Can we do it? I’m thinking about, you know, traditional private equity is so many of our listeners right now are going to try to put this in something they know. So they know two and 20 and they know, OK. So that’s right. Mike is taking my money, wants to get this outcome. And in order to do that, he’s getting paid to Antwine, probably works a little differently. But how does the social finance get paid?

Mike Silvestri: It’s definitely a little bit different from private equity. We typically bake in the management costs into the overall project cost. So it’s part of that capital creation. And typically, we segmented into the projects, design and structuring phase. And then the active performance management and active performance management is just our language for portfolio ops. Right. In the same way that a private equity investor is actively trying to work with management to make sure that the business is running smoothly or growing. We also actively work with the service provider to make sure that as we’re collecting data, that we’re course correcting and making sure that those outcomes are being achieved and we’re mitigating risks where possible.

William Norvell: OK. So question here, Mike, I’m interested. You used Win Win and I think win and maybe a fourth win for everyone. And so as a semi-trained investor that then raises some question. So I want to ask a little bit about the negatives. Know what would doesn’t work here, because right here there’s I’m really excited. Never heard of this concept to be really clear. And I’m just thinking to myself, this is amazing. This makes a lot of sense. I totally understand that. And if I could get a six percent return for something like this, that’s that’s really exciting to me personally. And so I’m interested. And if I was going to dig in and do some more diligence, what are the potential pitfalls or downfalls both of the investment? Maybe we could stick with this one in Massachusetts as we were getting to know it a little bit and also just the model. What are some of the biggest critiques people may have out there that are, say, not allowing you to get from one hundred million under billion? Right. Just loved to learn more.

Mike Silvestri: Yeah, all fair questions. And I think that as with any investment, there’s risks involved. Right. I mean, there’s performance risk is the biggest one that the service that’s being delivered and the outcomes that you hope it will achieve, it doesn’t materialize. Obviously, there’s all sorts of other risks in terms of investors pulling out, in terms of the government outcomes, payer shifting their priorities. These are also long term deals. So we’re talking about services being delivered over the course of years. And then even after the service is done, in many cases you need to track individuals over time. So there’s risks involved in that time cycle. And yeah, there’s risks across the investment structure. But at the same time, you know, the way we often think about risks and finances, know what’s the risk that I invest and things go poorly. But I think there’s also a risk that particularly for Christians. Right. What is the risk of not investing in something that has the potential to do dramatic good and measurably change a system that is stacked against individuals who are disadvantaged and in many cases, whether they can’t achieve health outcomes or they can’t get out of the criminal justice system or they can’t get a job. And what if we can use our capital to play a role in re wiring that system for good? That’s exactly what we’re trying to do with these bonds.

Henry Kaestner: OK, so like William fascinated by this feeling like I probably need to take some sort of action on this. So help me understand, as a faith driven investor, whether this faith driven investor is an individual like myself or a church. How do we get involved? And I’m going to ask you a question. It might make you feel a little bit uncomfortable, because to be very clear, I think it’s incredibly important and the Bible tells us this, that we can’t just proclaim the good news if somebody is starving or doesn’t have clothes or doesn’t have a roof over their heads. And you’re talking about things like clothing and shelter and food and what God made us for, which is really work. So some really basic necessities. Is your way to. And that may be enough. I think maybe a cross volunteer to go ahead. And just with that. Is there a way to bring the gospel, though, into this as well? Or is it not happen? Are you able to bring in service providers that might be able to administer these services in the name of Jesus? Or is that just pushing the envelope too much because is the ultimate payer is a municipality that would frown on things like that?

Mike Silvestri: I think it’s an amazing question, Henry, and I think that we should all think through these questions, because I think that my opinion is that it’s not outside the realm of possibility, but because you do have government payers involved and a social impact bond. My sense is there may be challenges with illicitly weaving in the gospel. But that said, we work with service providers, that we’re founded on faith based principles. I can also imagine a future state where churches and other religious organizations play an important role in providing these services. And frankly, a lot of our investors are motivated by faith or have their capital parked at religious organizations and donor advised fund sponsoring organizations. So I think the short answer is faith plays an important role to play and pay for success. And I would love to see it play a more prominent role. The only other thing I’d say is you think about the issues that we’re addressing. Right. And these issues are not Christian issues, you know, helping people gain economic mobility. Reducing prison recidivism, stewarding the environment. These are human issues. But at the same time, we as Christians do have certain beliefs that I would argue motivate us to care about these issues as much as anybody else. If not more, the belief that every human being is made in the image of God, even if they don’t look like us. The belief that we are stewards of God’s resources, that this money doesn’t belong to us, that ultimately we are entrusted with it. These are transformative beliefs. If we let them seep into our heart and seep into our investment strategies. So I would love to see faith and the gospel completely permeate every angle by which we think about stewarding our capital to make a difference on these problems.

William Norvell: I want to take Henry’s question. To be fair to say, when I heard you say at some level, which I think is really inspiring, is the number one role would probably be to become a service provider where you could be a link in the chain where I think about the Salvation Army Prison Fellowship, I know has job training where you could be a certified service provider and then have more people called to go love, especially now we’re approaching 20 percent employment. Feel that God is calling them to renew the dignity and work in their life through offering job training. Then you could set up a bond such as this to fund them. That sounds like a really great place for people listening to God, maybe stirring in their heart to be a part of something like this. Is that fair?

I think you build on that. I think of organizations like World Relief that are currently hired by the government to provide refugee services. And they do that very much as a part of mystery. So there is some precedent, of course, of people working towards outcomes. But I don’t think that investors are investing in these types of impact bonds. I’ve never done it. I’m really, really, really interested now. I’ve never had a guest on. Well, that’s not true. We’ve had guests on before where I like my guests. I want to invest in with a person. But I don’t know that I’ve ever felt as compelled in, like challenged as I do now. I mean, so just give me the wire instructions and let’s get this baby going. Let’s make it happen. OK, so let’s look at this a little bit more rather than just asking a question in our own personal circumstance. As you reflect on this is a Christ follower. What do you see as the opportunity as a church when you come back and haven’t seen a successful job? I think that you’ll have done 130 of these now around the world. Is that right?

Mike Silvestri: So there are 180 around the world, social finances. You know, one of the few pioneers in this space in the US alone is close to 30 deals.

Henry Kaestner: OK, so 30 deals as you come back and you look at the successful implementation. What are your hopes? How would you like to see a church get involved? Do you have faith based institutions that are part of your investor base right now?

Mike Silvestri: We do. I mean, the capital stack and some of our deals has benefited from capital, from faith based donor advised sponsors or even just individuals that may or may not be motivated by faith, among other things. I think there’s a huge role for the church to step up and to play a leading role in this space. I think, you know, I grew up in a church where we talked a lot about financial stewardship. And I often think about stewardship and kind of a binary way. Right. There’s good stewardship in philanthropic terms. Right. Am I being generous in my tithing and am I giving. And then there’s good stewardship in investing terms, like, am I maximizing my returns? But while I think that’s binary view, it’s simple and it’s easy to understand, it doesn’t easily accommodate opportunities in the impact investing space. Right. Opportunities where you can truly make a measurable impact on the lives of those in need, that the lives of people, the likes of which Christ spent so much of its time while you is here. The hit and the hurting that helped us and do that all the while getting a return on your capital so that the impact is actually multiplied. Right. It’s not just one time where you can really invest and reinvest and reinvest.

Henry Kaestner: So Mark Andriessen once said, just to help put some color around this Mark Andriessen once famously said, actually, I guess Mark Andriessen said it and then Warren Buffett famously said it. I will buy a house or I will buy a boat, a house being an investment or boat being giving. But I will never buy a houseboat because he had been asked, what do you think about impact investing? And it sounds like to me that you’re suggesting that Christ followes need to wade into the houseboat market. Need to endeavored to understand How do you balance the two? And maybe life doesn’t need to be so binary. Is that what you’re suggesting?

Mike Silvestri: I think that’s right. I think it comes down to what are your goals and what are your priorities? And I think that when we think about investing, we often assume that, well, you know, our our fiduciary duty is to maximize returns. Well, first of all, there’s no fiduciary duty to maximize profits. We do have a fiduciary duty to our stakeholders. We also have a biblical duty to all stakeholders and a biblical responsibility to care. Our society about widows, the orphans, the unemployed, the immigrants, the refugees. And so I find myself challenged when I reflect on how am I stewarding, truly stewarding the money that has been entrusted to me? Am I doing it in a way that is, at the end of the day, seeking to preserve capital, you know, preserve my own wealth, increase my comfort? Or am I being creative, imaginative and where necessary, sacrificial with it? And I think that doesn’t necessarily mean philanthropy. I think that we can be imaginative and creative and at times concessionary with our returns. If it means that we’re stewarding our capital to achieve maximum social outcomes. Right. To uplift those who are most marginalized, some of us. That, I think, is a arguably more balanced view of what our duty is as investors.

William Norvell: It’s a great place. That’s a great place to finish. You know, it’s a great challenge for for all of us and all the future investors. That’s why we do this podcast, is to get people thinking. And then there’s there’s a lot of gray and there’s a lot of different conversations to be. And I’m just really grateful for you to come on in and start a new conversation that I know I have not really been a part of.

Henry Kaestner: Yeah, I am, too. And this makes me think that this is a great opportunity to hear from our listener base to lots of different opportunities here. I think that most of our listener base knows of service providers that are working towards social outcomes, many of whom have very much a crisis center message to them. I’d love to hear back from the ideas that they have, maybe service providers they know they can really deliver. And then I’d love to go back to Mike and just say, okay, so we’ve found a universe of service providers that are doing these things. How do we construct a vehicle? How do you construct a vehicle and then have more folks know about it? Now, you would, of course, suggest, Mike, that that might be interesting, but there actually are 180 different vehicles that already exist where the church can participate right now. I do wonder, though, if there’s more of a pure play on working with some of these ministries. But let’s hear from the audience. And, you know, great time for you all to get onto the site. Faith driven investor, dawg. Leave some comments and leave some comments in the notes that this podcast. But I’ve been challenged in a way that I’m not frequently by guests. And so, Mike, I really appreciate that.

Mike Silvestri: Thanks for having me.

William Norvell: Yeah. You’re not off the hook yet. Oh, he’s not. Our last question, Mike. We’d love to ask as we love to connect our listeners with our guests through God’s word. We think it’s just amazing to see how God continues to show his words, living and breathing. And so if you wouldn’t mind if we take a second and think through. But a place in God’s scripture where he may have something coming alive to you in a new way could be this morning. Something you read could be the season, something you’ve been meditating on, that he’s just point your new direction. If you wouldn’t mind that be awesome. If you could share with our audience where he has you today.

Mike Silvestri: Thanks for the question, William. You know, I think on the answer to your question, that verse, Mivah 6:8 comes to mind, which I think I’m always challenged by. And I was challenged to memorize it as a young kid, but I’m challenged because it’s so simple. And for people like me and maybe folks listening to this, I imagine that it’s easy to overanalyze and overcomplicate things sometimes. Even some of these deals that we’ve talked about are very complicated. But, you know, God tells us in Micah 6:8 that what’s required of us is to act justly, to love mercy and to walk humbly. And that’s a pretty simple command, but it’s also an incredibly difficult one to obey. And so I offer that simply as a verse that challenges me and hopefully challenges those who are listening as how we can go about our daily lives, go about our work and go about our investing.

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Veteran market strategist Bob Doll unpacks the fifth fastest market correction since WWII and what’s driving today’s economic uncertainty. Gain insights on tariff strategy, recession probability, and how to position your portfolio during these turbulent times. Faith Driven Investors will appreciate Bob’s wisdom on markets alongside his reflections on patience and humility.

Please note that the views expressed by the hosts and guests are their own and do not necessarily represent the opinions of Faith Driven Investor.

Episode Transcript

Intro [00:00:00] You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ-following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening. 

Intro [00:00:17] Hey, everyone, all opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies and securities discussed. And this podcast is for informational purposes only, and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening. 

Richard Cunningham [00:00:44] Welcome back, everyone, to another episode of the Faith Driven Investor Podcast. Awesome to have you with us. It is the beginning of April. It has been a wild start to the year in the markets, to say the least. Just a little bit of volatility and uncertainty. We’ll use the T word today, which is tariffs, I’m sure, many times. And we’ll get into that. It’s been long overdue for us to do just a proper kind of macro look at the markets and the economy. And because of that, we have brought in the big guns of market commentary to join us. So we are joined by the one and only Bob Doll from CrossMark. John Coleman, it’s great to have you back in the co-host seat, as I know it’s been a couple of weeks since we’ve had you in the FDI podcast co- host seat. And so gentlemen, welcome onto the pod. Great to have your guys with us. John, we’ll start with you as a quick hello and then we’ll go over to Bob. 

John Coleman [00:01:28] Yeah, Richard, so great to see you. It is such an interesting and fun time in markets. And I’ll tell you, it’s always fun when I get to appear alongside Bob Dahl. Bob is obviously a hero of mine in the industry. I think he’s a hero, a lot of other people, someone I admire so deeply, one of the smartest guys in investments today, always a great communicator. So I just feel privileged to be here. You said the big guns, and I’m viewing that as like, there’s one really small gun, and then Bob has enough big guns for all of us. So. I’m super excited to hear what he has to say today. 

Bob Doll [00:01:59] Well, my privilege to be part of this as well, gents. It’s a crazy world we live in. Thankfully, we have a God on the throne who knows all the answers. And we take a stab at it, and sometimes we get it right, and oftentimes we get wrong, but we have fun in the process. 

Richard Cunningham [00:02:16] Amen to that. Well, Bob, it’s great to have you. Hey, the last time we had you was almost this time last year on the Faiths of an Investor podcast and you graciously unpacked your kind of 2024 expectations and predictions as at that time we were one quarter into the year. Here we are one quarter into 2025. It’s maybe that’s a great place to start is if you go back in the time machine a little bit and just kind of reflect on 24. I mean, you had another solid year of kind of predictions as that dovetails in and sets the stage for what we have seen kind of. here in Q1 of 2025. They’re recording this for everyone’s context on April 1st. I know April 2nd is quite a big day, quote unquote liberation day, as we kind of find out what Trump’s tariff policy will be. So we’re missing that by roughly 24 hours. But Bob, let’s go back and look at 24 as we kinda set the stage for what’s happened here in q1 of 25. 

Bob Doll [00:03:05] Sure. It seems like forever ago that we came out with our 24 predictions. I guess I’d sum up. First of all, our outside grader gave us a seven out of 10. So not a bad year. Nice. Having said that to be a bit and appropriately self-critical, we were too cautious as many people were both about the economy and risk asset stocks in particular, the economy chugged along. I think the underestimation on many of our parts. was how much power there was in the money. That is to say, post COVID, the excess savings that high end consumers had accumulated because they didn’t spend money during COVID and lower end consumers receiving multiple checks from the government and spending that over time. The tail on that lasted through much of 2024, gave us a good economy and a second year row of stocks going up 25%, Pretty amazing. 

John Coleman [00:04:04] Yeah, and I would just add, like Bob, I probably approached 2024 too conservatively and across asset classes, some in fact behaved a little more conservatively than others, certainly public markets did not behave very conservatively in 2024. And particularly the Magnificent 7 had a run that would have been difficult to predict, I think at the beginning of the year, just a historic run, so to speak. And as we head into 2025, Bob and I were chuckling about this before we started. You know, one of the themes I’m paying attention to, and perhaps he is, is just volatility and uncertainty. And it’s a constellation of things for me that are coming together. And I know this isn’t an exhaustive list, but right now we’re sitting on the precipice of some world-changing technologies. And so we’ve got this unpredictable, rapidly evolving technological landscape that includes artificial intelligence, but isn’t restricted to that. And those technologies are gonna be quite disruptive. We’re sitting, and I know we’ll dig into this, at a uniquely disruptive political moment. I think the Trump administration was intended to be disruptive as a political movement. The speed at which they’ve operated and the number of things they’ve taken on is probably faster than almost any of us predicted, and so more disrupted, for better or worse, than we might have predicted. And then there’s all this movement in the underlying economy and financial assets, right? where we did have a pretty heated market in 2024. Valuations are reasonably aggressive, at least in parts of the market right now. Housing prices actually kind of stayed up despite the fact that interest rates were going up and there was a slowdown in the market. And so there’s this continued threat of inflation in the background that I think people are still continue to worry about, but also this interesting situation where, depending on what part of markets you’re looking at, there is still pretty rich valuations in parts to those markets and how those will react. to the underlying economy, to technological disruption, to all this political disruption. You know, you add those things together on top of other things that may occur, and I think it’s gonna be quite an interesting year. 

Bob Doll [00:06:05] Yeah, I add to that or amplify some of it, John, one of our predictions this year is increased volatility. You know, we had no idea coming into the year it would be this volatile, the VIX comfortably averaging over 20, which most people know that’s a pretty high number for a full three month period. We’ll see if it lasts. And the cause is uncertainty. Risk assets, stocks, hate uncertainty. And we’ve served up, the administration has served up a bunch of it. I would argue it’s not just we don’t know what the tariffs are going to look like. It’s the volatility of the commentary. I’m going to do a tariff today, I might not do it tomorrow. It’s 5% on Tuesday, it’s 10% on Thursday, and this constant churn creates uncertainty. And when people have uncertainty, they pull their horns in. If you’re a business, you think about not hiring a person or two, you might be thinking of hiring. that new project, you say, let’s just pause on that. And if you’re an individual, you say, you know, maybe we should not plan that big vacation we were dreaming about for this summer. Maybe we need to just cut back a bit till we know the lay of the land. And you’re right, John, it’s mainly about tariffs. But it’s also about inflation, the tax cut, are we going to get it, a whole raft of things. Geopolitics, we haven’t even talked about that yet. So this uncertainty… is creating economic weakness. And if we don’t curtail the uncertainty, we’ll end up in a recession. And look, I say, observing them over many years, businesses can deal with bad news. What they can’t deal with is uncertainty. They just don’t know how to plan. So we’re stuck in that. One more comment on the good things you said of the Magnificent Seven and AI. You know, we’ve, in my view, hit a watershed moment. AI stocks, the Magnificent 7, just cleaning up on everything until a few months ago. And what’s changed? The answer is their earnings growth is slowing to still good levels, but more importantly, their cash flow is definitively decelerating. As they spend, I mean, the top three companies in AI declared in January, they’re going spend an incremental $200 billion on AI. and that just takes money out of their cash flow, and cash flow moves stocks even more than earnings do. So I think the broader theme here is equal weighted portfolios be cap weighted portfolials, mega cap stocks lag. I mean, I saw a stat, it’s an estimate so far that about 80% of managers beat their benchmark in the first quarter. When the mega cap stock are running the table, it’s really hard to beat the benchmark. When they’re lagging, you have a much better chance as most asset managers are more equally weighted in a probe. So a couple of PS’s to your becoming. 

Richard Cunningham [00:09:04] Yeah, so let’s maybe let’s go markets, Bob, and kind of start there and double click on all that we’ve been seeing. So I mean, you highlighted in this great paper that your team put out, crossroads or crosshairs, just kind of addressing head-on the uncertainty, the tariffs, everything that’s been going down right now that this has been the fifth fastest correction since World War II that we’re seeing in Q1. So maybe kind of double click into the magnitude of the correction we’ve seen. I mean S&P 500 kind of to date where we’re recording this is down, you know, just over 4% year to date. The Russell 2000, so kind of your small cap index is down almost 10% year to date. Kind of global, like macro look at the markets, Russell 3000 down 5% as well. Where are we kind of from a market footing standpoint as we deal with all the uncertainty and just the correction that’s taken place? Are we at the bottom? I know we’re not here to predict markets entirely, but what’s kind of your general sentiment right now? 

Bob Doll [00:09:54] So the rude awakening is, as you probably know, six weeks ago, the US stock market was at an all-time high. It is hard to believe. Wasn’t long ago. No, it wasn’t. I mean, enthusiasm and hope that came in when President Trump started pulling ahead in the polls in October, that started risk assets, equities in particular, moving higher, and that continued at various paces until February 17th, from which we had the pullback that you just cited. You gave them the year-to-date numbers. more stark to talk about what happened from that high to the recent lows. S&P down a little more than 10%. NASDAQ down well over 15%. The Magnificent 7 down 20%. Tesla down 40%. NVIDIA down 25%. These are big hits. Yes, the stocks were a bit overvalued, but it’s more about that slowdown and cash flow. And look, my view, John hinted at this earlier about valuations, the stock market was selling at its high at 22.5 PE. And you know, we don’t see that very often. When it’s selling like that, it’s assuming the world’s going to be nearly perfect, which it rarely is. So we get this pullback, and now we’re at 20.5PE, which is still not cheap. And I don’t believe the E. I think the earnings estimates are too high, and we’ll to come down as the economy slows. So, to your question, where do we go from here? So we had the pullback from 62, 6,300 to 55, 55, 50. Then we had a 5% run up. That was the oversold rally. Didn’t last very long and it wasn’t big, from which we are now testing. So back to those 55,50 lows, I think we’ve got a probe lower, 54, 53, 52. And if we don’t have recession, that could mark the low for the year. Doesn’t mean we’re growing straight up. I think we’re going to have a choppy year, but if we are going to have a recession and we have more visibility that we might have one, I think the S and P 500 will sport a handle of four, which won’t be very pretty and it’ll still not be cheap. I don’t want to sound like a bear, but there’s a risk out there. 

John Coleman [00:12:10] Yeah, and I would say I’m not that active on X, but I keep posting a chart every now and then as people freak out just of the five-year returns of the S&P. And it’s a little unfair now because we’re deep into COVID during 2020. Right now, set a trough. But the S & P is up 126.35% today from five years ago. It’s up 172.5% from this day 10 years ago It’s up 37% from this day two years ago. And so if you think the long-term returns in markets are linked to GDP and that it’s typically around 7% or 8%, we have been blowing through that number. I mean, high double-digit returns now for a long period of time. I mean this has been an incredible bull run since effectively the 2008 period, since the recovery from the great financial crisis with a blip during COVID. And I actually think some form of correction in the price of stocks in the valuation of these assets is healthy given the run-up that we’ve seen. I do think inflation and the amount of money in circulation in the economy obviously leads asset prices higher, but I also encourage a lot of folks that I’m talking to to just keep calm and carry on, right? If you look beyond the last quarter, we are living through one of the most remarkable public market cycles in history really in a lot of ways. And like Bob, I actually think there’s room for another, and I’m not predicting anything, but I would not be surprised to see 15 or 20% come out if we had a recession. I don’t actually think we’d be that far from appropriate valuations if that happened, just given how hot the markets have been. And while I think that would obviously be a dramatic move, it would impact people, it wouldn’t be unhealthy in terms of the long-term returns or even the midterm returns that people are getting. And so, In my mind, this year being a bit volatile, maybe a bit flat or even a bit down, wouldn’t be terribly unhealthy given the run up that we’ve had in some of these stocks and the valuations particularly amongst the large caps right now. I think small caps and mid caps tend to be valued a little bit better right now, but particularly towards the upper end of the market with the Magnificent 7, with even large cap stocks generally, the price to earnings multiples are at historic highs in a lot of ways. And so I would not be surprised that those retract a little bit, especially if there’s negative economic news. And I don’t think that’s actually a harbinger of long-term problems given the highs from which we’re retracting. If you just look at a one-year or two-year, I think even over the one year we’re up 9% right now, right, which would be a little above your long- term averages. And so investors should just be prepared that this could be a part of a normal cycle where financial assets return. to some level of normalcy after an incredible bull run, at least in my experience. 

Bob Doll [00:15:01] At the risk of piling on, John, there are only two ways to get the stock market or an individual stock to go up, you know. First is earnings better than expected. They come in as expected, the stock tends to go nowhere. So better than expect in earnings or to higher valuations. So let’s take them one at a time. Earnings are near an all time high. Profit margins, more importantly, are at all time highs. I can’t look at you guys and say, and the profit margin is going to go higher from here. I think it probably contracts some, which means earnings growth is less than normal. And we already talked about P’s being extended. So you put those two things together, the risk reward at the moment is not great. Let me add to that by saying if you look historically, when the P-E ratio of the five and ten year returns of averaged 4 or 5% including dividends. So when somebody says, you know, Bob, what do you think is going to happen to the stock market in the next 5 to 10 years? I say it’s going to be volatile. It’s going go up, but the total returns probably going to about 5% per annum. They look at me like, why are you so bearish? I’m not. I’m with you, John. You know, it’s still a good place to be. If you’re a good stock picker, you can do better than 5, but if 5 is what the S&P 500 gives you, value stocks will do better. maybe international stocks are better. maybe down cap will do better. We’ve just had such a wonderful, wonderful multi-year period. 

Richard Cunningham [00:16:30] So let’s get in some of the why. Bob, I hear you kind of getting into the fundamentals and the earnings and everything like that with the valuation, but there’s also this other why, which is kind of the broader economic side of things, the administration change and the regime change and kind of, the volatility that’s come out of Washington. Curious how to phrase this question. When you guys see what the Trump administration is looking to accomplish, they want to balance the budget. We’re bringing in 4 trillion, spending 6 trillion. So we’ve got a $2 trillion budget deficit. Elon has been tasked with. cutting out a trillion of that. Lutnik has been tasked with bringing in an additional trillion in revenue. So the theory of the plan makes a lot of sense in what they’re going after. It’s, hey, we wanna balance this budget. Is a lot the why for what we’re experiencing in the markets also a part of what the regime is looking to do and are they just willing to kind of deal with some of this blowback they’re gonna feel in the economy and the markets? What would you guys say to that? 

Bob Doll [00:17:24] There’s that question. Let’s look at the correction we’ve had over the last six, seven weeks. What’s caused it? Well, we’ve both used the word uncertainty. That’s, in my view, number one. Number two, and related, is tariffs. And number three is valuation. But valuation is a poor short-term indicator for future returns. It’s a great long-term indicated, but poor short term. You need a catalyst to unlock under or overvaluation. And the catalysts we got are uncertainty and tariffs. So that’s one way to answer your good question. I think another way is to say, unlike Trump 1.0, here at 2.0 I think they’re taking the pain, the tough news up front, and hopefully will live long enough to see the gain on the other side, which will come from tax cuts and deregulation and implied in that of course is some smaller budget deficits. But we got to get from here to there. And it’s not that simple as the stock market is showing us today. So I think that’s their plan. I hope that’s there plan because the alternative is not a whole lot of fun. So I that’s the why. And I come back to please, Mr. Trump, reduce the amount of uncertainty out there, you know, give us the bad news and let us live with it. Let us figure it out. Don’t give us good news on Monday and bad news on Tuesday and vice versa. 

John Coleman [00:18:51] Yeah, and maybe I’ll tee up a couple of topics I’d love to hear Bob weigh in on as well, just on the policy front. So let’s come back to technology and things like that later and fundamental productivity growth, et cetera. I think on the public policy front, my read is that the Trump administration is very much trying to be very aggressive in the first six to 12 months of their term. I think they understand that that’s their best opportunity to take dramatic action. I think they’ve learned from the example in Argentina, where Javier Mele took dramatic action up front. Now, Argentina was in a much more precarious financial situation than the United States, but Mele came in and he took dramatic action that many people criticize right away, but they’re already experiencing a dramatic recovery as a result of that dramatic action. And so if I just chunk the things that the Trump administration is trying to take on right now. You know, one certainly is to reduce the deficits and long-term debt of the United States, and they do want to eliminate this $2 trillion annual deficit that we’re running where costs are exceeding revenues dramatically now. And we’re piling up an unsustainable long- term debt in my view. They do want achieve that through a mixture of cuts coming from Doge. I think they legitimately believe they can get close to a trillion dollars by reducing waste, fraud, and abuse. Staffing levels and some of the government agencies that they view as unproductive, those will have negative implications in the short term because they will cause some unemployment. They will certainly reduce some government money in circulation. And there’s this whole discussion about whether government spending or parts of government spending should even be accounted for in GDP because they’re not productive spending, which we could get into. But that Doge effort is certainly targeted towards trying to reduce federal spending without fundamentally changing federal programs like Social Security, education, expending, etc. So attacking waste, fraud and abuse. The second is obviously that they’re trying to come up with new revenue sources that would support us expanding tax cuts for individuals. And their primary focus seems to be tariffs. If people want to get what I think has been the best explanation for What is likely the true posture of the Trump administration. The All In podcast had a good two hour interview with Letnik last week. I think it was where Letnik laid out systematically their position on tariffs, which is the U S for too long has allowed tariffs from other countries on us goods without any sort of parallel tariffs on our side. They fundamentally believe that that’s unfair, that it was an explicit policy choice to the United States following World War II to build up foreign countries so that they could regain footing. and they believe the time for that is over and that the United States should be operating more as a peer given that we’re the greatest consumer in the world and that U.S. taxpayers should not be supporting other countries with one-sided tariffs. And so when you see this tariff regime, many of those are retaliatory rather than aggressive, meaning they’re considering tariffs that would be on par with those already levied against the United States from places like India, from places, like China, even from places like Canada, which has been missed, Canada imposes. tariffs and restrictions on U.S. operating businesses right now that the Trump administration is mirroring, which is kind of part of his playbook. They also believe that that can be a significant revenue source. They look back to the pre-1910s, when the vast majority of U. S. tax revenues came from tariffs. And so they think they can raise a trillion dollars in revenue from tariffs in a way that not only puts us more in peripasoo with other countries, but re-onshores critical American jobs. You’ve got to remember now. There has been a remarkable electoral realignment in the U.S. where the Trump Republican Party in particular is now the party of the working class. If you look at polling data, et cetera, even unions supporting President Trump, they are dedicated to trying to bring working class jobs back to America through manufacturing, et cetera, not only because of a fundamental belief, but because of political motivation. as well. And so I think the terrorists are intended to punish certain behaviors, like they definitely want to use them on Mexico to reduce border crossings, fentanyl imports, etc. But they have a real economic belief that they can raise revenue with these and that they can restore fairness and that can re-onshore critical industries, right? And so, I think the terrorists, are likely actually not to be a short-term political negotiating lever, but actually a long-term policy of the United States. And that’s just starting to sink in. I think with people and then the final components of that, that Bob started to touch on, that could be helpful to the economy if we get through this pain. And I also think their political motivation is to get the worst stuff done this year so we can grow headed into the midterms, which is a political reality for them. They want to extend tax cuts. They’re very serious about trying to cut income tax on anyone under $150,000 a year in income. They want extend those, no tax on tips, et cetera, so they have to have revenue from somewhere else. They want to deregulate aggressively as a second round of Doge, which could be good for economic growth in the United States. And so I do think the tariffs and the cost cutting are kind of the bad news that the economy absorbing right now. And if they can get through those, their hope is that domestic job growth. tax cuts and deregulation can provide an economic jolt on the back end of that, that overwhelms any negative impact of those tariffs and of the cost cutting that they’re doing. And so I think their hope is they can thread the needle like Millet did, where they take the pain up front. But then by the time we head into the midterms next year, there’s a lot of good news for individuals and fundamental economic growth apart from government spending is restored in a positive way. 

Bob Doll [00:24:24] I agree with everything you said. I would emphasize the timeframe perspective. While Donald Trump did win the seven swing states, he did win the popular vote, which not too many Republicans do. He only beat Harris by one and a half points. It was not a landslide. A lot of people are talking that way, acting that way. And the way you see that is the margin of Republicans over Democrats in the House and the Senate. It’s like very narrow. And so getting things done is not gonna be simple. And you’re right, a year from now, the focus is gonna be on the midterm elections. And it’s very rare that the president in power doesn’t lose seats. So chances are high one or both chambers will revert to Democrats. So for Trump to get stuff done, he’s gotta do it now. And I hope you’re that we’re fine tuning, threading the needle. You know, two years is a short amount of time to get a lot done. So, uh, we just have to watch this real carefully guys. 

Richard Cunningham [00:25:29] And so I want to double click into tariffs, because I think that’s a key one that kind of is a microcosm into what’s going on here and what the Trump administration is trying to do. Bob, you put out a great stat in that paper that we mentioned earlier that Trump’s tariff plan, John, you mentioned a trillion dollars of revenue possibly, but like, you know, let’s go real conservative here. Let’s say it’s $250 billion in revenue to the U.S. That would, in other words, offset moving the corporate tax rate back from 35% to 21% from a revenue standpoint. So. This exercise of tariffs, I mean, there is negative near-term implications that we’ve spoken to in an already inflationary environment. Tariffs layer on another addition of kind of cost increase. Bob, you’ve mentioned the word recession a couple times now. What has to happen from a threading of the needle standpoint for this to work well and for this actually play out well? Because at what point does the Trump administration just say, hey, we need to take the exit ramp because midterms are coming and this is actually not playing out as we expected. Costs got out of control. we’re leaning in the recession. 

Bob Doll [00:26:29] Yeah, right set of questions, both politically and economically. So first of all, recession. If you know nothing, which most days I feel I know nothing. The probability of recession is 15%. Why? Because that’s about how much time we spend in recession. So if you know, nothing, somebody asked you 15%. Our view was at the start of the year, the probability was higher than that. Call it 25. And now it’s moved up to at least 35, probably 40%. So still less than half. But each passing day, and this starts to answer your good question, Richard. Each passing day economic weakness becomes more obvious. Uncertainty doesn’t go away. And that probability of recession just keeps going up. So we’ve got to reduce the uncertainty very fast. Tariffs. So John’s already talked about this to some degree, but let me amplify. The way I would like to look at tariffs. which I think could actually be positive, even though tariffs slow growth and create inflation. So the general are not good. If all we do is reciprocal tariffs, you know, the outcome can be not so bad. So let’s suppose John is putting a 3% tariff on my stuff. And I say, John, if you insist on that, we’re gonna do reciprocal, we’re going to do 3% on you. And John says, oh, hang on a minute. If I drop that and go to zero, will you stay at zero with me? And yeah, we come to an agreement and guess what? Tariffs just went down. Now that’s a little idealistic on my point to make that comment, but I’m hoping there’s going to be some of that and that would increase the competitive position of the United States significantly increase our growth rate and you know, bring more and more tax revenue in reduce the deficit, et cetera, et Cetera. So that’s another way out of this mess that we find ourselves in. But I come back to as you were connecting pieces of your question, we gotta get on with it. We can’t go another two months with all this uncertainty. We’ll be in a recession. 

John Coleman [00:28:39] And I think they’re trying to achieve what Bob is talking about. We’ll see how it plays out. But my read so far as they are hoping to get other countries to back down their tariffs, to increase the amount that we can export to other countries. And they’d be quite happy with that outcome. The one exception I might highlight is I do think there are punitive tariffs that might occur for non-economic reasons on certain countries, whether that be Mexico. If for example, they’re not happy with management of the cartels. I think China… I think there are a lot of non-economic considerations that will go into the tariffs on China, which make them a bit more difficult to predict. I think that’s to some extent warranted. And then there are certain product categories where I do think their focus is on re-onsuring, even if they’re short-term economic pain, and they’re trying to come up with other ways to offset those. I think COVID made everyone aware that our medical devices and pharmaceuticals, we were too at risk of foreign production of those and too at-risk of those things. defense technology, chips, which is a huge focus now, and what, again, they’re threading the needle. What they’re trying to do is get companies to announce huge investments in the U.S. to re-onshore chips. I think Nvidia just announced $100 billion to reonshoring. There have been some similar investments that have been announced. So if they can thread the needle where they have sustainable tariffs that try and re-inshore production of what they view as critical industries for U. S. national security and competitiveness. they can do so simultaneous with huge foreign investment in the United States to accomplish that, whether that be through SoftBank, through Saudi Arabia, through companies like Nvidia. I think their hope is that if they can get those things to hang together, they could actually achieve this goal of a painful process of re-onshoring but with enough foreign investment and capital inflows to actually support U.S. production in a more rapid way. The question is whether, on that last part, that will actually materialize in the way that they and over what time frame. Right? Because even when you say, I’m going to put $100 billion into re-onsuring chip manufacturing, you don’t turn on that 100 billion right away, right? That takes some time to filter in. And so I do think most of this is an economic tit for tat where they’re trying to raise revenue but also restore equilibrium on tariffs with various areas like the EU or countries like India. There are some punitive ones, and then there are industries that they’re really focused on trying to rebuild in the United States that they feel are a competitiveness and national security threat. 

Richard Cunningham [00:31:06] Good comments, guys. Thank you all. John, you said a couple of things that spurred two thoughts and we’re going to go to both of them. First, maybe while we’re talking tariffs and international relations, what about just what would you guys double click on as you look at the geopolitical landscape? Because I know that’s another factor and lever here that could just always throw a bomb in all of these plans of something kind of ignited in the wrong way. But as we think about Russia, Ukraine, what’s going on with Iran and the Middle East. Is there anything you have a particular eye on, Bob? 

Bob Doll [00:31:31] Yeah, so Donald Trump is desperate for a Nobel Peace Prize. And so don’t lose sight of that in what might happen. I know he said in the campaign trail, he can solve Russia, Ukraine in a day. Well, it’s taken a little longer than a day, but I do believe we will get some positive news there and we’ll stop shooting each other. You know, how much is that gonna cost? What happens to Zelensky in the process? How does Trump get there? But I think there’s gonna be calm there before too much longer. Same for the Middle East. I think… The U.S. has said to Israel, here’s a blank check. Go eliminate all the nasty boys. And when you’re getting close to finish, let’s talk about dismantling the nuclear power of Iran. I think there could be regime change forced by the West in Iran. And you know, do you do those couple of things and boy, things calm down. Doesn’t solve all the problems, but for a period of time. So I’m more than optimistic. I’m hopeful on both of those sets of conflicts. China’s a much more difficult one. I think personally that China has real economic problems. Too many 100-story buildings with nobody living in them, all financed on debt. Consumption, it’s getting a little better, but struggling. I don’t think President Xi is gonna last all that long. They have a massive demographic problem because the one birth policy, which is no longer policy became a way of life. And if you study the Chinese population, you know, fewer get married when they do it’s later in life. And if they have any kids, it’s one, if you have two, you have a big family. Their population demographers say will be half of what it is today by the end of this century. That’s a big problem. You cannot grow your economy if your population shrinking that fast. So. I don’t know what happens there. So you still have, you know, Russia, North Korea, China, and Iran. How do you solve that one? But on the first two, they’re a lot smaller and a lot simpler. Neither is simple. You get it. 

John Coleman [00:33:46] Yeah, Bob, those comments are awesome. And I think you’ve touched on all the right things. I actually am modestly confident that the Ukraine, Russia, we’ve seen the worst of it now and that it will calm down. I think there will be a negotiated settlement there. I think Russia’s tired of the war. I think Ukraine as a whole is tired of war and Europe is tired the war The key that Europe will focus on is not giving Putin a win in this to set a long-term precedent that’s bad. I think everyone agrees Crimea is probably a part of Russia or a disputed territory indefinitely moving out here. We’re not going to get that back for Ukraine, but then the negotiation turns into how long do they agree not to join NATO, what other territories remain with Russia, et cetera. But that’s kind of a prolonged diplomatic negotiation that I think is unlikely to flare up because I don’t think it’s in anyone’s interest right now for that to flare up further. Putin is facing his own pressures. I think China is much frailer than we think they are. I think they’re spying in the U S is actually a huge problem. That’s a political problem, but their population’s declining. Their financial system is in trouble. Their fundamental economy is in. Terrorists will hurt them worse than us, right? Because they don’t have a sustainable in economy. Long term, that makes me bullish on the fact that the United States can outcompete China and that China will have to face some sort of reforms at some point or decline. Short term, there’s always a big risk when a powerful country is at a frail point in its history that things could go wrong quickly and the best way to unify people when there are domestic problems is to create a foreign adversary. And so I think we have to be. appropriately cautious in the short term about what type of an instability there could be in China. And then the Iran question to me is a big one. I do think that Iran is at the heart of everything that’s happening in the Middle East right now. I think they’re probably weaker now than almost any time since the 70s. I personally believe that the U.S. is waiting for a good moment to let Israel strike Iran’s nuclear reactors and potentially do even more. I think Iran is much more of a loose cannon than China or Russia at this point. And if that spirals out of control, that could cause significant disruptions, particularly in certain markets, oil and natural gas, et cetera, but also even in shipping and things like that. So if I were to focus on one foreign conflict that I thought had the opportunity to spin out of the control in the near term, it would likely be the Middle Eastern conflict, just depending on if Israel gets the green light and if they hit Iran in their country. and then what Iran’s response to that is. And that’s quite difficult to predict. I think that’s an unsolvable area of uncertainty right now. But I do think China and Russia are not in as strong a position as sometimes they are painted to be. 

Bob Doll [00:36:28] You’re largely on the same page, and don’t forget that Nobel Peace Prize. 

John Coleman [00:36:32] and the Nobel Prize. I don’t know that they’re gonna give it to him, Bobby, even if he brings it out of peace. Thanks. 

Richard Cunningham [00:36:40] especially in light of all those tariffs. But hey, John, the second point you brought up when it was the geopolitical side of things and also from unpacking tariffs and whatnot and on-shoring, one of the potential long-term benefits is the on-shoring that could come to the US, also under this thought of less regulation and just the guardrails of business maybe being freed up a little bit. And on the backs of less regulations, possibly more M&A activity. And so that’s where I wanted to go next with you guys was, hey, we saw Core Weave IPO last week. We saw Google Alphabet have an enormous acquisition, $32 billion of whiz. Even though it’s been a really tough kind of stock market in Q1 since 2022, one of the lowest ever, you’re starting to see some rumblings of, hey, Q1 2025 was an incredible time for deal activity on the private markets in smaller time, kind of one of bigger upticks since 2021. So what are you guys watching as it relates to M&A and maybe IPO markets starting to heat up a little bit? 

Bob Doll [00:37:33] Surprised or I would have expected a whole lot more than we’re seeing you are right to point out some of the things you’re talking About but I think it’s I’ve used the word so many times It’s uncertainty that’s causing guys and gals that might otherwise do a deal to just step back But if we can get past this back to we take our pain and then we go to the game I think we could see a raft of deals that the administration will allow to happen and maybe even encourage to happen but we gotta get past the uncertainty first. 

John Coleman [00:38:03] And this is where I’m probably most bullish on long-term economic prospects or even midterm economic prospects for the United States. We have an almost insurmountable lead at the moment that is unlikely to go away in the next four years in technological innovation and business innovation. Europe has basically regulated itself into stagnation. Japan is in no position at the moment to innovate in the way that they did in the 80s. Korea has the most heavy collapsing demographic crisis in the world right now. South Korea does, at least in the major developed countries. And there are areas where there’s growth in innovation, Africa, parts of Latin America, et cetera, but nowhere that has the business base that the United States does. And we are right at the pointy end of the sphere on all the most important technological innovations right now, the best AI companies, we hear about threats from China, but they are in the United states. the best automation companies are in the United States. Many of the best robotics companies are in United States, and particularly if we have an era of deregulation that allows them to continue to innovate and build businesses. If it’s true that the immigration policy is gonna turn to recruitment on a meritocratic basis, which is part of this Trump gold card that they’re launching, they think they’re gonna get a million people to pay $5 million to get a green card for the US. Many entrepreneurs wanting to start businesses, for example. I think we could create an economic environment where we stay at the forefront of these massive long-term technological trends, and that would make me extremely bullish on the fundamental growth of the U.S. economy because the companies are able to start here that I think could be great for the U S. I’m with Bob. I thought we’d see a little more activity early on because the FTC certainly has a I think that’s still going to kick in, because I think there’s a lot of pent-up demand for that. It may just take some time. And so I’m a little bit bullish on the fundamental economy, particularly in the technology sector and in the innovation sector, so the hard technology and software, where we have a huge lead right now, and there’s really no global competitor other than China. And there are many reasons great entrepreneurs aren’t moving to China, right, and that they’re likely to come here rather than stay in Europe or stay in other parts of Have a great day. And if that’s the case, and if we can recruit them here, and if can maintain our lead in those various innovation areas, there’s some short-term labor problems that may happen to AI. I think that’s going to be transformational. But at the very least, our companies will continue to be successful, and our startup ecosystem will continue be successful. 

Bob Doll [00:40:33] John, you just outlined the reasons why the United States stock market has a premium valuation over every other in the world. Yeah, we’re having some difficulties at the moment. International is outperforming. But we’re not going to go to parity on a PE basis anyway, shape or form for the very reasons you said. 

Richard Cunningham [00:40:52] Well, hey, let’s pivot now to, I know a topic the three of us are all very passionate about. You two both lead faith-based or faith-driven investment firms. Love to hear about maybe that kind of one problem, one thing top of mind for you, Bob and your work at Crossmark and John and your lead in Sovereign Capital that you’re just really ruminating on as it relates to the faith- driven and kind of faith- based investing ecosystem. 

Bob Doll [00:41:13] You know, I would say, and I’m sure John’s going to agree with us and have more things to say, I’m now four years at Crossmark, the amount of time I have spent educating people, close my mind. So what I’m trying to say is, come on, let’s get on with it. A lot of people have not heard about what we all do for a living every day. Oh, I didn’t know that exists. Tell me more. And that’s whether it’s a financial advisor, a faith based institution. a faith-based individual investor and we’re all working overtime to get the word out and educate and uh you know i get frustrated richard the people that don’t see in the light bulb doesn’t come on and they don’t just 

John Coleman [00:41:56] Yeah, I couldn’t agree more with Bob, so I’ll take it a different direction, which is one of the things that motivates me as a faith-driven investor is I think people like Bob, people like the folks that work with us, we have a real optimism about the future because of our faith. We know where this all ends up, short-term or long-term, you know? But we also have a commitment to love of neighbor and to seeing people flourish. And one of worrying trends of the last… 20 years, 30 years, has been this consistent decline in flourishing despite increased prosperity, right? People are lonelier, they’re less happy. There’s a lot of fragmentation. There’s lot of social problems that have built up even though we’re richer than we used to be, you know, with some exceptions. And I think what I would love to see as faith-based investors continue to take the lead on how can we as investors, as partners to those who are building companies. try and solve not only the economic problems, we have to perform with excellence. That’s what we’re called to do. But in some small measure, contribute to trying to solve this giant macro problem, particularly in the developed world of this crisis of purpose and meaning of the loneliness and isolation that people feel of the way in which people are not engaged at work. How can we be contributors to creating workplaces that make people’s lives better, not worse, and reverse some of these trends that we’ve seen? I think there are some small green shoots on that front. I mean, Bible sales are up 25%. The Hallow app has exploded and there are tens of millions of people doing daily devotionals. We’ve even seen a ton of articles recently about Christianity suddenly making an appearance in Silicon Valley. I remember the HBO show, Silicon Valley, where people came out as Christian. It was like, you know, the worst thing that they can do. And now, you now, there are leaders in that space. And that’s important because the faith we share, but also because I think. That series of positions and beliefs and the tenets of that faith unlock something that can make people’s lives better and more fulfilling and happier, make families stronger. And my hope is that if we can get people off the sidelines, Bob, and if we get them to start thinking of their values as a part of their capital allocation, and if can use that capital to really transform the way that companies and real estate developments work. in a way that’s aligned with creating love of neighbor and human flourishing in the various things in which we’re investing, that we can unlock not only economic prosperity, but a deeper prosperity of the soul that I feel is lacking right now in so many parts of our world. 

Bob Doll [00:44:26] Amen. You’ve just described reforming capitalism. That’s what we need to do. There’s so many good aspects of it. And yet, for capitalism to work, it needs Judeo-Christian principles. And we can’t separate the two. We need to encourage a flourishing world underneath the rubric of, you know, we will love the Lord our God and all he stands for. 

Richard Cunningham [00:44:50] Well guys, this has been an awesome episode and Bob, we’re gonna do this. I mean, what a privilege to have you on the podcast. Take us home with some wisdom. What’s the Lord been teaching you lately in and through his word? 

Bob Doll [00:44:59] Yeah, I almost use the word answer to one of the last questions. Patience. I’m an impatient guy. I want to get it done yesterday when I quote know what the right answer is. So whether that’s personally or professionally, uh, professionally, it’s, you know, we already articulated it. How many years are we going to have to educate before people do it? You know, and look, people have to be convinced in one over in time to think I respect all that. And personally, it is the same thing. You know. When I do things at Crossmark, I think, how come we don’t have the answer now? How come we’re not moving the ball faster? So patience. God has a long-term time horizon and I gotta fit into it by relaxing and letting God be God and not forcing myself to try to be God. 

John Coleman [00:45:45] And this will be moderately self-serving. Patience is not a virtue that I’m blessed with, Bob. So I’m 100% with you on that. When you figure it out, give me a call. It’s not what I’m naturally blessed with. I’ll tell you, this is one promotional thing I’ll say is I’ve been watching House of David every week when it comes out. I think everybody should be watching House Of David. I think the change in culture is huge and it’s just so cool to see biblical stories come to life at a Hollywood level of quality. But it’s also made me reflect much more deeply on Samuel and Kings and on the story of David. And one of these themes is just how cautious we need to be to maintain humility and faithfulness, particularly as we’re successful. What brought down King Saul was, there’s a great line in the first episode where Samuel says, when you were small in your own eyes, God made you great. And now that you’re great in your eyes, you’ve fallen away from God. and the story of David and even Jonathan is really about keeping their heads on straight that they are servants of the living God. And that gives them both a confidence, but also a humility, a confidence that if they’re living into that mission, they can do anything and a humility that it’s not by their own strength, but God’s strength, right? Which can be hard sometimes. I mean, anytime someone’s successful, they start to get in their own head about being responsible for that success. And that’s always the seed of downfall, as it even was for David and Solomon, you know, later in those stories. And just watching House of David, that brings it to life so much for me, like, Bob, I’m so encouraged that someone like you is in the faith-driven investing ecosystem because you’re the best at what you do. You are a remarkable person in markets. You’re incredibly intelligent. You bring a professionalism to this industry that is desperately needed. But I also know you’re humble. And so… My hope is, for myself, that even as we begin to make strides, even as we’re able to accomplish great things, that we appropriately attribute that success to the one who gave it to us, and that we really just faithfully try and dedicate ourselves to his service and to the mission that he would lay before us, rather than kind of getting high on our own supply and starting to believe our own story or narrative and put ourselves at the center. So true. 

Bob Doll [00:47:52] I sometimes talk about when it’s money, well, it’s not our money, it God’s money. And one guy said to me recently, a believer, but I worked hard for that. And who gave you the brain power to be able to do the work hard? It’s all his. And the sooner we figure that out, the sooner can move the humility and away from the pride. 

Richard Cunningham [00:48:11] What is it? James 117. Every good and perfect gift comes from above. It starts there. Amen. Man, Bob Doll, John Coleman. What a great episode. We covered a lot of ground. I know it’s been a full and volatile Q1, but what a privilege to bring you guys in for some timely remarks and then some timeless wisdom as our friend Luke Rausch likes to say it there at the end. So friends for John Coleman, Bob doll, this is Richard Cunningham. Thanks for joining us for another episode of the FDI Podcast and we will catch you next time. 

Speaker 5 [00:48:36] We are grateful for the opportunity to serve this community and see listeners come in from more than 100 countries. Faith-driven investing can be a lonely journey, but it doesn’t have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers of questions you have and find great community as they do so. There’s no cost, no catch. In person or online, you can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for a monthly newsletter at faithdriveninvesting.org. This podcast wouldn’t be possible without the help of many of our friends. Executive producer Justin Forman, intro mixed and arranged by Summer Draggs, audio and editing by Richard Barley. Our theme song is Sweet Ever After by Ellie Holcomb. 

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ETF specialist for Praxis Investment Management Deirdre Gibson joins hosts Richard Cunningham and John Coleman in this month’s Marks on the Markets. The team tackles the market impact of Trump’s sweeping tariffs and reveal the surprising gap between what investors want and what advisors deliver. Gibson unpacks how Jesus’ engagement with sinners offers Christians a blueprint for transforming companies through investment rather than simply avoiding problematic industries. The conversation delivers concrete market analysis alongside practical insights on how investors can weather economic uncertainty while staying true to their values.

Please note that the views expressed by the hosts and guests are their own and do not necessarily represent the opinions of Faith Driven Investor.

Episode Transcript

Richard Cunningham [00:00:00] You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ-following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening.

Intro [00:00:17] Hey everyone, all opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies and securities discussed. And this podcast is for informational purposes only, and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham [00:00:46] Welcome back, friends, to another episode of the Faith Driven Investor Podcast. It is the month of May, which is pretty hard to believe, honestly.

We’re talking marks on the markets. I’ve got the one and only John Coleman with me in the podcast studio. John, we’re about to say hey to our guest, Deirdre Gibson. Before we do that, how are you, man? What’s new?

John Coleman [00:01:03] Richard, never a dull moment in markets today. You know, there are quarters where it’s like super relaxed to be an investor and there are quarters where its not.

And we’ve started talking about this all year, but at least we got plenty of commentary for the Marks on the Markets episodes, Richard. I feel like we’re never gonna be at a loss for content.

Richard Cunningham [00:01:22] No doubt, 2025 has brought it. Trump 2.0 has brought. We hit it last time in length with Bob Doll when we were doing Marks in the Markets with our tariffs. And we’re probably gonna get into a little bit more of that today.

I know you’re well briefed on the subject, but just for listeners out there, we’re gonna get in to a lot of the market stuff on the back half of this episode. Deirdre Gibson’s here as well to provide some market commentary. She’s from Praxis Investment Management.

But before we do that, Deirdra, you have done a couple of really cool things lately that we wanna get into in terms of a talk at KA, some of the research coming out of your firm at Praxis. But before we go anywhere there, how are you welcome on to the FDI pod? What a joy to have you with us for your first official Faith Driven Investor podcast.

Deirdre Gibson [00:01:58] Well, thank you. It’s absolutely a delight to be here.

Richard Cunningham [00:02:01] Awesome, and you’re coming to us from Denver, kind of Littleton, just somewhere outside of the Denver area.

Deirdre Gibson [00:02:07] Yes, Denver, Colorado, the southern suburbs to be specific. Yeah, so I’ve got a fantastic view of the Rocky Mountain Front Range outside of my window as we speak.

Richard Cunningham [00:02:17] Not bad. Not bad and then your job title says you’re an ETF specialist and one of the national sales directors at Praxis. So I think you need to set the record straight for just everyone out there. Can you tell us in layman’s terms the difference between an ETF and a mutual fund?

Deirdre Gibson [00:02:31] Oh, yes, I love this question in part because for so long, I worked in finance or finance adjacent and I, I thought really that ETFs were basically just another kind of mutual fund.

So it is kind of in the name, right? You start with the fact that they’re traded on the exchange. Okay, why does that make a difference? Well, if you’re buying shares of mutual fund, you hand over a lot of cash will pretend it’s a lot of cash. And that mutual fund manager has to do something with that. They’re gonna turn around and buy some of the shares of the underlying stocks or bonds or whatever’s in that mutual funds.

And likewise, when you wanna sell out of your mutual fund, they have to turn and sell some of underlying shares typically. And especially, you know, when do people wanna sell out often when things aren’t going so well. So you’re often, it’s not such a great time, but all of those buying and selling transactions are taxable transactions.

Whereas, with shares of an ETF that are on the exchange, You know, it’s all secondary market. Everyone’s buying and selling from each other and from market makers. And all those shares are put there by a third party. It’s called the authorized participant, the AP.

And that third party basically puts together the recipe of the stocks or bonds or whatever’s in that ETF. And they trade it to the issuer in exchange for a bunch of shares of the ETF. That trade isn’t taxable. And that allows portfolio managers to do all kinds of things to really avoid those tax implications.

So there’s tax benefits, there’s liquidity benefits, there’s transparency benefits, which I think are super interesting from the point of view of a values-driven or faith-driven investor that you know day by day exactly what you own and how much of it.

And then, you know, a fourth one that ETF folks don’t often talk about, but that’s kind of close to my heart is that… The minimum investment is a share, or for some ETFs on some platforms, a fraction of a share.

So, you know, if you’re opening up an account for your kid who’s got $5, they might be able to get a diversified portfolio on day one, which is pretty special. I think, you now, I have a heart for people who are trying to get started in investing, and you know I think that’s not often who the industry is set up to help, but I think it should be, I’d like it to be, and so that’s one thing that I like about ETFs just for myself.

John Coleman [00:04:42] Yeah, what’s interesting, before I joined Sovereign Capital, I worked at a big firm called Invesco for a period of time, and when I first joined, the ETF was already pretty cemented. This would have been 2012.

We had bought a firm called PowerShares at that time, which just became Inveso ETFs, and the ETF structurally just has so many advantages, I think, relative to the mutual fund structure. I know both kind of coexist today.

You highlighted it, the liquidity. The ability to create new ETFs at reasonably low cost that can index the market in different ways or provide different perspectives on the market. It’s just become a really flexible financial instrument that the average person can access that can create differentiated exposures that would have been really challenging, I think, in the old model and can often do so in a less expensive way than a mutual fund could.

So it’s a super fascinating instrument. It has been growing like gangbusters for 20 years now, I guess. I’m interested to see how much room there is to run. Maybe you know, I don’t know what ETF penetration of public markets is today, and now there’s direct indexing and things, but it feels like it’s still a growing instrument right

Deirdre Gibson [00:05:51] Oh, for sure, absolutely. I think it’ll keep growing for a long time, especially because, I mean, you mentioned the flexibility and that’s another key difference.

You can put virtually anything into an ETF wrapper. And all of a sudden, regular retail investors, including, you know, your five-year-old with $5, can access options, alternatives, like real estate, all kinds of underlying commodities, futures, leveraged. I mean all kinds of products are available to the average investor that were not available previous to ETFs.

And I think that that piece is really going to grow, which of course, you know, it’s a double-edged sword. Because if you think that an ETF is just going to be your regular vanilla stock and bond fund, and you haven’t looked under the hood, even with these leveraged ETFs, you now, they have a certain timeframe to them.

And if you’re not rebalancing your portfolio on the same timeframe, it’s not like a 2X ETF is going to give you double over a month if their time period is meant to be daily. You really have to understand what’s under the hood when you’re looking at some of the hairier ETFs, kind of the spicy ones I call them, you know? Make sure, like, if you’re not ready for spicy, vanilla’s delicious, absolutely, stick with vanilla,

Richard Cunningham [00:07:02] Spoken like an ETF specialist, which I love. And so, Deirdre, that was actually quite a bit of the genesis of you coming onto the FTI podcast is a crowd that knows all about ETFs and mutual funds is our friends at Kingdom Advisors and the thousands of advisors that are tied up in that community.

And this year you gave a pretty seminal talk at the KA conference. And it was our good friend Amy Minnick who reached out to me and was like, hey, you all have to have Deirdra on the FDI pod. The conversation she led at KA was just moving.

And so I wanna give you a couple minutes to kind of just preview that. We’re not gonna spend too much time here, but we’d love to hear a little bit about you and just kind of that conversation you led at Kingdom Advisors back in kind of early Q1 of this year.

Deirdre Gibson [00:07:39] Yeah, it was such a privilege to do it. And I really appreciated actually that the team at Praxis, you know, I came and I said, I really want to talk about this is really top of mind for me. And they said, you go for it, even though it felt perhaps a little bit dangerous, which is perhaps I shouldn’t have because we were talking about the life of Jesus, like maybe I don’t know, is Jesus dangerous perhaps in a way.

But part of it is, you I’ve been in this faith driven investment world for years and years now and I think a lot of us, when we look at the Bible to try to figure out what does it say about money, we look it, what does the Bible say about money, obviously, logically, like that’s a normal thing. And there’s a lot to be gleaned from that. There’s a life that we have glean that from that, but I felt like there was also a lot to be gleamed from just looking at the life of Jesus.

And so what I mean by that is essentially in faith-based investing, there’s three verbs, three actions you can really do. One of them is avoiding investments in companies or products or activities that are antithetical to your faith, not aligned with your values, all of that, right? One of the is to seek out those companies that have extra impact and blessing on the world. And then one of them is to engage with companies to make things better.

And I think the easiest one for most people to understand is the avoid side. Like that’s simple. And it’s simple to practice. Many forms of it are simple to practice because a lot of times it’s just like, Okay, this is a cigarette company. The thing they make is cigarettes. It is a product that kills people when used as directed. Like, this a simple thing.

Whereas, you know, some things can be more complicated to understand it takes more analysis, more nuance. It frankly costs more money to pay for that analysis and nuance. So I think we head towards the avoid side. And actually this relates to the research you mentioned. So remind me, we’ll come back to that connection.

But I think that the engaged piece is really a lot of what we see in Jesus’ life. So the talk that I gave at KA really focused on Jesus engaging with the woman at the well, Jesus engaging the woman who was caught in adultery, and Jesus engaging with the women who poured out.

So there’s actually more than one woman who poured perfume on his feet, right? But this was in Luke, I wanna say chapter seven and eight. So John had sent his people to say to Jesus, Are you the one? And he had said, tell them what you see, you know?

And then afterwards, Jesus is talking, presumably to the disciples or maybe just to the people who are standing there. And he says, John came neither eating nor drinking. And you said, oh, that guy has a demon. I’m paraphrasing slightly.

And then the son of man came eating and drinking. And you say, he’s a glutton and a drunkard, a friend of tax collectors and sinners. And then the very next story Luke tells, he gets invited to the house of Simon the Pharisee and a woman, a sinful woman shows up and spends the whole time like weeping at his feet, washing with, you know, pouring the perfume, wiping with her hair.

And Simon is sitting there thinking like, what is wrong with this guy? He’s letting this sinful woman touch his feet and all this stuff. And then he sort of gently points out like, Simon, you were supposed to give me a kiss when I arrived, you didn’t do that, but she hasn’t stopped kissing my feet. You were supposed to give me water to wash with, but you didn’t do that. But she’s been washing my feet with her tears. Those who’ve been forgiven much, love much.”

And so it’s just like, was he a glutton and a drunkard? No. Was he a friend of tax collectors and sinners? Oh yeah, totally. Guilty as charged, if you can call that guilt, you know?

So it really started to speak to me about what it means for us to engage in the marketplace. And when it comes back to this avoid… Seek, engage thing, there’s only so much engagement you can do with a company you’re not invested in.

Like you can write a letter, you can put something in the news, but what are you gonna really do to change somebody’s hearts and minds? And is it really just like, we wanna change their behavior, but also I wanna change people’s hearts and minds for Christ.

Like I want them to know who Jesus is. I want to be encountering Christians in the marketplace behaving as Jesus behaved with this powerful love and compassion and grace. And also, yeah, the go now and sin no more, but in this way that’s not pharisaical, you know? I think he set the example, and I think there’s opportunity for us as Christians in investments to do that with our investments.

John Coleman [00:12:03] Yeah, for sure. I mean, Deirdre, one of the things we focus on, so, you know, in my day job, I work at Sovereign’s Capital, not always FDI. And our mission as a firm is to love God and love our neighbor through investing.

And one of propositions there is that the gospel is always more about what Christians are for than what we’re against. Like, you mentioned Jesus always engaged with sinful women. He engaged with sinful everybody. That was one of hallmarks of Jesus, So it’s not surprising that they were all. Sinful as well, and we all are, right?

But the idea is that the gospel is about how we help people flourish, how we love our neighbor, how we lean into others, and how Christians can be salt and light in a world that has struggles.

And one of the things that’s embedded within that, I think, is if all we do is avoid, we actually lose our seat at the table. We lose our ability to lean into that.

And so two things we’ve been focused on. One is how do we create investment strategies that actually highlight companies that are creating human flourishing, that are leaning into this idea of love of neighbor? How do we funnel capital to entrepreneurs and business leaders who have this gospel mentality in the way they work with others?

And then in the case of companies where, that’s not the case, where the leadership is different or where their focus is different, how do use our seat at the table through capital to speak into those, right?

We set up an advisory firm called Prosper Align, for example, that’s intended to do corporate engagement. And proxy advisory for folks and the idea is when you have capital you have the ability to influence people but Christians have often lost that influence and a story I love to tell is you know in 1971 the very first kind of activist investor in the modern era was when the Episcopal Church engaged with General Motors over apartheid South Africa.

So at that time, the Episkopal Church held something like 0.03% or 0.003% of GM stock, but they opposed that company’s operations in apartheids South Africa because they felt like they weren’t abiding by human rights.

So they did the shareholder proposal at a board meeting to try and convince the company to take a stand against the acts of apartheid South Africa. They failed resoundingly. They were voted down by all the other institutional investors. I think they got two or 3% of the vote.

But their only ally was GM’s lone blackboard member who just happened to be the pastor of a Baptist church in Philadelphia called the Zion Baptist Church. And his name was Leon Sullivan, and within a year after that, there was this movement to push all of corporate America to change its practices in apartheid South Africa. They actually called them the Sullivan principles after this GM board member.

And I think the church has lost that ability to kind of really speak into things, I think, in a constructive way where we’re offering solutions. And this idea that we can use our capital to engage, I is one that’s costless for Christian investors.

We have a voice by virtue of holding shares of these companies and our ability to then use that voice to try and put forward the values that we know to be true, the kind of values that we think Jesus would embrace, is a missed opportunity too often and one that is a huge opportunity I think for people, whether it’s investment managers or institutions or individuals now.

Deirdre Gibson [00:15:19] Yeah, absolutely. It’s so interesting. One of my devotionals over the weekend was talking about how Paul, speaking to the Greeks in Athens, I think, he had been walking around seeing all these temples everywhere to all of these different Greek gods, and he saw one to an unknown God.

And then when he was speaking, he’s saying, hey, you guys have this temple for an unknown God. Like, let me tell you about this unknown God, and this devotion was all like, it was from the dwell app, in case anyone’s wondering, really great app.

And it was really How he’s using this to build a bridge across, this bridge is something that other people can come across that could lead to their eternal life. That’s amazing. Let’s not lose that opportunity by coming in with hostility where there are bridges that we could build instead.

Richard Cunningham [00:16:03] And the model I’m always reminded of is I’ve got a good pastor buddy here in Austin, who says, man, I am jealous of the people who get to go to work every day. He goes, my chance to interact with non-believers and do this engaged Deirdre that you’re talking about is at the gas pump.

He goes I spend all day long inside the walls of a church talking to other Christians. And he goes, I just long sometimes to just kind of actually be out on the front lines. Powerful.

I just want to land the plane on this real quickly before we move on to that research. So what is maybe the practical application or how are you guys thinking about this or reconciling this? Because if the desire is to engage. What do we do with the cigarette company?

If we’re shepherding and stewarding other investors’ capital in the seats that we all sit in on behalf of other people and we have a fiduciary call, how have you thought about that Deirdre?

Deirdre Gibson [00:16:45] That’s a great question, Richard. I have heard some folks say, well, you should just own everything, but nobody I know has unlimited time and resources and energy to engage with all of the companies and perhaps not with all of the company’s on all of topics.

So what we at Praxis do is choose engagement themes and these themes last for multiple years. So my colleague, Chris Meyer is the lead engager in most of our company engagements, although our team is growing. So that may change in the future.

And he told me that it takes two years. Typically to build up that level of trust when you have a conversation going. And then once you have that trust built up where they know, hey, you’re not just pitchforks at the gate. You’re actually showing up. You care about this company.

You are invested in it. Your clients benefit from the company’s wellbeing, but you’re bringing to them these issues that are also risks for the company. I mean, that alone, like just having the patience to show up for a couple of years until the trust is built is really powerful.

Now, I had the opportunity to have an amazing conversation with Chris and also with an advisor who’s been thinking about these things really deeply lately on Friday. And a big part of the conversation was, how do you know, like kind of like you said, it’s a really important part of the process.

So we’d screen out a bunch of companies where like, we’re going to shake the dust here. This is not the time and place for us. You know, again, I don’t think we’re gonna convince a cigarette company to stop selling cigarettes like that’s. Not our jam. Maybe it’s somebody else’s, like, I hope somebody else is called to help them transition to hemp clothing or something, I don’t know. But for us, that’s not it.

And so we choose the themes where we can become experts, where we could partner with others. And so one of those themes has included the topics of child safety online. And I think a lot of us have seen some really shocking stuff. And it’s everything, right? It’s child sexual exploitation, it’s also bullying, It’s also mental health like there’s a huge mental health crisis among Gen Z And all of that stuff kind of falls into like, what’s going on with children and young people online.

And the conversation you were having with Chris, like part of the conversation, the question was being asked was like, at what point do you give up? As I’m listening to Chris talk about how he approaches this, and also as I’m thinking about my own background, which I spent two years as a full-time, like fighting human trafficking, that was my job.

And so I have like deep somewhere buried in my brain, a lot of stories I’ve really tried hard to forget, truly traumatizing stories about things that have happened to kids, to young people, around human trafficking and stuff like that.

And in my mind, like, well, there’s no world in which these companies stop existing or stop dramatically influencing. Our society and our future and the world that our kids are gonna live in. So like, I don’t want him to stop. I desperately want him to keep those conversations going as long as necessary. I wanna bring more people to the table.

For me, that issue, like, okay, with cigarettes, that’s a whole thing because they have practices of targeting children in third world countries where they are not sufficiently protected. But we can at least pretend to ourselves for a moment that people have a choice about whether to smoke or not.

But I don’t know that today people have a choice about whether to go online or not. Like that’s not how we can live our lives very much. Even Chris himself who lives on a homestead like he built his house with his hands.

So yeah, I hope that he never stops and I hope others join us because it’s so important that we have a seat at that table. Children’s lives depend on it.

Richard Cunningham [00:20:11] Well, thank you for unpacking that. That’s helpful framing. And now I want to kind of pivot into kind of speaking to Chris, the Praxis firm more broadly is this research that you all put out and this will be kind of our last topic before we go markets.

And it’s pretty staggering on just when we’re thinking about the financial advisor client relationship, something that you’ll dove into was the client’s desire to have these faith and values alignment types conversation with their advisors.

This exact thing we’re talking about, is it negative screening? Is it leaning in to engage? What is the advisor doing at the firm level to do such a thing and the client’s desire for that convo, but an advisor’s apprehension to have the conversation. So give us a little bit of the kind of the primer on the research and what you guys found.

Deirdre Gibson [00:20:50] Yes, yes. So just to set the stage, the survey was filled out by over a thousand individual investors. We screened for people who are actually making investment decisions in their home, either alone or, you know, with their partner. But everything else was, you know, a representative sample of the American public, right? And then 400 plus financial advisors.

And around, I think, 67% of the investors are identified as being religious or spiritual in which, again, that matches up with the Pew Research is kind of the gold standard of like, you know, looking at, at least among secular institutions, I guess, looking religion in American life, and likewise with advisors.

But here was the thing, and you mentioned it, in several different ways that the question was asked, investors repeatedly said, it’s really important to me that my advisor understand what my values are, understand what my preferences are, give me information, give me options about how I can align my investments with these. And consistently advisers. Underestimated how important that was to investors.

So in the ranges, I would say, of investors saying like 70% to 85% were saying that that’s important and advisors more close to 50% to 60%. But only 9% of advisors said they initiate that conversation. A third of advisors saying they never initiate that conversation. They just don’t have that conversation at all. Typically it’s the investor bringing it up.

And now here’s a really interesting thing to me. That’s more investors than describe themselves as religious. So faith-filled investors, but also regular people who just have values really want to see those values at work in the world. And they want to them work in their money. And that’s like something, they’re coming to the advisor for expertise and the advisor is holding back from giving it. So then the question is why?

Richard Cunningham [00:22:44] Yep, absolutely. That’s what was top of mind for me.

Deirdre Gibson [00:22:47] Right. So a best guess based on the data, you know, is that advisors really want to come up with the best financial solution. Like they are obviously, it’s their job to be concerned about the financial outcomes and they’re concerned that the faith driven opportunities aren’t as good from various considerations.

I think in some cases, that’s a misperception. And in other cases, I think it’s a mis-perception about what the alternative is, because And this was one of the parts of the research that we thought was really surprising. A lot of investors, if their advisor isn’t giving them these options, so investors are going off and doing this on their own.

Even investors who have a financial advisor are keeping money on the side and going off in investing on their on. And as far as we can tell, what are they investing it in? Sometimes mutual funds and ETFs and things that you wouldn’t expect, but sometimes things that they, they check the box private equity.

And it had a description that was like direct investments in private companies. And I don’t think that most regular retail investors have access to private equity, but I think they are talking about direct investments in private company, which could be small companies, like small businesses.

So I’m even wondering if it’s like, years ago, my friend Jonathan, who asked me if he should pull all of his retirement savings out of his, he worked for a ministry. He was very upset that they didn’t have any faith aligned options in their 403B. And he was like, maybe I should just pull it all and invest in this business in my neighborhood that’s doing these great things. I was like please don’t do that, Donovan. I want you to retire well and I don’t think this is gonna get you there. And so I wonder if that’s what people are doing, you know?

John Coleman [00:24:24] Yeah, there’s definitely what we find as we talk to people is there’s such latent demand for this, but often clients are very restricted by the platforms with which they operate with the financial advisors.

And one of the things I think that’s been most constraining is that the larger platforms in particular, wire houses, et cetera, don’t really allow their financial advisors the flexibility, at least on the investment side, to interfaith driven investing. Now. In terms of planning, in terms of life advice, I think there’s greater flexibility for that. I think financial advisors serve as coaches for financial decisions.

But the frustrating thing we see is people get fired up about faith-driven investing and then they go to their advisor and they’re at a wirehouse and they say, we really have no options for you. Or you can get in a Catholic screening fund that follows the bishop’s guidelines that kind of negative screens some of your public equities, but that’s it.

And so as people lean into the space, what’s the solution for that? Because institutions are able to move right now. Often they’re intermediated, but they have a little more discretion. Ultra-high net worth, high net worth individuals who are willing to go off platform have the ability to kind of allocate to funds, to investment managers that they’re fired up about.

But there’s this chicken and egg right now in the financial advisor community where most platforms effectively prohibit. Their clients from investing in things that are aligned with their faith and their advisors are stuck. They don’t really have the opportunity. So if they get someone excited about it, often their only opportunity is to go off platform unless it’s an independent advisor of Blue Trust or an Eversource or someone like that who is explicitly kind of faith oriented that has more flexibility as an RIA to get into those sorts of products and has a motivation to do that.

So what breaks that dam, so to speak, because most advisors do sit on broker dealer platforms or wirehouse platforms that effectively won’t allow them to participate in the faith driven investing movement right now. What’s the solution to that?

Deirdre Gibson [00:26:20] You know, I would tell those advisors, don’t be afraid to be the squeaky wheel. Don’t underestimate the power of your voice asking for those products over time because that is exactly what’s brought those products on board with other platforms.

And I think there’s a case to be made that clients at wirehouses are expecting the best. They’re expecting the fullest spectrum of the best of what’s available out there. In a lot of wirehouses, they know that they have the clout to make certain demands.

So speaking from an issuer standpoint, they can demand a certain amount of pay to play. They often require that you have a sales team making X number of phone calls and visits and emails to your advisors per year, which is hilarious to me, because I feel like a lot of advisors don’t really necessarily want that. But they call it product support. They want that product support, they want it shown that you’re selling the product.

And, you know, a lot faith-based Issuers are smaller, have a smaller sales team, maybe a smaller marketing budget, but that doesn’t mean that the product isn’t quality product.

And I feel like with demand from the advisor base towards the national accounts folks at the wire houses, I think that they would see that, hey, over time, maybe there’s an ability to bend those rules. Like a rule that you made is a rule that you can break in order to bring your clients the best of what’s available, including within the faith-driven space.

Richard Cunningham [00:27:45] Well, it’s important that you guys are putting out research like this because I think it’s this type of stuff that shows, Hey, there is a business case. Also, if you’re willing to be the squeak, we’ll be the advisor that hangs up a shingle and says, Hey we actually have a competency, a willingness to go carve out that opportunity for you. Mr. And Mrs. Client to gain access to the FDI space is huge.

It’s friends like Tim McGreedy. He were out there saying, Hey now I’m actually going to provide the research on the quality of the product. And then it’s issuers who are putting forth as we were just talking about. Excellent competitive product as well. And it’s kind of a multifaceted approach.

And I think we all just kind of pray that this is a tide that raises all boats. And so thank you all for this research. I think it proves a very important business case out there for advisors to keep leaning in.

All right, friends, well, in the time remaining, let’s make a pivot and let’s go markets. John, I want to start with you because you put out just this morning. So we’re recording this on May 5th. It’s a Monday. So I just want to make the disclaimer that anything we say today. Just given the speed and velocity of headlines and volatility that we’re experiencing by the time it releases on May 12th. Could be out of date here in a week’s time, but John, you put out a wonderful piece this morning, just a full-blown deep dive on tariffs.

And I think if we’re gonna have any type of market or economy conversation, kind of need a level set on where we are in the tariff situation. A lot of just kind of getting in the head of what is the Trump administration thinking, help us understand that and kind of set the playing field for us here.

John Coleman [00:29:01] Yeah, absolutely. So obviously quite a lot of my time today is thinking about tariffs and the impact on the economy broadly, as well as individual companies that we work with.

About three weeks ago, I put out an explainer on what I thought might be happening in the administration, what their goals were, and what tools they were thinking about using in pursuit of those goals.

I think what we’ve seen over the course of the last month, so Liberation Day was just about a month ago, in early April, Liberation day being the day that President Trump announced sweeping tariffs that were basically benchmarked against the trade deficit that we had with different countries.

So he has been a long-standing advocate that we should reduce our trade deficit, that we should try and re-onsure American manufacturing, both for our national security and for the benefit American workers, and that’s something he’s been talking about for around 30 years. So this was part of the campaign promise, but I think the scale and speed at which he tried to implement these tariffs and how aggressive they were was probably a surprise to many people.

So in the intervening month, what we saw was financial markets initially took a heavy dive. They went down quite substantially. They’ve actually returned to above their pre-liberation day rates right now. So the stock market is back up where it was before liberation day, But there continue to be a lot of concerns about the economy.

And what I might do is just lay out some of those concerns, lay out what I think the Trump administration is trying to accomplish. And then what I wrote today that Richard is referencing is what I think might be a soft landing for the American global economy that would help to achieve the Trump administration’s goals, but do so in a way that’s not economically damaging.

So what we’ve witnessed over the course of the last month is a worrying set of factors that are playing into the economy. First, the stock market was down and then it was back up. But the stock market is really just responsive to underlying economic principles.

And I think what everyone is watching right now is whether the tariffs create a greater possibility of recession, both because they slow down general economic activity, but also because they negatively impact American companies.

So if you’re a small business and you source 80% of your goods from China Suddenly, the cost of those goods went up 145% overnight, with some exceptions, right? If you source your goods from Italy, those might have been just stopped in port, at least they went up 10%. Some of these foreign suppliers are rerouting their shipment, so there’s a real danger that it causes an economic slowdown.

As a response to the tariffs, many foreign governments and even domestic participants began to sell off treasuries, so we saw rates going up rather than decreasing, which was, I think, the policy outcome that the administration wanted.

And tariffs are inflationary, right? Meaning that if you raise the cost of goods because of their input costs, because of tariffs. Naturally, those prices go up, that’s inflation.

And the problem is if you get in a situation where you’ve got inflation, you’ve got a general economic slowdown, you got rates rising, and you have the economy kind of in a state of dysfunction, you get what’s called stagflation, which is actually what happened to Japan for about 20 years that basically killed its economic growth. And so I think that’s been the concern in people’s minds.

The Trump administration seems to be fully aware of that right now. Scott Besson has taken to making public comments that are trying to ease some concerns. President Trump has done so as well, which is one reason I think markets have recovered.

And I think in the intervening month, we’ve gotten greater clarity in what they’re trying to accomplish. And I it’s four things, primarily. The first of those is, as I said, President Trump wants to reduce the trade deficit, and he wants to re-onshore manufacturing.

If you look at his electoral coalition, it really was a coalition of the working class this time. Even many union supporters actually came out for a Republican president, which was quite unusual. And so he has this belief in re-onshoring manufacturing, eliminating the The second is they want to level playing fields with other countries.

What they’re right about is for decades now, the United States has actually often allowed other countries to raise their trade barriers, whether that be tariffs or whether that be prohibiting U.S. Companies from operating. And that’s true in Canada, it’s true and China, it is true in the European Union elsewhere.

But America hasn’t raised its own barriers by and large. And so they get a sense that that’s unfair, that it’s actually unfair barriers to American producers who would like to operate abroad. And so, they wanna institute this principle of reciprocity to try and lower foreign trade barriers.

The third is that they’re trying to secure critical supply chains. I think many people were made aware of those during COVID, where we were aware suddenly that we didn’t have access to pharmaceuticals or medical devices, because many of the supply chains for those were overseas.

And even more concerning were often in adversaries like China, who could use those supply chains as negotiating leverage. And so in certain sectors that they view as critical, they want to make sure America has secure supply chains, and the fourth is a really target.

Attempt to change most of our allies position towards China. You know, China is the primary geostrategic adversary of the United States right now. China is a dictatorship. It’s a communist dictatorship.

And I think there’s rising concern that they have the economic and military leverage in order to put free countries like the United states into a corner. And President Trump sees this as an opportunity to try and mitigate or diminish the influence of China and its government on international economic and military or strategic affairs.

With that in mind is those goals of the Trump administration, because I don’t think those are going away. They’re very committed to that path. What would a soft landing look like?

And I laid out just a few places, and then I’d love Deirdre to comment as she sees it as well, where we could implement those policies, but do so in a way that potentially leads to a soft-landing both for the American economy and the global economy.

The first step in my mind is to assure that the tariffs are modest and genuinely reciprocal. And what I mean by that is modest, a five to 10% tariff probably isn’t that distortionary. It causes some inflation because it’s a part of the supply chains that are coming in. It is an alternative source of tax revenue, effectively like a consumption tax.

But you could probably bear a 5% to 10% tariff on almost all goods coming into the United States. And if it were relatively egalitarian, that might cause a little inflation, it might cause a little slowdown, but it would give American companies an advantage on the edge to price compete with foreign producers of supplies, and it would provide an alternative source of taxation effectively to complement income taxes. It would serve as a consumption tax.

And then if they were to make it modest and genuinely reciprocal, we could simultaneously lower foreign barriers to domestic producers. And what this means is if Canada, for example, has a variety of restrictions on US financial institutions right now, making it practically impossible for US banks to operate in Canada, that is an unfair barrier to American banks if we allow Canadian banks to compete in the United States.

If the Trump administration said, we’ll be willing to maintain our lower tariff rate, we’ll willing to maintained our lower barriers to entry for Canadian banks, but you have to lower your own barriers to American competition, that’s reciprocity, right?

In game theory, it’s called tip for tap, meaning that we really just do what other countries are doing in the pursuit of lowering their barriers. And so I think the first step is to cement that with the vast majority of countries and the vast of majority of products, what we really want is a modest tariff to achieve those goals and to implement true reciprocity where we are willing to lower our trade barriers as long as other countries are willing lower theirs and if they keep them high, we’re going to match those. Right? Meaning that we are just going to try and keep a level playing field with that.

The second component of that in my mind is to identify very clearly what industries we consider critical. So if one of the goals was to secure critical American supply chains, we need to give the economy clarity on which supply chains are critical, where we’re going to focus our effort to re-onsure or what’s called friend-sure, meaning move it to allied countries or countries that we feel are secure.

There are obvious categories for this, pharmaceuticals, medical devices, everything associated with artificial intelligence and computing, so things like semiconductors, sensitive national security inputs, et cetera.

But until they release a list of what these critical products or critical categories are and how they’re going to treat those, it’s very difficult for business actors to where they genuinely are going to have to switch those supply chains. Or make the investment to build those out in the United States and I think clarity around those industries would also give American companies clarity enough to invest to build their supply chains onshore or for insure those.

The third component of that in my mind is to give similar clarity on which partnerships with friendly or allied nations. We will look to turn to as we move away from China, so that as American producers are trying to build substitute supply chains outside of China, that they know which countries the United States is going to have lower trade barriers with, or we’re going to a consistent trade relationship.

That might be the Philippines, it might be Brazil, it might Mexico, it may be Canada, but as soon as we can clarify those, that gives the admin the ability to build mutually advantageous trade relationships with those countries and to give American businesses and foreign suppliers the clarity to relocate their supply chains, which might reside in China or other nations now and build out capacity in those countries knowing that that investment will pay off.

The fourth component in my mind, there are only two more, is a well-articulated approach to China, Richard. So I think we need to be very clear about what our approach to China is.

And I would bifurcate that between the critical industries we just mentioned, where I think on-shoring is an imminent need and something we need take action on now, versus non-critical industries.

So if you’re buying socks or tennis shoes from China, for example, those are not as critical as defense technology or semiconductors. And if we want to tariff those goods, my advice would be to stair-step those tariffs in so that American companies and other foreign suppliers have the ability over years, not months, to move their manufacturing supply chains to more advantageous countries like Vietnam or the Philippines so that we can secure those. Supplies.

And if the administration would give us clarity on what its intended approach is with China and give us time in non-critical industries to face tariffs or trade barriers in over a period of years, that might give American companies the time and breathing room to switch their operations without dramatically increasing costs.

And then the final component that I think might play a part in this. Is if tariffs are a stick that you use to punish foreign countries that are erecting their own trade barriers or to force American companies to switch their supply chains, you need to complement that with the carrot of incentives for our companies or others to invest in reshoring those supply chains or moving them to friendlier locales.

Scott Besant has hinted at some of this. He hinted that there is going to be favorable tax treatment, accelerated depreciation schedules, for example, for Americans who relocate manufacturing here on the equipment necessary to build that, President Trump has solicited investment from private companies like NVIDIA and Apple, foreign countries like Saudi Arabia into the United States that hopefully will go towards reshoring some of that capacity, but they need to think through the tax incentives, potentially credit lines that allow businesses to pay for the capital improvements they need, to reshore manufacturing capabilities, different types of subsidies or incentives that make it more possible for U.S. Companies to a return on investment.

For switching those supply chains, whether they are onshore here in the United States or in friendlier nations. And so if we could do that, if we can take a more modest and reciprocal approach to tariffs If we could clearly identify critical industries, if we could identify the countries that will friend short with us, where we’ll have an advantageous trade relationship, and if we can clarify the strategy with China and then provide positive incentives, I think we could potentially see an outcome to this tariff situation that doesn’t lead to the type of economic difficulty that many analysts are predicting right now.

Richard Cunningham [00:41:42] Ladies and gentlemen, John Coleman on tariffs. We might need to package that and just make sure the Trump administration sees that. That was robust.

John Coleman [00:41:49] That’s Richard’s nice way of saying, I talk too much, Deirdre, so.

Deirdre Gibson [00:41:53] No, that was incredible. And I think Richard is right, because the administration is paying attention to the markets. That much is clear, and I think a lot of us appreciate it.

Richard Cunningham [00:42:02] Absolutely dear how would you respond I mean there’s endless there that you could you know threads that you can pull on But what is in particularly you know kind of top of mind for you as you hear John and unpack that

Deirdre Gibson [00:42:11] You know, a few things are top of mind and one of them is just, you know, we’ve got all of the economic data that we’ve been looking at, sort of the hard GDP data and then all of the consumer and investor sentiment data. And those, the hard to stop data are telling very, very different stories. You know? We have a functionally resilient economy and a lot of people who are scared. And when you have that kind of divergence, that can be a setup for either opportunity or surprise.

So I think it’s, for one thing, a really good moment for investors to be paying attention to consumer behavior as well as economic indicators, because I think in a lot of sectors, that’s really what drives earnings.

I kind of, maybe a personal example of this, but my five-year-old is trying to earn money for a small motorcycle type device. And you know, five- year-olds don’t earn money quickly. And I was looking at it and looking at the news and thinking… This thing’s gonna double in price before he gets there. Maybe I should buy it early and just hide it in the basement until he actually like finishes earning the money.

And then I literally the next day was reading the Wall Street Journal and like, oh, everybody else is having the same thought. Everyone else is bringing in the goods and services, the goods really before the tariffs hit, okay. So that’s a great example of like, you know, what’s happening in our households is happening in everyone’s households.

Another example of that that I’ve seen just on the investor behavior side, and I always have a really strong interest in behavioral finance, is sort of the coming home of the home bias. So home bias and behavioral finance means anybody, and this is global, anybody is likely to invest more in companies in their own country.

And Americans, I mean, I think for good reason, we’ve done this a ton, right? Americans, it’s not uncommon to have an entirely US-based portfolio, or pretty close to it. You know, in the last decade, well, the numbers have really been on our side for that.

But I do think, especially with everything that John just said about the way that this is changing geopolitically, it’s a nice time to consider rebalancing in that regard and to really be looking at what our opportunities are. I think the opportunities globally are going to be changing from an investor’s standpoint.

The third thing that comes to mind is that amidst all of this, there has been, you know like uncertainty is always when people have a like to. And that flight to safety narrative has gotten a little mixed up lately. It just hasn’t been the same as we’ve expected. And so I think it’s a good moment to keep your eye on your fixed income exposure. It’s a moment for active management.

Now I say this with some bias because Praxis does have our flagship fund as an actively managed impact bond fund. And it’s got all the cool impacty stuff that we were talking about in the earlier part of our conversation, all of the faith driven activities built into it, which I think is really cool. So take that for what it’s worth. But those are some of the things that are kind of top of mind for me.

John Coleman [00:44:53] And I think the behavioral finance part of this is important, because people’s reaction to the terrorists is going to be almost as important as the policies themselves. And what we’re seeing is a lot of business owners in the presence of uncertainty. Like you said, there’s a fight to safety and there’s also natural conservatism.

So if you’re a big business right now and you’re uncertain about whether there will be a recession, what your input costs will be, what your providers will be charging you, you’re going to pull back on spending now and there is a vicious cycle, whereas people pull back, it impacts others, others pull back and there’s a general tightening or conservatism in the economy.

And that is a vicious cycle that can send you into a pretty deep economic recession if you’re not careful. And so one of the questions I have throughout this moment, whether it be tariffs or other policies that are happening in the economy, is how do you give the American consumer and how do give American businesses the confidence to spend, the confidence to continue capital investments, because if that confidence goes away, which is really behavioral finance thing.

It will change the way money flows through the economy. And that’s one of the things I think I’m most concerned about right now is if we enter this period where people are generally just very conservative with their cash because they’re worried about the uncertainty of the markets or the tariff regime or what other companies are going to do, we will end up in a recession. It’s a given, right? That is the very nature of it.

And those things can be deep unless you’re willing to use the tools to get you out of recession. And our tools are more limited than they were a few years ago. I mean, our fiscal situation is not. Incredible right now as a country and so fiscal stimulus might be more difficult than it was in the past.

Monetary policy is more possible now because rates are higher than they once were, but we’re still at long-term averages for treasury rates and for fixed income rates right now. It’s not like they’re incredibly low. They’re just higher than great financial crisis levels.

And so I think we need to be very careful because the fiscal and monetary tools at our disposal are not quite what we’d hope they would be to generally stimulate our way out of recession. And so generating this confidence in people that we can continue to invest and spend will be important to making it either a mild recession or keeping us out of it entirely.

Richard Cunningham [00:47:05] Well, good commentary from you both and just kind of to put a few kind of closing numbers behind it all because John, you spoke about the pre-liberation day levels that markets have kind of returned to and I like the framing of what you were saying is like, hey, this is critical that we navigate this to a soft landing because I think markets have processed a lot of the news and, you know, from April 22nd to May 2nd, nine-day positive run for US stock market, which is the longest winning streak in more than two And so that S&P 500 is still. Is only down 3.5% year to day.

Now small caps are taking it on the chin a little bit harder down kind of 10% year-to-date. NASDAQ tech kind of mag seven as we know kind of leads the charge there, dramatically is down 7.5%, year to date. So back to those pre-liberation day levels, experiencing some of the shock of it, but I think of process the information, John, that you talked about, but critical that we navigate this thing to a soft landing going forward where the recession conversation really becomes a present one.

And are we able to bounce back as you were talking about? Deidre could not agree more also on the behavioral finance component of this and how business owners are going to react and their necessity and need for, I think we would all agree, just predictable information. Very, very tough and challenging to navigate a business in the midst of not knowing what’s kind of coming around each corner. I know there’s so much more to say, but we are coming up on our time and I want to be sensitive to that. Deidra, you look like you’re about to come out of your seat. Was there something you were about to add real quickly?

Deirdre Gibson [00:48:28] I just want to pose a potentially crazy question.

Richard Cunningham [00:48:32] Ask it.

Deirdre Gibson [00:48:33] Okay. Just thinking about this from a long-term standpoint and from sort of a meta standpoint, I mean, we’re Christians on a Christian podcast talking about money from a Christian perspective, right?

And one of the things I have noticed, especially, again, since becoming a mom, so biased here, but a lot of the most important work done in the economy is unpaid or low-paid work, like parenting and caregiving for elderly parents and all of this stuff and This is often work where it’s not very easily monetizable, but it does reflect the Imago day, the reality that every human is inherently valuable regardless of their productive capacity.

And so there’s been this thing in the back of my mind, especially as AI has been coming online and now quantum computing has taken leaps and bounds that were unfathomable maybe even a few years ago. How do we think about these things and build a world an economy, how do we build an economy in which humans can thrive?

Is this a moment, this moment of rather extreme disruption and change, is this a movement where we can think about these things and build some of those things in now? I don’t know whose job that is to think about those things or put those into perspective, but I wanna put this out there into the world of like-minded humans who are working in finance and government and economics to think about, you know, maybe it’s.

My best idea is a poor one right now, which is like some approach maybe to universal basic income, but maybe it solves this confidence question that John was asking of, you know, some version of life where we’ve got, and I don’t know where that comes from. Again, I have no ideas. It’s not good. I’m not suggesting this, but just can we think about this? How do we think about the economy starting from the viewpoint that every human matters and not just for our productive capacity and build from there?

Richard Cunningham [00:50:25] This is epic because we typically close every FDI pod with the exact same question. And so we’re switching it up today and our guest is asking the question. So do you have a powerful, important question? John, what do you think? How would you riff on that?

John Coleman [00:50:35] Oh my gosh, that’s a, we got to do podcast part two. There is a lot to unpack there. I’ll actually just lay out my own scripture reference from a couple of days ago.

So I listened to the Hallow. I do my lectio with Hallow every day. So, I’m Protestant, not Catholic, but Hallow has this wonderful thing where for 10 minutes a day, you meditate on a scripture. And I believe it was yesterday or the day before that scripture was about the loaves and issues, right, where… God once again proved that.

It’s not what we have, it’s not our ability to control our material resources. But he’s in control and he can do a lot with what little we have even if we don’t understand how that’s gonna work.

So you know, the little boy brings five loaves and two fishes and they feed 5,000 men which was probably 15 or 20,000 people at this gathering and then they have tons left over. There’s a surplus after it, right? Because Jesus was able to do something extraordinary with overabundance with what little his followers could bring to him as long as they had faith.

And I think that may intersect with some of what Deirdre is talking about, because I think often we feel very constrained by a materialistic view of the world, by this idea of focusing on people’s productive capacity and what that means for their identity or by the resources that we have at our disposal.

And it is good to periodically step back and know that God has an entirely different view of us as individuals, and he has an entire different economy that he runs in the world, and his provision is greater than anything that we could possibly imagine.

And in times like this where you’re tempted either to devalue people who are not working or not productive, where people devalute themselves because they’re worried that AI is going to take their jobs, where we’re worried about economic uncertainty and what that might mean for the economy, I think anchoring on ourselves in the perspective of our faith where we know every person is infinitely worthy and possesses dignity regardless of what they can produce in a materialistic sense.

And that ultimately materialistic stuff is not what we rely on and that God is going to right the arc of history regardless of whether we go into a recession or AI eats jobs. Christians don’t have to be as afraid of these types of things as non-Christians would because we have faith that there is an arc of History that the creator of the universe is writing and that he actually has our best interest in mind and that He wants abundance for us.

That doesn’t necessarily mean material abundance, like the loaves and fishes. But he wants us to live fulfilling and flourishing lives. And if we can take confidence in that, I think it rewrites our identity and allows us to approach markets in a way that’s got a greater peace and a greater confidence than the average person would.

Richard Cunningham [00:53:19] Well said, John. I’ll take a quick real stab at this, and that is, in Matthew 25, dear Joe, parable of the talents, the final steward, who is the one that is told, you need to be somewhere where there’s weeping and gnashing of teeth. The mistake was not that this servant was a poor investor. That really didn’t do anything, squandered, didn’t even invest in the first place.

The mistake of that servant was they didn’t know the heart of his master. And he made wrongful assumptions about the master and the master’s intentions. And I think that is where we can get in the most trouble as believers, is we don’t go get to know the master. And we make wrong assumptions.

And so as a faith driven investor, faith driven entrepreneur, we choose not to do anything and we squander what’s put in front of us. I think what you’re talking about is this big grand macro question, like where do we even start kind of biting away at that enormous apple?

And it’s for each of us individually as the FTE or the FDI to say, hey, how do I get to the master and how would the master inform me? And so we aren’t found to be that last servant. And so that is my two cents. I’d love to hear your greater answers or give us any kind of final commentary as we close here.

John Coleman [00:54:19] Well, part two will have to be the UBI and in-center discussion. I know. Seriously, that’s teaming up a massive topic. But Deirdre opened up quantum computing and artificial intelligence in the last five minutes. You’ve got to be. I’m sorry.

Deirdre Gibson [00:54:33] I’m sorry.

John Coleman [00:54:35] Fascinating, fascinating topics to dig into, but I think that’s a really encouraging word, Richard. There’s a reason you’re the host here.

And Deirdre, I think your heart and the way that you laid out both the earlier investing conversation around engagement and faith-driven investing and the way that want to emphasize the dignity of individuals in the midst of all of this, I think is an incredible perspective and one that’s too often lost in our financial kind of discussions in the marketplace, but one in which we certainly have to anchor ourselves.

Deirdre Gibson [00:55:04] Yeah, we don’t want to rely too heavily on the idea that a rising tide lifts all boats. Some boats are anchored too tight.

Richard Cunningham [00:55:11] Well, Deirdre Gibson, Praxis Investment Management. What a joy to have you on the Faith Driven Investor podcast. Ladies and gentlemen, for John Coleman, I’m Richard Cunningham. We will catch you next time. Thanks for tuning in.

Speaker 5 [00:55:21] We are grateful for the opportunity to serve this community and see listeners come in from more than 100 countries. Faith-driven investing can be a lonely journey, but it doesn’t have to be.

The best way to stay connected is to join a group study with other investors looking to get the same answers to questions you have and find great community as they do so. There’s no cost, no catch. In person or online, you can meet an hour a week with other peers from your backyard or the other side of the world.

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When Brent Beshore penned his annual letter reflecting on lives disassembling around him, he never expected it would resonate so deeply with business leaders and investors across the country. His invitation to step into “nothing to fear, nothing to hide” relationships offers a refreshing counterpoint to the isolation that often accompanies success in today’s achievement-oriented culture. Through his 30-year investment horizon at Permanent Equity, Beshore demonstrates how faith-informed patience might just produce better returns—both financially and humanly—than the standard “buy, lever, strip and flip” model.

Please note that the views expressed by the hosts and guests are their own and do not necessarily represent the opinions of Faith Driven Investor.

Episode Transcript

Brent Beshore [00:00:00] The broader culture is the worship of mammon. I say mammon and not just money because I think it goes beyond just money. It is an idea of self- Reliance.

Justin Forman [00:00:09] And designed to be dependent. Have the hardest time accepting that idea.

Brent Beshore [00:00:12] Absolutely! We are tricked into believing that freedom… Looks like being independent and not in need of anything. The irony is that true freedom is found in Christ. He says, my yoke is easy and my burden is light, but you have to submit to him everything. If anything, I am way more excellent at my job as a follower. Than I was as an atheist. If you’re shooting the lights out and you’re making tons of money and you are sacrificing your family at the altar of success, you are losing. Yeah, you got a yacht and you have no one to enjoy it with. A driven entrepreneur.

Justin Forman [00:00:48] So often in today’s world we think of everything for instant gratification and short-term results. But what does it look like? To have the long-term perspective in mind, to maybe even think about something that might last. Beyond our lifetime. Today we’re at South by Southwest, a special gathering here in Austin, Texas. To talk about this topic. With Brent Beshore and Richard Cunningham. Let’s go ahead and get started. With our conversation. Hey, what is it like to have South By here? Like, do you normally flee Austin? Do you normally run from this place?

Richard Cunningham [00:01:21] Mixed bag. So I grew up in downtown Austin. It is an incredible, like you can feel the buzz in the air. It kind of reminds me of like a college football Saturday. For like a week and a half of having South By in Austin. I will confess because Marshall, my wife, and I live downtown. We’ve had this like tendency in the last few years to be like, all right, South by is coming. That’s a lot of traffic. Cunningham’s will exit. We’ll go make our pilgrimage to Breckenridge or something like that.

Justin Forman [00:01:41] Like that ski, or the Holy Land. We’re talking pilgrimage, you gotta talk Holy Land!

Richard Cunningham [00:01:45] Um… But it’s special, and then when this whole Sunday service thing started a couple years ago… There’s this dynamism of like, wait, we can plant a flag for Jesus in the midst of all of this. Not that he needs us to, but what an opportunity to, to say, hey. So many people are coming in. From so many different kind of. Cultural mountains. Film entrepreneurship, investing. What have you, it’s like the- networking event of all networking events. And someone had a brilliant idea to be like, you know what? Let’s do something faith oriented. And it’s been really special to see the church kind of gravitate around that, so.

Justin Forman [00:02:16] I think it’s been special to see it gravitate towards it, but I think its like. We were just with John Irwin when the House of David stuff was kicking off. Just to talk about his idea of just like, hey, it’s not that Hollywood left Christians, Christians left. What I love so much about this is like. In a time where people in the church would be known to run. Like the church is pushing in, the church is pushing into this conversation. And man, we’re seeing.

Brent Beshore [00:02:41] Can we just take a moment? House of David is so good. I mean, like. I-I-I texted Coleman. And I was like. Oh my gosh! Like this is a real show, like it like not like a like a almost there, but like. House of David was something that independent, like the cinematography, the writing. The entire thing like everything was It was incredible.

Justin Forman [00:03:02] I didn’t know Gandalf was making an appearance as Samuel. Who knew?

Richard Cunningham [00:03:06] Samuel is a beast. He is not to be messed with.

Justin Forman [00:03:09] He’s so much of a beast, like my 11 year old was like, that was a little weighty, that first scene, or that first episode. I loved it. I loved too. I loved. But I also didn’t. I was like let’s go. Let’s go!

Richard Cunningham [00:03:20] They’re working on something John’s talking about. How cool would it be? Like you know when you see on Amazon? And you’re watching a show and it like flashes the actor who’s in that scene or something like that. Of how cool would it be. To see House of David flash the scripture and the verse where it’s like, did Samuel actually? That guy and like that brutal. And it’s like, yeah, there it is right there in first or second Samuel. Of Samuel doing that exact thing, and how cool to drive people to the Bible through House of David, so.

Justin Forman [00:03:46] Yeah, I mean, I’m trying to remember who was it that was talking about this, about scripture engagement, and they were talking about it. Maybe it was Bobby that was just talking about just… Or somebody was coming in, they were doing the data analytics, and they were looking at it, and they’re like, man, why did… I don’t know what the chapter was they were referencing had some huge spike. And they’re like, oh, well, you know, the chosen last night covered this passage. And how cool is it that we’re in a place where you can see the cause and effect of those things? Kind of hitting like that. That’s a fun treat to see those things.

Richard Cunningham [00:04:14] Adds up to cool stuff. Brent, you’re in Austin, coming from… The middle of america man beautiful columbia missouri You found me. I am the unicorn. I’m a Stephen F. Austin high school graduate in Maroon’s oldest public high school west of Mississippi.

Justin Forman [00:04:30] High school batting average was?

Richard Cunningham [00:04:32] Don’t worry about it. We’re not here to talk about that. We’re here to about Brent B. Short being in Austin, you’re speaking at a big South by event tonight. Permanent equity has just had, it feels like the Lord’s hand of favor on top of it. Give us some of kind of the Brent Be Sure 101. Bring us up to speed on where we are right now because your story is so powerful. And I know you can go in a bunch of different directions where you get into a bunch that. But maybe kind of give us some of the lay of the land. And we’ll just pull on a bunch of different threads.

Brent Beshore [00:04:56] Yeah, I’m married to Erica 16 years now. We’ve got four kids. We thought we were done after three. I joke that. My son’s the Chuck Norris of children. He battled through a vasectomy and 240 plus your parents trying to prevent his pregnancy. So what a legend. He’s amazing. I’m not sure what the Lord is going to do with him. But he is he’s gonna be on fire. The kid came out. He was like the happiest most joyful. He is incredible. Silas I can’t I just can’t tell you what an absolute blessing and I mean the reality was when I was an atheist I was a thesis in my 20s. I didn’t ever want kids They were I looked as an impediment to my success to it would be a lot of work. I got in want that It was all about me and uh… It’s amazing how just over and over again, I married my wife because she was hot. I started the business because I wanted to get rich. The Lord uses my sin and for my good in His glory, which is what He promises, but man, I just never knew and it’s amazing. So it’s amazing.

Justin Forman [00:05:50] No, no, isn’t it? I mean, isn’t that fascinating? Like, again, it’s our brokenness that he often uses most. I mean, we’re hearing that, we are seeing that, we’re seeing that in the stories. I mean, we’re seeing it in places like South By, or even people that are coming to Christ here recently. It’s like, there’s just that point. Where like, we’ve seen the facade, we’ve see everything that’s there, but it’s our brokenness. It leads it back to it. That’s one of the things I just love. Just about the way that you talk about that, always so candidly and consistently.

Brent Beshore [00:06:16] Yeah, I mean, I think it’s by His wounds we’re healed and by our wounds, we’re able to heal others. I’ve seen Christ through us. But I’ve seen it so clearly, it’s in our areas of greatest weakness and areas of greatest sin, usually. That is where we’re able to bring healing to others. I mean, I think that. The lie is that whatever you’re battling… Whatever you’ve got hidden underneath. That is so ugly, no one’s gonna love you if it comes out and that you’re the only one battling it, right? That you’re somehow a freak. That you’re the only one who’s ever had that issue. And I mean, that’s what the enemy wants from us, right? Cause it keeps it hidden. Uh… You know if the darkness grows uh and and unless you drag in the light it’s the only disinfectant like there’s no other disinfectant You’ve got to confess it to God, and you’ve got to confess to others. Um, I’ve just seen over and over and over again in my life. 

It’s it’s, you know, I I got a computer put in my room when I was 10 years old. I looked at pornography every day of my life. Right? Um, the amount of deep wounding that that created. I didn’t even know it was a problem. I remember, I mean, telling my now wife, I remember we were dating and She found out I had looked at pornography and she was like, oh my gosh, like. And I was like, I don’t think there’s anything wrong with it. Like I didn’t think there was anything wrong. I thought it was healthy. And in fact, if you read a bunch of like, you know, the, the quote unquote, modern health science behind it. It’s like, oh, pornography’s good, pornography’s healthy. I can tell you. Uh, no man who looks at pornography is healthy. You just can’t be healthy. It’s not how God designed this. It is a cheap imitation of a beautiful gift from God. Right? As Christians, like, we’re not anti-sex. Sex was made by God. It is beautiful. It’s just like a fire, though. You put it in your fireplace, amazing, warms the whole house, super enjoyable. Put it in the middle of your living room, you burn the house down, kill everyone. It’s the exact same way with pornography. So it’s things like that that I’ve now been able to say, hey, look, and by the way, I’m still in a battle with lust every day. I don’t want to give the impression it’s like, hey. I’m George W. On the aircraft carrier saying mission accomplished behind me, right? Like, we’ve still got a long war. There’s a long war ahead of us. But I can tell you that. When I am. Open and honest about where my struggles are, open and on us about who I am. That I am in real deep relationship. That’s where healing, incredible freedom comes from. That’s what the Lord made us for.

Richard Cunningham [00:08:29] You put this in an annual letter. So you close down 2024. Shared a bunch of reflections. This particular kind of thread you’re tugging on about the open transparency and honesty and realness about sexual sin or just getting things out of the darkness and into the light. Has been viewed. Just an absurd clip right now, so tell us about just kind of the wildfire spread of this like vulnerable letter you put out there for the public on LinkedIn and Twitter and everywhere.

Brent Beshore [00:08:53] Yeah, I mean, I felt convicted, you know, every year. So I write this, I basically write one thing a year. I should write more.

Richard Cunningham [00:09:02] You’re giving yourself a hard time, because I’d follow you closely on Twitter and you put out some absolute things yourself. Oh, okay. You write small amounts.

Brent Beshore [00:09:07] Small amounts, yeah, yeah. They’re a little bite size, but I write like one long thing a year, and it’s the annual letter. And it’s very odd to have an annual letter uh… That is both mixes personal and professional And I feel very called to do that. And so every year I just try to pray and Lord, what do you have for me? What do you want me to say? And it’s funny because I start that process in like September. And nothing happens in September. I keep chewing and chewing. I’ll start a couple of times and just nothing happens. And this year, it was about, oh, mid-November. And to be honest, what… Really convicted me was I saw more lives fall apart. I think in the letter I called it the unplanned rapid disassembly. Of so many lives, whether it was adultery. Addiction issues. Mental health breaks criminal activity. I got more people that reached out to me in the last year and said Hey, can we talk? Wow, man, when I get that text, you’re like, Oh, Thumbs up. And get on the phone, and somebody’s life’s a mess. It’s just an absolute wreck. And you start asking questions about it. Okay, when did this start? How did this happen? Almost inevitably every single time it started small. It was benign, it was just a little thing here, a little there, a little corner cut, a little season of life. It was just a little fun, a little flirtatious text. One extra drink, it’s not a big deal, and then all of a sudden… That slope gets slipperier and slipper and then you compound over time. 

And maybe it’s just my age, right? So I’m 42. I feel like there’s a way to get in trouble at 42 that you just couldn’t get in at 25. Like you have enough enmeshing of relationships and there’s enough people counting on you. That at. 25, you just don’t have that at 42. People are counting on you. And so I just watched over and over again, you know, people around my age and their lives just blowing up. I felt convicted to say, hey, I’ve got a front row seat. To this brokenness and the shrapnel and the maiming that is just awful. I mean, lives being destroyed, families being destroyed. And by the way. We forget these are not like, yeah, it’s not fun for the individual person. We’re talking about generational consequences. I mean, I can tell you in my family… Um, my uh, and. Died in a car crash at 16 years old. Um, let’s see here, six years before I was born. And I’ve lived my entire life in the shadow of that in my family. And it was a horrible accident. Um, It things happen that caused generational scarring and this generational sin that I think. If you look at most of the patterns, certainly the same patterns in my life, it comes through generations. And so I think that the, you know, the question we have to ask ourselves is if we’re gonna live in the darkness. And we’re gonna tolerate sort of the acceptable sin that we think we have. Really what we’re doing is we’re perpetuating generational sin and eventually it blows up Like even- the smallest unrepentant sin becomes big enough eventually and leads us into dark places. I just saw. 

The consequences of it over and over and over this year and I just felt. Called to say. To people, hey, you gotta live in the light. It’s scary. Look, we all wanna matter and we all want to belong, right? That’s what we’re all seeking, right. You cannot. Belong unless you’re in real relationship. And so we pretend, we wear these masks to each other and we pretend like we’re in a real relationship when we’re not. When I ask you, how are you? And you say, I’m good. How are you? I’m good. There’s nothing for relationship there. If you’re good, you know what I’m thinking? Shoot, he’s good. Like, he is actually pretty convincing. He’s good, I’m not good, but I can’t say I’m good. So what do we do? We keep it hiding, right? We gotta kind of retain things back behind the wall. Getting into a real relationship is scary because the lie that we tell ourselves, whether we hear from the enemy… Is that if people really know you, they wouldn’t love you. If they really knew who you were, not only would they not love you, they don’t like you. They wouldn’t want to be around you. They wouldn’t want nothing to do with you. And by the way, you’re gonna end up alone. The weird part is you’re already alone if you’re not in a relationship. I don’t know how many. You know, I’m going to say men because that’s who I really go deep with and who I know. I don’t know how many men I’ve known. Who th- they’re not known by their wife. Like they’re in a marriage where they don’t actually know, they don’t know their wife and their wife doesn’t know them. They have kids. They share a life together. They are strangers living in a household. I think you see this come out. People are like, oh, we. We fell out of love. Well, how does that happen? The night as you know each other right So I think the thing that, in that letter… By far, the letter’s been viewed so many times, it’s amazing to see how much it’s spread. And the part that was by far the most. Clipped, the most referenced, was nothing to fear, nothing to hide. And that was the message, right? To call people into it and say, Hey, look. The alternative is not worth it. The hiding that you think is tolerable isn’t worth it. You have to be known.

Speaker 4 [00:14:09] American

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Brent Beshore [00:14:59] You have to confess to God, you have to confess to others, you have to get into a relationship. The most incredible freedoms on the other side. I can tell you. When I started becoming known. I don’t think I fully appreciated how much darkness was in me. And I mean, this is the Christian walk, right? When you first become a Christian, the cross is really small. It’s like a little step stool. You just need a little help up, right, middle class in spirit. Lord, yeah, help me, but you don’t actually see the full weight of your sin. If you did, you’d be destroyed by it. You know, now, let’s see here, I don’t know, 12 years in. 11 and a half, 12 years into my walk with Jesus. And it’s like, man, I’m more aware of my sin now than I’ve ever been. Like if you ask me, how am I doing? I’d be like, I’ve got stuff I’ve gotta really work on. I want to be in known and in relationship with that. That’s actually where you gain freedom. So I think it’s just very counter-tuitive. I just see… Most people, I mean. Henry David Thoreau says the massive men lead lives of quiet desperation. I mean, this is not, he’s secular. He’s not a follower of Jesus. I mean this is just a widely known thing. Of course. Everyone’s hiding, everyone’s masking up, everyone is pretending. And we’re going through life numb. I mean, if you numb the pain, you’re gonna numb the joy. You can’t be in, if you’re not gonna have a depth of emotion, a depth relationship, there’s no depth of joy, there’s not depth of happiness, there’s depth of anything.

Justin Forman [00:16:20] Why don’t you talk about this? You talked about how it went viral and it had that traction, specifically the section. But I think it’s also the audience here, right? Let’s talk about the realities as entrepreneurs and investors. Like, you’re always selling somebody. Something. The perception of it. Like, let’s pause for a moment here to say we’ve seen the church, we’ve seen the brokenness, we seen church leadership challenges. There’s often times when I think about like. Some of his first gatherings and megachurch conferences and other things. What you wouldn’t do to be able to go back 25, 30 years ago and say, hey. Let’s bake this in from the beginning. Yeah, we got to make sure that we understand this. How important is this in this moment? When we think about fund managers, when we think about entrepreneur scaling and growing. The stories are getting bigger. The crashes will get bigger too if we’re not careful. How do we bake that level of vulnerability? Into this. Movement into this conversation.

Brent Beshore [00:17:16] Yeah, well, I would say going back 25 years with the… The big gatherings, like there’s not many pastors who have survived. I mean, if you look, there’s very few pastors who you would say were well-known pastors 20, 25 years ago, even 15 years ago. Who’ve made it. Almost all of them have fallen. Well, how did they fall? They fall because they weren’t known. And by the way, whether you’re a pastor at a church or you’re the CEO of a business or anyone, you don’t even have to be in leadership. As you become more successful, it’s more isolating. And that doesn’t matter what line of work you’re in. I mean, my heart goes out to a lot of these guys if you look like. I remember getting- given a number of books when I was first becoming a believer. By people who were these incredible inspirational people. I would say 80% of them have had some huge fall since then. Now it doesn’t invalidate what they said. But man, it would have been so much more powerful if they had said, hey, I’m actually in this act of struggle. I need to be known. I think that the formula is the same for everyone. If you’re not actively in a relationship, if you’re being known, if you don’t have anybody in your life who can tell you no. You are screwed and you just don’t know it.

Speaker 6 [00:18:25] I don’t know it yet.

Brent Beshore [00:18:26] And so yeah, the audiences, I mean, fund managers in the financial world, I mean let’s be honest. The entire financial world represents a microcosm of what the broader culture is. The broader culture the worship of mammon. I say mammon and not just money because I think it goes beyond just money. It is an idea of self- Reliance. You know, the opposite of faith is not doubt, it’s self-reliance. Like if you think about what the enemy really wants us to believe. Is that we’re self-made men

Justin Forman [00:18:53] We’re designed to be dependent, but we have the hardest time accepting that idea.

Brent Beshore [00:18:57] Absolutely, and we are tricked into believing. That FREEDOM! Looks like being independent and not in need of anything. The irony is that true freedom… Is found in Christ, which is he says my yoke is easy and my burden is light. But you have to submit to him everything. Everything I am and everything I have has to go in. Before you can gain the freedom. And so I think that this is the upside down kingdom that we live in, but when we look at the world, it looks right side up. And you look and I mean, I, I’ll confess like. I’m tempted! You know, I mean, I’ve spent, um, I spent. Earlier this week. At a high-end investor conference. These people are the best in the world at what they do. And everyone is talking about all their wins. Talking about how much money they’re making, they’re talking about what they’re buying, they’re taking about their third vacation homes. They’re talking about how they’re going to do this and conquer this and and then you look in their eyes. And there’s this deep sadness. And everyone sees it, but no one wants to acknowledge it. Because man, we can put this nice shiny veneer over the top of it. And so, yeah, the audience, when I wrote my annual letter, I felt very called to write it to a financial, for the most part, a financial audience. Maybe it has broader appeal, but I go into quite a bit of technical detail about the financial side. But to say, hey… If you think you’re winning… If you think that that’s going to be the way to life and life abundant. You’re going to do what I did, which is you’re gonna catch the car hopefully eventually. I mean, there’s only two types of people, right? There’s these people who think, okay, if I only had that, then my life would be complete. Or the people who actually get it. And it tastes like ashes.

Speaker 7 [00:20:37] Yeah

Brent Beshore [00:20:38] And that’s what I did, that’s my story. That’s my story.

Justin Forman [00:20:40] And I think there’s something so much like we, oftentimes we flip on the TV, we watch sports and let’s face it, it’s been an amazing run. The last couple of months. Are you talking about the Chiefs? Well, we’ll talk about the Chiefs, but it’s an amazing one that most of those Super Bowls, most of the games, it ends with the soundbite of saying. I just wanna thank God. Yeah, there has been revival sweeping through. There’s been revival. Man, some incredible work. Steve Centrum, Professional Athletes Outreach. FCA so many different ministries a long obedience in that direction chasing after the

Richard Cunningham [00:21:07] Chasing after these athletes is so cool.

Justin Forman [00:21:09] Chasing after to say, how do we help serve and disciple you for those moments? But one of the things. I love. Is like, you’ve heard the story of Riley Leonard. We heard all the story on the ascendancy. When you lose that game. And you praise God just as much. And losses. As you do the winds, that’s hitting on what you’re talking about. That’s what Patrick Mahomes did. Yeah, he loses the Super Bowl and he’s

Brent Beshore [00:21:30] Thank God for that.

Richard Cunningham [00:21:32] Me as much as I’d. Hate to say it here in Austin, Texas. I mean, they are my bitter rival, the Texas Longhorns. Quinn Ures, Michael Taft, Jade Baron, all of their studs got in the post-game conference and they Jade baron the DB stopped the interview after so I was like, hold up. I need to say something, like, Jesus is good. Regardless of us just losing this game. We always say it after we win, because we win a lot. But we just lost in the Koshuel playoff. And I need to acknowledge. God’s goodness and the opportunity to do this.

Justin Forman [00:21:59] I think it’s beautiful, and I think you’re hitting on something, Brian. It’s just like, just… We are surrounded by the world’s trappings. And like, we are I mean like the fiercest parts of the battle. Are coming to the footsteps of entrepreneurs and investors. Everything the insecurities identity and there’s always something no matter what conference you go to There’s always somebody that’s like, man, you know what? They got it, if only we can get to that point. And like, it’s when do we put to death the comparison? How do we put to death a comparison? Step into that moment of contentment. It’s a struggle. Right? Like every single day. But I think it’s worth it. Builders Investors that aren’t ever satisfied, always looking for that next improvement. How do you pull that in tension with?

Brent Beshore [00:22:47] I think that, for me, I think God calls us into excellence because He’s the God of excellence, right? And how does the enemy work? He takes what’s true. I mean, the devil doesn’t pop out in horns and a cape and, you know, that’s what, I mean the depictions in the movies, right? Like the enemy is going to look like an angel of light. Like it’s going to look like it’s right and true. And so, I mean, I was raised in a culture where competition was good, like you go out and try to win, winners win. Competition and being competitive with one another, I think is. Excellence with a twist at the end. Right? So I think it’s good and right and true that we try to be excellent. It is not good and right and true when I say, I am excellent because I put you down because I beat you. And therefore I can be above you. Anytime we’re trying to elevate ourselves. Above anybody, I think that’s where we’re off track. And for me, this has been revelatory, really in the last three or four years for me. I am so competitive, like if you, if you like. When I have lost the plot. I get incredibly competitive. I’m gonna beat everyone, I’m going to win all the things, I’m to do all, I mean. That was. Unconstrained, that was my life in my teens and 20s. And there’s a feeling that rises in me that’s so dark. And it’s anxious and it’s insecure. It’s, I’m never going to be enough. I’m never going to have enough. 

There’s no amount of winning that satisfies it. So you just keep competing and it destroys relationships. It eats you up inside. But I’ve realized recently… Wonderful to be competitive with yourself. It’s wonderful to say. I am pleased with what I did there, and I’m thankful that whatever the Lord provided, but I want to be more excellent because I wanna do everything unto the Lord. And no matter how I play, if I win or lose… Isn’t the point. It’s how do I play? And usually when I can get myself into that position. Turns out I actually win a lot more. But the difference is, instead of me being like, yeah. I won. I’m over you, I’m the winner, you’re the loser, I am like Hey, that was a really fun game we played. And I mean, I think this works the same way in business, right? Like, I feel the inclination when I’m around fund managers who are managing more money than I am, doing bigger deals, going faster. Man, I am not doing as well as they are. Like that, that feels terrible. Like I’m not. Then I’m like, wait a minute. The Lord has called me into something. Independent. Of any of those games. All I’m called in to do is do what he’s called me into. Be obedient. He’s going to give me. What I should have. I will never have more than what the Lord wants me to have. I’ll never have less. And I am a steward of whatever he wants to do. While I can get myself into that, I actually play the game way better. There’s a grain to the universe. If we actually go with the grain of the universe, things typically go better. Job can happen. Things can happen, bad things happen to good people, right? I’m not trying to, this is not prosperity gospel. It is also true that Proverbs says a lot on this topic. Like to the hard worker, to the diligent, to the wise. Go a lot of the spoils that the world would call good. The difference is we get them to receive them as a gift, we don’t earn them, we’re not gaining them. And that’s the big difference.

Justin Forman [00:25:55] You know, there’s, I’m reminded of a video that we showed this year in the Faith Driven Investor Conference is the one on Roy Ellis when we talked about the cathedral-like thinking. And I think that there’s something that we’ve. Whether it’s what the narrative has been in business or investing other it’s like oh man it’s quick hit oh Why didn’t you start your first business from 17 and exit it by 21? Why haven’t you done this, why haven’t done that? The quick, you know. Business flip, but when you think about this idea of just a long-term in mind, because that’s what you’re getting. Like what does it take for us to get to this cathedral? Thinking to live for something beyond our lifetime. I love that story. That just says, man. When we look back in history. The great. Cathedrals of our time. The stories of like, God and his church there, they took generations. To build. And what does it look like for us to kind of get back to that cathedral-like thinking? In a society and culture that values so much the short term. I mean, you’ve. You’re in that space when you think about the long term whole.

Brent Beshore [00:26:56] Yeah, I mean, if you think about it, as followers of Jesus, we should have the longest time horizon of anybody. Like our time horizon is eternity. And if we really believe that the more the people who take. Eternity most seriously, but the people who take this world most seriously too. Like, you know, it’s not the only two things that are going to survive or the Word of God and the… the souls of men, that is escapism. That is not what the Bible says. The Bible says, heaven is coming back to earth. There’s an incredible short story, I highly encourage anybody. To read it, you all to read, it called Leaf by Nickel. And it was written by J.R. Tolkien, so this is one of Tolkien’s essays. And it’s this really interesting concept, like I think niggle. Is Tolkien. Because if you read biographies of Tolkien and how he developed his world, I mean, he developed the whole languages, all the languages of Lord of the Rings first, right? Which, I mean, it was a painting, it was decade long process to develop the languages. I mean you wrote out entire languages before you ever got into any plots, before you got into character development, right? You wrote out languages. It took him forever. To write. Lord of the Rings, The Hobbit. And Leaf by Niggle has this really, it’s a beautiful concept. And I, again, highly encourage you to read it, which is. There’s a painter. Niggle who could only, he had this vision of this grand tree that he wanted to paint. It was like the tree of life. That’s kind of how I interpret it. In his lifetime, he could only get himself to paint a single leaf on it. Just a single leaf. And he beat himself up about it, and the enemy got into his ear and said, “‘You’re worthless, you’re no good. “‘You can only paint this leaf.'” I think that we do the same thing, right? He passed into eternity. And he sees… The tree that was in his mind, that one leaf has been transformed into the entire painting, it’s affected the world, right? So the things we do now get carried on and perfected into eternity. And so. The cathedral thinking is, okay, you don’t build a cathedral in a year. I mean, cathedrals sometimes took. A hundred years, fifty years to build, right?

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Brent Beshore [00:29:46] For me as an investor, you know, the standard model in private equity is what I call the by lever strip and flip model, Get tenure fun life. It takes a couple years to buy stuff, takes a couple years sell stuff, so really you got three or four years at most five years to own something. It’s just impossible to develop. Good long-term strategy. Great long-term relationships. Make good long-term decisions when you’ve got that time horizon. It’s impossible to make. Good long-term relationships, good long term decisions with short-term capital. And so I think one of the things as followers of Jesus we can do is continue to push the time horizon, which is really hard with investors, as LPs. You’re trying to tell an LP like, hey, give me your capital for 30 years. I had more than a few of them say you’re a complete idiot, which is also true, but just maybe in different ways. There’s no way. I remember one guy, we were at a family office in Florida. And we thought we were getting investment from these people. The CIO came in, and he’s like, asking all kinds of questions. At the end, I was like, are, you know. What do you think? You seem pretty interesting. He’s like, Oh, I would never give you our money. And I was like, Wait, what? I was like, why are we here? I mean, we flew down our whole team, like we spent all this money and time to come down here. And he was like oh, I just wanted to meet the guy who was even asking for 30 years of capital. I was like that’s What are you talking about dog and pony show man? It’s brutal.

Justin Forman [00:31:02] There’s no way, right? You get validated parking on the way out? Yeah, exactly.

Brent Beshore [00:31:05] Yeah, exactly. His logic was, he was like, hey, 30 years from now, he’s like, you’re going to be on your third wife. You’re going have a bunch of step kids you don’t even know. Like you’re gonna have vacation homes all over the world. You’re not gonna care about what you’re doing. And I was like, man, that is such a, well, at first I was like, that seems like an oddly specific.

Speaker 6 [00:31:19] Yeah. Correction.

Brent Beshore [00:31:21] Um, but beyond that. I think that’s a point of view which basically says, hey, the only things that you can really count on are in the short term because everyone’s gonna go off the rails. And you know what, for most people, that’s probably true. I mean, you and all, you, and I have. Probably all of us have seen this. Most people cannot continue to stay focused on what they’re doing and and and a life happens and things go off the rails I think this is the idea though that We can really. Focus on these few things that we can do right and true and be unconcerned about what they mean into eternity because we are trying to build the cathedral over a long period of time.

Justin Forman [00:31:54] It’s fascinating. I mean, can you imagine being a cathedral builder? Like, hey, I’m just gonna build up to this part. I don’t know who’s coming along behind me. I’m not sure. I don’t know their name. Maybe I’ll train them as an apprentice. But somebody else is gonna build the top half of this. And I mean, just that perspective shifts. Yeah, you got it right.

Richard Cunningham [00:32:07] Yeah, you got to write yourself in the story. Yeah. You put yourself in a perspective of like, this is no longer about me. It’s about the cathedral.

Brent Beshore [00:32:14] Investment partnerships also aren’t built that way. Like, if you look at most investing firms, they are just pure partnerships, right? There’s no lasting value that’s being created. I mean, it’s kind of like a brand that you kind of come under. But there’s nothing enduring about that. That’s why these partnerships break up all the time, right? Um I think that you can build, I mean, this is one of the things that I’m excited about with permanent equity. I’m trying to build permanent equity… Not as a partnership, not to say we don’t have partners. But as something that’s enduring that stands for something that hopefully we can have stewarded into generations to come. Which is a very different line of thinking than saying, hey, you and I are gonna be partners. Eventually, we’re not going to be partners. We’re going to try to bring some other people in at some point. They can choose to be partner or not. But there’s really nothing enduring about the structure.

Justin Forman [00:32:58] There’s nothing enduring about it, but, you know, I- It was interesting, somebody was talking about this in terms of… I think the example was in politics is sometimes there’s a candidate that like you’re charging down a path. But you might not agree with the candidate that’s needed to turn the car in the opposite direction. To plant the seeds of going a different direction. It might be a short-term season, but then the question is who’s going to take that baton, right? And so, I mean, I hear the idea. That in a short time horizon. You can’t finish the task. But you can plant some seeds to that. And I think that there’s an incredible rebirth of people that are thinking with that mindset of like, hey, how do we? Let me plant seeds into that, but I’m fascinated though, and I kind of want to approach it from the idea of like, hey, what? Unique opportunities are there. In the long-term hold. To look at things differently, whether it’s the mentorship, the culture development, the team structure, the… The generational mindset of not looking for the quick fix person but somebody that’s thinking with the long term in mind. I think that there’s just so much opportunity. When you talk about the long-term. Cathedral-like mindset. To think about spiritual integration. And think about ways that we can bake this in. And it’s not. And again, there’s some that are planting seeds, and there are some that planting seeds and they’re also the same person harvesting. And that’s what you guys. Are in the business of. What are some of the things when you look at it, when you think about… Maybe not where it is today. But even just thinking about in the next 10, 20 years, as this conversation matures. How does a long-term hold increase those opportunities to take things deeper?

Brent Beshore [00:34:32] Yeah, well, and I think at the very core, we’re not a forced actor. So if you talk to most private equity. People. And you ask them, like, what are their biggest losses of their career? It’s really interesting. I’ve done this quite a few times, almost inevitably. They don’t talk about the deal that went bad. That’s what you think, right? You think they’d be like, oh man. We had this zero. 10 years ago, it was a zero out. Like we thought it was gonna be this incredible thing and just. It detonated. It’s actually not what they say. They say is. What really kills me. The biggest losses I feel like are the ones that I knew were gonna be incredible long-term compounders. That we were forced to sell. And so, yeah, I think that by the nature of having long-term capital, it gives you the option. To not to have to do anything. And again… You know you plant a seed using your analogy you plant seed if you keep digging it up. As soon as it sprouts, you’re gonna kill it. Right. It just, it just can’t sustain that. I think there are good reasons to sell and bad reasons to sell. So I want to be clear, like permanent equity is not one of these firms that would say we would never sell. In fact, I had the pleasure of having dinner with Warren Buffett. And it was. Phenomenal evening, three and a half hours, there was five of us. And I got to ask him, I came with like loaded, it was probably awful. I’m like his nightmare. But I like. I came in like loaded with like 40 different questions. But one of my main questions was I was like, hey, I just want to understand like. Don’t you think that there are companies in the portfolio that you have? That would be better off owned by somebody else. And he’s like, absolutely. And I said, well. Why wouldn’t you sell him he’s like because I want to be able to go to the person say I’ve never sold anything and I’m not going to sell your baby right. And I think, look, I think the ethos behind that is good. I think that the practicality of it is. 

There are different seasons for different stewards of different assets. And there’s nothing that’s more holy. About you and I saying, Hey, even though we’re not the best owners of this thing. We just need to own it because selling is somehow bad. In fact, if any owner occasionally, you know, I’ll get this question from a seller. And they’ll say, well, you’re never going to sell my business, right? I didn’t say that. They’re like, whoa. If you’re gonna sell it, then why don’t I just sell it to the highest bidder? And I said. Wait a minute, is there something wrong with selling the business? Yeah, I don’t want you to sell it. You’re selling the business. They’re like, oh, well, I said, so can we agree? What’s the idol underneath? Yeah. Can we agree that there are good reasons to sell and bad reasons to A great reason to sell is there somebody else who would be a better steward of the asset. Somebody else who could carry on forward that legacy. And I think that gives you the optionality to do it. But there’s also a lot of reasons to hold something, not only to make money, but to endure the culture, to be able to reinvest in relationships. I mean, the hardest part of doing what I do is for sure the first 18 months. Because the default assumption, no matter what you say, no matter where your track record is. Default Assumption from people who don’t know you is. They talk a big game. They’re going to come in. First week, they’re gonna say, ah, okay, niceties aside, now the ax comes out. Now we’re going to grind on you like… You never believe be possible, right? It’s funny because we’ll tell people during due diligence, just operate the business the week after as you did the week before. Two days after closing. Hey, so what do you want me to do this week? I don’t know. What were you gonna do this week? They’re like Well… I don’t know, I mean, just do whatever you’re gonna do. Without us. And they’re like, well, there’s really no catch. What do you want to know? I don’t wanna know anything right now, I just want you to be you, just operate. Do you need any help? No? Don’t need any help? Call me if you need something. I’ll call you if we need something. No one really believes that. 

So the first 18 months is this like testing of exploration of trust. And there’s a lot of opportunities to get sideways. I mean, any relationship you can get sideways, so I feel like once you clear 18 months, especially three or four or five years, you start to get into this really nice rhythm of. High trust, expectations, know what’s going on. That’s really the beauty that the speed can really accelerate because you have that trust. Now think about that compounding for 10 years, 12 years, 15 years, right? I mean, I still own the business I bought 15 years ago. The relationship I have, her name is Jenu Molly. Is phenomenal. I was talking with her a couple days ago. We’re dealing with something really difficult right now. And. The ability for me to hop on and say, hey, how’s your daughter doing? She’s like, oh my gosh, you know. My, my, my youngest just started driving. I’m like, you’re gonna start driving. I remember when she was like one, you know? Um, we’ve been in relation for 15 years. What does that business do? It’s a military recruitment firm, so we help the military recruit. Hard to get. Kind of across different series.

Justin Forman [00:39:15] Hard to get people sounds a little suspicious for a record. I think we veer off of that.

Brent Beshore [00:39:20] Yeah, yeah, it’s kind of like one time I was at a national defense. Event and I sat next to a woman and I was like, Oh, what do you do? She was like, I work in the Middle East, and I was like oh cool, like get more specific. And she’s like, are you new here? And I was like, I am, how’d you know? And she’s like… Yeah. Can I just give you a pro tip? Sure. She’s like, when people say they work in the Middle East, don’t ask more questions. This is not the place to be.

Speaker 6 [00:39:43] Yeah.

Richard Cunningham [00:39:44] We don’t post on LinkedIn. No, that’s hilarious. So get specific on both sides of the permanent equity equation. So you’re buying these businesses. I think we’d love to hear about some of the businesses because i saw the amusement park transaction and we gotta get into that And then the other side is you’re kind of hinting at the family office in Florida who laughed you out of the room and was like, I’m not giving you capital for 30 years. Talk about because you’re deploying out of a pretty sizable fun right now that took an outside capital. Talk about that partnership with the investors who have to kind of reorient their thinking around. The long-term hold. And hey, in- three to five years I’m not going to see a liquidity event in one of these businesses sells. Traditionally, in your model, there are opportunities for sale. What does that look like? How are you guys bringing them into the mix and saying, hey, this is an opportunity for. Cash flow and for all of these other things that comes with this. So kind of break down the strategy from both sides of the aisle if you will.

Brent Beshore [00:40:31] Yeah, maybe you started on the capital side first because it really enables us to do what we do, right? If we had a traditional two and 20 structure, 10-year fun life, we just couldn’t. Make the promises we make, we couldn’t do the things we do. Honestly, I probably couldn’t sleep at night, which is by far the most important thing right getting a good sleep Um You know, I feel like our. Our structure. It really selects for incredible investors. Because when you go to somebody, most people would say, hey, we want to take your money for 30 years, like. They’re going to tell you no, and like, no, just straight off the bat. And by the way, it’s a very common, it just outside of our mandate, we can’t do it, you know, and we always say, of course, it sounds like they’re bad people or anything. It’s they have a mandate. They have constraints on their capital, they can’t do it. So it’s a very rare investor. That can give you capital for 30 years. By the nature of that, their longer term, their higher relationship, they’re excited about the long term that we are. Um… So I feel like we’ve got. Some of the best investors in the world, the people who think like that. It’s just rare. And so WashU, their endowments, our anchor investor, Scott Wilson and Adam and Andrew and the whole team there. You know, it’s been a beautiful partnership, and I tell you what. Know, COVID hit, I just want to tell you a little vignette, COVID hit, and no one knew what was going to happen, right? If you guys knew, then you should’ve told me. Um… No one knew, and look, I had fears, and I remember calling up Scott and I’m saying, We may have a whole bunch of businesses that go to zero. I’m not sure if we’ll be able to float all of them. And, you know, I think. Most investors would say, okay, this is an opportunity. I’ve got the upper hand. Maybe I can negotiate some terms. Hey Junior! Userist line of credit, you know, kind of get sharky about it. And Scott did the most beautiful thing. He said… First of all, Brent, we’re 100% behind you. We have a lot of cash. And we would love to support you in whatever you need. You just tell us what you need And I said, well, Scott, I don’t need anything right now. Knowing that that was standing at our back. Knowing that we had access to capital if we needed it, that it was gonna be kind, generous, long-term capital. Made all the difference. It allowed us to focus on what mattered, to make good decisions. Um, that’s what you get with investors who I would say, get it, quote unquote, long term, right? And so, you know, we’re deeply grateful. Like I said, we think we have the best partners in the world. That enables us to go then to business owners and say. Um, everyone else is going to, um, try to resell you within a short period of time. Probably acts a bunch of your leadership. Kind of bring in their people, maybe move it out of the community that it’s in. Levered up with a bunch of debt And it’s just going to completely change the nature of the business. We can come in and say we like you because you’ve done a great job. We wouldn’t be interested unless we thought you did a great job. We want you to continue to do a good job. We hope that. We can support you and maybe increase the trajectory, but we’re not trying to completely transform, remake the business. We’re trying to help support you in your vision of where you want to take this. So let’s talk about that. Let’s talk about what we should be doing. The ability to not use debt is highly underrated. You know, math is pretty straightforward. You know, if you know exactly what the future holds. It’s not hard to say, okay, use max leverage, but as little equity as you can, you’re gonna get incredible returns on that equity. Things go okay. The problem is the world is unknown and unknowable. Like that is our viewpoint. And it’s been proven over and over again, especially recently. I have no idea what’s going to happen the next year. Right. Um, I can remember I was in a conversation. It was, uh, fall of 2019. We were completing our $300 million fund raise and our last fund. And I was talking with some investors and I was like, do you guys see anything on the horizon that could potentially like. Upset the apple cart. No, everything was great, everything’s awesome. Fall of 19. This is great, fall of 19, nothing could be going on. We buy an aerospace business fall of 19. I don’t know if you guys know this, but aerospace never goes down. Always Flatter Up. Always flatter up. We’re working the seller’s team and one of the guys on the team says. Are you guys like? Complete idiots, like you’re buying an aerospace business with all cash, like. This is a bunch of parts. You can lever it like it’s, this is. Why are you guys doing it this way? And we were like, well, because we believe in this, you know, philosophy that we have better optionality. We have no idea what’s gonna come down the pipe. And they’re like. All right. We are idiots just for different reasons. Um Turns out, it’s not like we foresaw COVID coming, believe me, we didn’t at all. But when COVID came, we were literally the only one of the people in our industry who didn’t have that. And we made 10 years of progress in two years. And the business completely transformed. I think it’s 7X what it was. In 2020 now. And um… It’s been an incredible success story. And it wouldn’t have happened if we had been beholden to banks and being able to do that. So I think it’s the pairing of. Long-term time horizon. The lack of debt that we put on these companies. And then our fee model, which is. Crazy. I mean. I think it’s unique, I don’t think anyone else has done this, but they take no fees of any kind. No reimbursements of any kind. There’s no cash that comes from our portfolio companies or from the LPs to us. Outside of… We take a percentage of free cash flow above a hurdle as we return cash back to investors. So it’s incredibly entrepreneurial. You know, said differently, there’s no fee income coming in. There’s no incentive for us to. Amass more and more resources so that we can get more and more fees, which is kind of the trap that traditional private equity falls into. We’re doing it just. Purely for the love of the game and for what we’re doing and we’re pairing our capital with their their capital and we are trying to do the best we can, and if we can’t do well, like our investors. Make more money than us. And if they don’t make money, we don’t make any money. They had to make a lot more than us for us to make money. And so I feel like it’s those things that really just perfectly align. You know, the incentives at the company level, the incentives of the permanent equity level, and the incentives that the investor level are all aligned as well as they possibly can be. To make good decisions. And again, it’s kind of like. We want to have all the incentives lined up to push us in the right direction, we can still screw it up. We do, we have to say sorry. But… I don’t feel the poles of traditional fund manager in having to make those trade-offs.

Justin Forman [00:46:49] That’s awesome. Well, this is a special episode. It’s fun to be here at South by just to talk about this and this convergence of. Faith Driven Entrepreneurs and Faith Drived Investors is going to air on both of those. I want you to talk about just kind of where some of those conversations for you guys and the importance of community hits. With Main Street Summit. I just want you to just kind of talk about. What is it? Who’s there? What’s that journey been like?

Brent Beshore [00:47:10] Yeah. I joke that. Private equity is an excuse for hospitality. I like I love my friends becoming friends, like nothing makes me happier. I don’t get any envy. If they’re all getting together without me, it might be. But for the most part, I want them to go off and have a great time together. For me to be able to see my friends become friends is just the greatest joy in my life. And I think, you know, kind of going back to part of our earlier conversation. You know, to be known means to be in community. And most people don’t have access to community, especially in the financial world. And the community that we do have access to feels very shallow. Transactional. Money focused and was what we’re trying to do with Main Street Summit. We were at another event called Capital Camp that’s only for investors. We’re trying to bring people together and say, hey. We’re all here to do well. We want to be excellent at what we do. There’s no sacrifice of excellence. If anything, I am way more excellent at my job as a follower of Jesus. Than I was as an atheist. Um. We want you to be excellent, but we want you to be in relationship and remember what excellence is. Excellence, if you’re shooting the lights out and you’re making tons of money and you are sacrificing your family at the altar of success. You are losing. Like, yeah, you got a yacht and you have no one to enjoy it with. And so we try to have messages like that where it’s not a, so it’s on a faith driven event necessarily. I mean, there’s a lot of people of faith at the event. We want people to be authentically who they are. And we want it to be something where people feel comfortable inviting their atheist or maybe it’s a person of a different type of faith. To come to the event. But we can all share these values and say, hey, we’re pursuing excellence. We’re putting our family first. If we want to be in real relationship. And that aroma of Christ, I think, just comes through. I think that people, I mean, why don’t you talk to it, Richard, I think you were there. I knew it.

Richard Cunningham [00:49:11] It was unbelievably powerful. First of all, you show up to Columbia, Missouri, it’s fall. It’s beautiful. Which is the center of the known universe. The center of known universe

Justin Forman [00:49:18] Waco was that? What’s that? I thought we established Waco as the center. Okay, they’re competing closely.

Richard Cunningham [00:49:23] Absolutely. But like, and it just feels like when you show up to a conference and you feel this rush of like, I got to meet, meet, network, network. And somehow, some way, you’ve created and curated this environment where Main Street Summit takes over all of downtown Main Street. And things just kind of slow down, you’re like, wait. I’m here to just like fellowship and enjoy. And then the people you put on the main stage, which is just so commendable is like John Coleman gets up there and he’s like, Hey. We’re all here to make more money, it feels like. But I’m actually gonna talk about how that’s actually not beneficial to your soul is to pursue money. Alan Barnhart gets up there and talks about giving away. Billions of dollars and how just the Lord called him this radical generosity. And so you are so winsome and strategic and how you position people up there but you’re hittin’ on it. It speaks to this whole person. I mean, you put your personal trainer up on stage to talk about just being healthy. And what it looks like to go on a fitness journey because We are mind, body, spirit, soul, as we run businesses or invest in businesses. It’s this incredible kind of opportunity to say, Hey, let’s talk about. The whole person and there’s. Fun whiskey and tequila tastings and there’s great live music and it’s just it. Had this kind of ability of like, I walked back and as a you know, middle of the week event and I was like, I feel like I just had the greatest long weekend of all time with a bunch of really special people. So you guys have nailed. Just the heart posture behind it, so keep going, but…

Brent Beshore [00:50:34] Keep going but well honestly i i mean we’re here you know we’re in austin we’re at south by southwest i mean as i have in my head of what i hope it becomes You know, South By started with. 40 years ago? 50 years ago, maybe we’re pushing now. I don’t even know. It’s in a long time Um, and I’m, you know, I’m sure it started small. I’ve talked to a bunch of people who started these events that became big and they were like, and we couldn’t get anybody to come. I mean, Allen and co, I talked to the guy who runs the Allen co conference, Which is like the, you know, if you see Bill Gates walking next to Warren Buffett, it’s at Allen co, right? Like that’s, you know, they all got vests on the old puffy puffy vester in Sun Valley, And I talked to him and I was asking him all kinds of questions about how do they do things, what are they working on, all this stuff. And he said, well, how many people do you have do your first year? And I said, oh, you know. First-year capital camp was like I think 260 and he’s like And I was like. Oh, man, that’s not very good. Is it? He’s probably going to he’s like. We couldn’t get like two dozen people to show up the first 10 years of the Allen Coat Conference. What? And he’s like, yeah, it just over time gains momentum. Being here is actually, I’ve never experienced South by Southwest. One of the things I’m excited about is. Got an invitation to speak tonight. I’m excited to just go and experience it because What in my head is South By is kind of where I want Main Street to go, which is a festival. I want it to be a festival where instead of, you know, food and wine or instead of. You know, films. You sit in relationship with people and learn and grow together. And different niches and different interests and different industries and. Want all of those people to come together in this very broad tent. So whether you’re. Running a startup, whether you’ve got a 50-year-old mature business. Whether you’re an owner or an operator or an investor in this area of the market, we want to create the big tent gathering. Where people start to come in. And say, hey. We want to be in relationship. We want be known. Let’s gather there once a year. And make it something on the calendar that we go to.’

Richard Cunningham [00:52:20] I think you guys have captured lightning in a bottle. Gravitational force type of thing. And I bring up Main Street Summit, people are like, you got to go to Main Street summit. Oh my goodness, I saw so-and-so was speaking or so-so is there, so. Kudos and job well done. I just love that your philosophy to private equity and kind of your redemptive mindset. Gets to kind of permeate throughout all of this, because people naturally look up permanent equity or be sure and. They start looking into. What do they do and how do they go about it? And they’re like, wait, what is this? Long-term hold private equity company. That’s not just like stripping down. It’s just a really. Kind of winsome way to kind of. Showcase what you guys are all about as well

Justin Forman [00:52:56] Fun conversation. It’s great to be with both of you guys. Friends, if you’re listening to this and you’re wrestling with this question of like, man, it feels like a lonely journey, or it feels that you’re in that burnout stage, I would just encourage you, whether you’re a faith-driven entrepreneur or a faith driven investor. Find somebody, find somebody in a place where you can begin to get known. And so that it starts with the little things that pull us off track. As we talked about today, it starts small, and it starts little. Find a place. An event, a conference, whether it’s Main Street Summit or some of the opportunities that are all over the Faith Driven Entrepreneur and Faith Drived Investor site. But just take a faithful step. Take a step towards somewhere where you can be known. So, great to be with you guys. Thanks for tuning in, we’ll see you guys next week.

Close [00:53:39] Come for content. Stay for community. Join a faith-driven entrepreneur group online. No cost. No catch. 

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With the US credit rating downgraded and tariffs reshaping global trade, markets are sending mixed signals about what comes next. Hosts Richard Cunningham and John Coleman welcome Matt Monson, Partner of Public Equity at Sovereign’s Capital, to break down why the Magnificent Seven’s dominance might be masking hidden risks in your portfolio and how massive AI investments from Middle Eastern partners could reshape America’s economic future. From the Federal Reserve’s impossible position to the real impact of trade uncertainty on Main Street businesses, this episode cuts through the noise to reveal what investors actually need to know.

Please note that the views expressed by the hosts and guests are their own and do not necessarily represent the opinions of Faith Driven Investor.

Episode Transcript

Richard Cunningham [00:00:00] You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ-following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening.

Intro [00:00:17] Hey, everyone, all opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies of securities discussed. And this podcast is for informational purposes only, and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham [00:00:44] Friends, welcome back to another episode of the Faith Driven Investor Podcast. Great to have you with us for episode 198. John Coleman, we are creeping up on 200, which is really exciting. It’s Marks on the Markets. It is technically the month of June. I will admit it is May 20th and we are recording this episode a little further in advance than we like to record our Marks on the Market episode. But that just means life is full and there’s a lot of good things going on, gentlemen. And the nice thing is we’ve got a couple of juggernauts here to talk markets. And so these insights will still be relevant, regardless of us being seven business days away from this podcast releasing.

John Coleman [00:01:19] Well, fortunately, we live in a really slow news cycle.

Richard Cunningham [00:01:23] Absolutely.

John Coleman [00:01:23] So what could happen over the next 10 days that would make our comments outdated?

Richard Cunningham [00:01:28] Literally nothing, absolutely nothing. So there’s the voice of John Coleman. John, we’re joined today by our great friend Matt Monson out of Denver, Colorado. Matt, I pray the weather is better where you are than where I am in Austin, Texas. We’re feeling summer.

Matt Monson [00:01:40] Richard, it is always beautiful. Thanks for having me.

Richard Cunningham [00:01:42] We’re pumped to have you, man. Guys, let’s start with this. A couple days ago, the US credit worthiness was downgraded. Did you guys see this? So we went from AAA down to AA1 from Moody’s, and this now joins S&P and Fitch, where they have long had the US rated back, that’s back to 2023 and 2011. Markets haven’t really kind of responded in some like big downward way. What do you make of all the spent, Monson.

Matt Monson [00:02:09] You know, I think there’s room for someone who’s wittier than I to come up with a new phrase other than the risk free rate because it seems like there’s a little bit of risk now in U.S. Treasuries. It’s the slightly risky right now. That’s right. I mean, you know, big surprise, right? If we spend more and keep racking up the debt like sooner or later, we’re going to end up with a whole lot more debt than we can support. So I don’t think anyone should be surprised by it. And that’s probably why the markets didn’t react is a lot of folks in fixed income space saw this one coming. Yeah. I mean, this.

John Coleman [00:02:42] This has been on the horizon for a long time. I think probably the US rating was slower to drop because the US dollar is the world reserve currency, and it was the most stable of the currencies. And what’s interesting about all of these, right, is the US is definitively in an unsustainable fiscal condition. I think the debt is at something like $36 trillion. We’re not having to refinance it at higher interest rates. The new budget, which I know we’ll talk about, leads us to something like an eight or nine percent deficit. So not government spending, an eight to nine percent annual deficit adding to that debt. There’s just no way that makes sense. I think one of the reasons markets have kind of priced that in and one of reasons the dollar has remained somewhat strong is because when you look around the world, this is a problem almost everywhere, right? Almost everywhere in the developed world. Has an unsustainable fiscal condition right now. I think the Japanese prime minister recently went public and said that he thought their fiscal condition was less sustainable than Greece’s, particularly because of their decline in population. Germany is the only place in the EU right now that seems to have a somewhat sustainable fiscal situation. China doesn’t report real numbers, but everything that we hear coming out of China is that their economy has slowed, that they’ve got. Internal debt as well as their national debt. So internal debt, meaning different provinces, the different state controlled companies, etc. And here in the US, we got the same thing. The states are typically very indebted, many of them unsustainably. So our entitlement programs can’t be paid for even under the current deficit spending that we have. And it’s got to be a wake up call for national governments because this is unsustainable. And one of my hopes is that Moody’s taking action and downgrading. The U.S. Credit rating is a wake-up call for the people of the United States who will always have to lead their elected representatives who have really very little incentive to reduce spending, given that spending produces votes. And I think, you know, hopefully this is a time for us to take it seriously because markets have not reacted, but over time, the markets are going to have to react more dramatically to this if we can’t solve the unsustainable government fiscal situation that we’ve gotten ourselves into. That’s my position at least.

Matt Monson [00:04:58] Yeah, that’s right, John, no one would run their personal lives like this. So why should we run the country like this? That’s well said.

Richard Cunningham [00:05:04] It’s a moody-sided U.S. Government’s failure to implement measures to reverse the trend of large annual fiscal deficits and with growing interest costs because as the debt racks up higher and those interest payments come due, then they just start to kind of snowball on yourself. And without adjustments to taxation and government spending, the federal budget flexibility is just getting too tight. It’s too limited. And so that brings into the question this big, beautiful bill. John, I know you’ve spent a lot of time recently talking and helping the listener get into kind of the Trump kind of administration’s head on how they’re thinking about tariffs. This bill doesn’t necessarily show a kind of return to pre-COVID levels or let’s stabilize spending if anything, the deficit would grow. You know, you hear both sides, there’s proponents of it. There’s defenders of it, there are people who are up in flames about just more and more spending kind of on a congressional front. Matt, what do you make of all of this and kind of where do things go from here, kind of siding some of the budget deficits we’ve already talked about?

Matt Monson [00:06:01] Yeah, I think it’s hard to say that you want to reduce a budget deficit at the same time as what we’re talking about with the big, beautiful bill. I’m just not sure that we’re going to accomplish what Trump has set out to accomplish over the longterm. So I’m as excited and as interested as you are to have a front row seat and watching this unfold.

John Coleman [00:06:20] Honestly, I’m not an expert on what’s in there. It is a big bill. The early signs are that it doesn’t dramatically enough take steps towards reducing the deficits that we’re talking about, particularly with us having to reset many of our interest payments at higher rates, which is hundreds of millions of dollars that will go out the door for no additional programs. Congress has had a very difficult time even getting to slow down in some of the spending in some of these areas. Even moderate reductions. I think there was great hope that with the DOGE initiatives. And with more restraint that we could reduce spending enough to really start to get to, I think, what people have rallied around as a potential stable long-term situation, which I might disagree with on the margins, is a 3% deficit. So people say they want to get to 3% inflation, 3% economic growth. At least that’s what Scott Besson has talked about. Ray Dalio has rallied about the 3-3-3 plan, which would be those three numbers. And this bill obviously, from what we’ve seen so far, does not seem to get us there. And what’s surprising to me is, you know, if we were to just cut spending to pre-COVID levels, we would actually be in a much better fiscal situation. I think people don’t understand how dramatically the fiscal deficits have expanded because initially the COVID situation, which maybe was explainable, but where many of those things persisted after COVID. And the number of these benefit programs that have expanded in an unsustainable way and aren’t being addressed right now from what I can see in the midst of also trying to cut taxes and things like that. We’ll have to see what the final bill says, but if the early indications are correct and it really keeps our deficits in the seven to 9% range. I think we’ve got a long year ahead of us to try and get something more accomplished over the course of the next year because it obviously doesn’t do anything to slow the deteriorating fiscal situation that we’re in right now.

Richard Cunningham [00:08:20] So Matt, you’re a markets guy, public equities manager. You’re perceiving all of this as you make kind of buy sell decisions inside a portfolio. So let’s kind of shift over there as we’ve now kind of laid the land of the economic landscape and maybe just go back to start at 25 for us because there has been a lot of action that has taken place. You think of early April liberation day, S&P 500 reaching an all time peak in February, but then just, you know, a 20 plus percent kind of crash after liberation day. And now we’re back to. Pre-liberation day levels, if you will. Some markets have rallied. What has been kind of your annual take thus far on where things have started, where they’ve come? Where does the market sit today? Kind of some of your outlook that you guys have.

Matt Monson [00:09:00] Yeah, for sure. So I’m actually surprised the market recovered as fast as it did and as much as it did. And part of it’s because when tariffs get announced at 145% on Chinese goods, it’s a huge number. So, I recognize why markets sold off as fast and as hard as they did. But now that we’ve settled at 30%, at least for the next 90 days, I don’t think people are really internalizing how big 30% is on Chinese goods coming into the United States. And consumers haven’t seen it yet on the shelves. And so I think as those moments start happening where item A coming off the shelf might be up to 30% more expensive than item B, I think you’re gonna start to see it in markets again. And so that’s one thing I’ve been thinking about in terms of how markets have recovered and just valuation multiples. You know, I hear it every day that folks will say, gosh, large caps seem expensive. Well, if you back out seven companies and you- pretty sure you can guess which seven from the large cap index. The large cap the index doesn’t look expensive. It actually looks like it’s trading right on top of its historical trading multiple. And same with mid and small caps. They typically traded a premium to large caps, but are right now trading at a significant discount to large gaps. So just to put some numbers to that, and then I’ll hand it back over to you Richard. When you look at the median forward PE of the Magnificent Seven, I ran this this morning, it’s 31 times. The S&P 500 is 23 times. And to give you something to compare against when you’re an active manager who’s going out and picking companies with the same expected earnings growth as the Magnificent 7, you can pick them at 16 times. And so it just gives you a sense for how much price-to-earnings premium there is on those seven companies and how much that drags the entire index up. Hey, Matt, a couple.

John Coleman [00:10:50] Of follow ups on that. I’d love to get your perspective. One is we’ve been in this growth cycle for a period of time. We go through these different cycles of value and growth. I know you put out research how up into the great financial crisis, effectively, we lived through a period where small and mid outperformed the large cap and outperform some of the growth stocks. We’ve been at a very long cycle now where the largest stocks have perform small and mid. First question is just kind of are we seeing any reversion to the mean there? Are we seeing a potential turn in the cycle? I know people have talked about that for a long time, but the timing has been difficult to pinpoint if we are gonna see a reversion in that cycle. Have you seen any early indications of that, or is it still a continuation of the cycle we’ve been in?

Matt Monson [00:11:36] Yeah, I haven’t seen a turn. I mean, you’ve seen a little bit more sell off in the mag seven this year than in some of the other names in the market. And I think it’s just because they had a whole lot more PE multiple that could come out and that, you know, they had further to fall. You know, using what you just mentioned over the last decade, large caps were absolutely the winner. But what people don’t think about is that the decade before large caps significantly underperformed, not just small and mid cap equities, but they underperform US treasuries. And when you add the two periods together and you look at the last 25 years, large caps have still underperformed mid and small caps. And so I think there’s just so much recency bias to the performance of the S&P 500 that people are hung up on that index. I mean, likewise, you’re seeing that across, you know, different data points as well. You know, people wanna see rates go back to zero. Well, people don’t remember that even though Fed funds spent more time at zero over the last decade, the 20 years before that from 1990 through the end of 2009, the average was a little over 4%, which is where we’re at now. And so I think that, you know, people just get hung up oftentimes on looking at what the last decades has brought and not remembering the 20 and 30 and 50 years before then. Well, I’m looking at the-

John Coleman [00:12:52] seven Matt, one of the things that keeps going through my head is there could be various reasons the mag seven are valued at a premium over the others. Right. And I’ll offer a couple that you reflect. I mean, you’re in markets every day. One is just a flight to quality. They’re big, successful companies. This is not the dot-com bust in the early 2000s where it was kind of vaporware. These are big cash-flowing successful companies and just like people flee to U.S. Treasuries in times of crisis because of their safety, that could be one reason. The second could just be this increasing holdings in ETFs and passive holdings, all of which seem to have exposure disproportionately to the MAG-7. So I think it’s something like 30% plus of the S&P 500 asset weight right now is in those seven stocks. They’re also in growth-oriented passive holdlings, et cetera. And so there’s this self-fulfilling cycle where these passive holdnings, which have grown up so much over the last 15 years will reinforce the valuation of those. And then the third, which I haven’t totally discounted, is that those seven stocks actually are positioned, or at least some of them are positioned to take advantage of what I think is the biggest technological revolution of our lives, which is artificial intelligence. You know, if you look at some of the big names and we’re not making specific securities recommendations here, I’m just mentioning companies, but if you look at Google, if he look at Tesla, for example, which has a lot of AI embedded within its hardware for driving, for robotics, et cetera. If you look it Apple, if look at Microsoft, certainly. All of these seem poised to use their cash to seize on this growth in artificial intelligence. And so it could be that their near-term earnings don’t reflect that, but people are betting that these biggest companies are best positioned to take advantage of this technological revolution. Maybe there are other factors. I mean, why do you think there’s so much of a premium on, we’ll call it these seven stocks, but these seven, eight, nine stocks right now, which are all clustered around those technological advancements that we’ve been seeing.

Matt Monson [00:14:53] Now, going back to something you mentioned a minute ago, every dollar that flows out of active management and into passive, I think, in general, benefits the magnificent seven. And it’s because I don’t know that many active managers that put 30% of their money to work in seven names. And so if a dollar comes out of Active and it goes into passive and that means 30% goes into seven names, you’re right, you’re gonna incrementally buy the names that are already really big. And there’s good reasons to own them too. Like you said, if AI ends up being an arms race, and if you have to spend a hundred billion on hardware in order to get an edge, I think that there’s something there. Now, if DeepSeq can be replicated across a whole bunch of small kind of tier one players that can spend a smaller amount of money to build an incredible large language model that can outmode some of the other bigger, more established, let’s call it $100 billion large language models. Then I think it starts to break down that thesis. I wish I was an expert in whether or not that was true. I don’t think anyone knows. I think we’re gonna see as folks continue to spend and we figure out whether or not you can be small and win in AI. One more thing just to reflect on is that the Magnificent 7 do all have one key thing in common. And it’s that many of them have technology monopolies or in some cases duopolies. And When you’re looking at Google and the talk around whether or not pieces of their ecosystem need to be broken up or pieces of meta need to be broken or Apple is too fiercely guarding their ecosystem. I mean, the EU doesn’t have any of these companies headquartered there. They don’t seem to like any of them. And so I think that folks are taking risk in a sense that they’ve got 30% of their cash or invested capital in the stock market in these seven names. And yet these seven names actually share risk factors in common, and so it’s just something important to draw to listeners’ attention if they haven’t thought through it before.

John Coleman [00:16:52] Yeah, and that’s one thing I’ve talked a lot about with people, and Richard, you can direct us where you want to go, is if you just think about your risk budget, I think intuitively a lot of day-to-day investors think of the S&P 500 or similar indexes as a low risk way to get into the markets. They think this is broad coverage of the markets, I’m in the index, quote unquote, I’m investing what others are investing in this is like a safe bet I mean, it’s performed extraordinarily well over the last five years, right? So I’m not saying there’s not some validity to the performance of that index, but from a risk budget point of view, it’s worth people knowing you’ve got 30 or 40 percent of your exposure in these seven names, and because the risk factors are correlated, even more of your risk is in those names, right. And so you may think of it as a lower risk bet, and it’s certainly returned really well over five years. But that level of concentration with aligned risk factors. It creates more risk than a more diversified pool of holdings would be, whether that’s in private markets or commodities or a broader array of public securities. I think the average investor probably underestimates the risk that they’re taking by going into just the big passive indexes like the RUSP 3000 or the S&P 500 and the concentration in those asset-weighted indexes. In those in a few number of small names with correlated risk factors what that introduces to their portfolio and so that is something I think that investors need to grapple with with their advisors is you know this seems like the safe bet but actually do I need to diversify my holdings in some way so that I’m not entirely risk-adjusted to these largest names.

Matt Monson [00:18:35] Absolutely. And my favorite is when someone says, Well, I own five different ETFs. Well, within each of the five, you might still have 30% of your exposure in each of the five in the same seven stock.

Richard Cunningham [00:18:45] And just to tie a bow on kind of the Mag-7 conversation, looking at those seven specific names, you’ve got your positive performers on the year, Microsoft, NVIDIA, Meta. That intuitively makes sense. Microsoft has had strong earnings growth. NVIDia continues to kind of ride the AI demand and just the demand for their products. And then your negative performers, Apple, Amazon, absolutely tariff-related, Alphabet, you know, which is Google, a lot of talk about Search and OpenAI and ChatGBT possibly replacing. What is the Google ad revenue that is traditional search and then Tesla and just all the volatility they’ve experienced with Elon kind of floating between different positions. And so there’s your kind of three positive performers, four negative performers. And then overall, when you look at the indices that we’re talking about here, NASDAQ, S&P 500 that are heavily concentrated, Mag-7, both are about flat year to date. We’ve talked about the increase, the sharp decline, and then kind of back to pre-liberation day levels. Speaking of AI arms race, gentlemen, Once again, we’re recording on May 20th. How about Trump’s kind of tour of the Middle East and the big conversations with the kingdom of Saudi Arabia. One of the things he promised was foreign direct investment to the U.S. Just massive announcements around AI investment from UAE, KSA into the U S and the reciprocity there. And just kind of some of the forward momentum as we look at what was traditionally very tough and kind of hesitant relationships and now becoming kind of big time. Commerce, pro-commerce relationships between the US and these Middle East partners.

Matt Monson [00:20:17] Yeah, we’re thrilled to see this taking place because if the U.S. Wasn’t there striking those deals, someone else would be there striking those deals six months after. And so I’m thrilled to be as a member of the United States to be partnering with those countries around the future of their investments in AI hardware and software.

John Coleman [00:20:34] Yeah, I think if you go back far enough in history, Richard, some of those partnerships, and they’re not alliances because we’re not formal allies with those countries in the technical sense of the term, but we had been deeply partnered with countries like Saudi Arabia and the Emirates on multiple fronts, particularly through the Clinton and Bush administration, which was an extension of some of the prior policies before that. I think those relationships. Got a lot shakier during the Obama administration and subsequently, again, during the Biden administration. Two thoughts here. One is I do think constructive engagement with those countries, which actually have been liberalizing quite a lot. If you look at what’s happening in Saudi Arabia, I lived in Saudi Arabia for a few months, once early in my career. And if you look the country today versus when I lived there almost 20 years ago, it’s a dramatically different place. So it is good, I think, to build our partnerships abroad with economic ties, and especially to diversify those economic ties so that we have a broad base of countries where we’re getting that foreign direct investment. I think our economic relationships have become a bit too concentrated in places like China, which are now adversaries, at least on some fronts rather than partners. And then like Matt. I think this idea of getting quote-unquote friendly countries or countries with which we have broad-based economic partnerships, investing in U.S. Infrastructure, building those economic ties is something that we should seek. I think that will help to power U. S. Companies which are using that infrastructure to develop things that we can sell abroad. And I think those economic partnerships at least traditionally have mitigated the possibility of conflict. They’ve mitigated the possibility that things. Escalate in a military way or in a foreign policy way, and economic ties have tended to dampen escalation of various other types of conflict, which are obviously worse, even than economic conflicts. And so I think it’s good news, particularly as we need to, Matt mentioned it earlier. We’re gonna have to pour hundreds of billions of dollars into energy infrastructure in order to power all of these AI capabilities into semiconductor plants, into related technologies in order fuel this technological revolution. And I think seeking that investment abroad is actually a pretty smart way to seek it if we do that on terms which are friendly to the US government. I say we speaking as an American. I also think it’s pretty good for the world if we can get a handle on some of these technologies which could potentially make life better, potentially make it worse, but the technological revolution is coming and the question is whether we can keep pace with other countries with which we might have less trust like China in the development of energy and artificial intelligence or whether we fall behind like Europe has. And I think it’s good for America to keep pace, especially with some of the Asian economies like China. Where we are in an arms race right now on both energy and artificial intelligence in the broader technology ecosystem.

Richard Cunningham [00:23:29] And so as we talk in international relations, let’s go over to the tariff conversation. I know we’ve hit this the last couple of Mark’s episodes as it’s been an enormous headline over the past few months. Matt, where do you kind of stand? What have you seen in your portfolio, the companies that you’re monitoring? Mark, it’s hate uncertainty. And I know this conversation has bred a lot of uncertainty. We’re starting to see kind of some light at the end of the tunnel, if you will. There was a China deal kind of announced or at least the next 90 days. We saw a UK trade agreement come to fruition. Pretty friendly, favorable terms to the U.S., if you will. How are U. S. Companies responding to all of the uncertainty? What are you seeing within your portfolio? What’s kind of your general take and outlook with the tariff kind of broader conversation?

Matt Monson [00:24:10] Yeah, we had to build a whole framework based on analyzing the risk from tariffs, both on revenue and cogs. So I’ll just break down how we thought about it from a public equity’s perspective and how we analyzed all of our holdings for this type of risk. So first, figuring out how much of each of your companies that you own, how much they sell into China specifically, is the easiest part of the equation. Because thinking back only a few weeks ago, if there’s 125% tariff on a company sales going into China. That’s going to make that good less attractive than a substitute good, if there is a substitute. So what we did was we quickly figured out which companies were selling a material amount of their revenues into China. And in some cases, we reduced or we sold out of those positions. But we didn’t have a lot of those. The other side of the tariffs equation that is more common that people have been talking about a lot over the last few weeks is… So many of our companies in the United States get their inputs from or their cogs or cost of goods sold from China. Now, companies don’t break those out as cleanly in their disclosures as they do their revenues. So it’s actually been a really big research undertaking for us to try to identify which companies we have that source a material amount of their inputs from China, and now once you identify which ones do that, now the next question. Is where are the company’s sales, the U.S. Company sales? So I’ll give you an example. One company I was on the phone with said, well, we manufacture about a third of our goods in China, but half of our sales are outside the United States. So we’re never going to bring those goods manufactured in China into the United states. We’re going to sell those to our customers in Germany and in the UK. And so it’s actually a very complex spiderweb of. Components to be able to figure out how much gets manufactured abroad and whether or not that needs to come through the United States. And so that’s been a really interesting undertaking for us over the last few weeks. But going back to something I said earlier, even at a 30% tariff rate for goods coming in from China, I think that number’s a lot bigger. We started with something that was even larger, 145%. So now 30% looks relatively small. But if we would have started from nothing and gone to 30% It’s actually a much bigger number than what I think folks can appreciate.

John Coleman [00:26:26] That’s one of the things that is making the Fed’s job hard right now because the tariffs kind of by definition, if not absorbed by suppliers, which I don’t think they can be fully absorbed even at the 10% level, will be inflationary. Now, it’s a one-time step up in inflation, assuming those rates stay stable. Not everything is subject to a tariff including input costs because we don’t get everything abroad but we do get a lot abroad so it’s only a portion of the input costs that we’re talking about but even at a 10 percent level you’re talking about an inflationary impact and certainly at a 30 percent level with China you are talking about inflationary impacts. A lot will depend on where these bilateral negotiations go. We’ve got this 90-day pause, which I believe might be extended beyond 90 days from when they announced the 90- day pause, depending on how those negotiations are going. But if the conclusion of the UK negotiations are any indication, the Trump administration likely will stick to wanting to have an across-the-board tariff with almost every country at or around the 10% level. And I think if you’re the fed… You’ve got a very difficult problem right now because the U.S. Economy, at least the latest I’ve seen Matt, doesn’t seem to have slowed dramatically. The equity markets have recovered. Employment is still very high for those participating. Labor force participation is low, which we could talk about, but employment numbers are still relatively high. And we’re looking at the likelihood of inflation somewhere between two. And 5%, 6%, 7%, at least in a one-time step up because of tariffs, depending on how you calculate all the input costs. And so if your Fed mandate is full employment and low inflation, it’s really hard for you to drop interest rates right now. And I think we’ve seen a lot of the rates rise over the last few days. We saw mortgage rates top 7% again. And so I think, we’re in a sticky situation right now for the Federal Reserve where we can’t inject a lot monetary easing at the moment or drop rates. Because all of these other factors are making it difficult for the Fed to achieve its objectives given the broader policy framework. And so we are in a precarious economic position right now as we try and figure out what’s going to happen in these bilateral negotiations from a macro perspective. And then at the company level, you’re even more confused right now. You’re slowing investment. You’re trying to stockpile cash to figure out how you’re going to navigate the tariffs. Think about, I talked to a company the other day, a smaller company that sources 100% of its goods from China. 100% percent of its goods just went, a fairly large company went up 30% in price. They are struggling to figure whether they can pass that to consumers. That would be quite hard to pass to consumers, so they are in a very precarious cash position right now to see if they can survive the year. And that single example is happening in tens of thousands of small and large companies all over America, all over the world right now. And so I think the chances of a general economic slowdown have increased dramatically. The cause of all the uncertainty and the conservatism that that’s inspiring in companies, apart from the unfavorable rate environment, which makes borrowing more difficult, et cetera. So we are in this kind of difficult economic situation right now, where there’s not an easy way to relieve some of the economic pain that these companies are feeling.

Matt Monson [00:29:51] Yeah, and I’ll just say too, it’s self-reinforcing. When one company wants to pull back a little bit and reduce investment because they’re not sure what the future looks like, well, that reduction of investment is a reduction in revenue somewhere else, which means that they’re now forced to reduce their own investment. And so it’s a dangerous circle once it starts.

Richard Cunningham [00:30:11] That’s what we got into on our last Mark’s episode. If you hadn’t checked that out was Deirdre Gibson got into kind of the behavioral finance side of all this too. It’s just a human component that comes into the large macro response. Yeah, originally, it looked like a lot of the tariff impact was just going to kind of come in margin compression. And it was this, hey, how long can we hold without having to pass along significant price increases? And John, to your point, it’s eventually going to come and hopefully doesn’t come in one massive wave. Maybe that takes to my next question, both of you guys. Is Trump seeking an off ramp in these kind of new negotiations, these 90 day pauses, is he accomplishing what he set out to accomplish? Like I look at the efforts of Doge, I think we all can intuitively see the intention of the tariff revenue, which will enable kind of certain, you know, tax breaks to go in place that is helpful for the flourishing of the American people. But then you look at things like the big beautiful bill, which is possibly more spending. Where are you guys at right now as you kind of look at the overall approach in game plan? Are you still buying stock in the long term kind of philosophy or are you having kind of some questions about reconciling some of the decisions that have been made?

Matt Monson [00:31:18] So John, I’d love to hear your view on, you know, just the reworking of the tax base, you know, similar to what we saw historically.

John Coleman [00:31:27] Look, I’ll be honest, Richard. I would be pretending if I knew where all this was going to land. I don’t know that the administration knows exactly where it’s going to land right now, right? I’m not in those rooms at the moment. I don t know where it s going to land. I do think they are aware of the distress that these tariffs, especially at higher rates, were likely to cause, particularly in the small business community. And I would not be surprised if we see a series of measures to ease the pain, particularly on small businesses, maybe businesses broadly, but small businesses. Secretary Besant has hinted at things like accelerated depreciation schedules, maybe even rebates on some of the tariffs. I don’t think Secretary Besent has said that, but I’ve heard for small businesses there might even be limited rebates of some of tariff increase in price. There might be some measures to ease. The oncoming set of tariffs that are coming, I do think they understand that if we don’t reach the right bilateral negotiations in these trade agreements and get to a more predictable place, that we risk economic jeopardy in the economy. And so I do think they’re trying to work expeditiously to get those deals done. And I do think foreign countries are quite engaged right now. The US is still the world’s largest consumer. This has really upended the global trade ecosystem in substantial ways. I think this is priority 1A for many countries right now. But we don’t know where it’s going to land over the next three, six, 12 months. And I think the outcomes of that will matter a lot. Look, if we settle on lower trade barriers for American producers abroad because of the reciprocal nature of some of these tariffs and if we settled on something like a 10 percent tariff and it’s predictable and it stable and people can plan three, four or five years out. That the pain could be limited to businesses. If the uncertainty persists for a long period of time or if the tariff rates go beyond that or if we do get into a trade war with major counterparties like China in a significant way, I think that will have ramifications both for us and for China or from the other counterparties that we’re acting with. And so, look, I think my position is typically to stay invested, especially in assets that tend to appreciate with inflation. Like equities, like real estate, et cetera. Holding cash can be the right thing to do in any given moment, but it can also be risky in the sense that if you miss the big updates in equity markets, for example, that’s risky. If the dollar were to depreciate because of an economic slowdown, holding cash is risky rather than assets that tend to appreciate with inflation. And so I tend to stay invested. But I do think people have to be really thoughtful about the diversification of their portfolios right now so that they’re mitigating risks in their own portfolios that help to manage the exposures they have across different parts of the ecosystem. And part of that might be diversification even within the public equity markets where you get exposed to a variety of industries so that you’re not wholly contingent upon a certain area or industry that might get disproportionately impacted by some of these moves.

Richard Cunningham [00:34:36] Matt, I want to open up the floor to you a little bit and just kind of say, hey, broadly, what else are you watching with a close eye? You know, it could be the FDI landscape. It could be IPO and M&A markets. It could something on an international front. You know just what right now, as you think about your role as an allocator, engaging with companies in just some remarkable ways, which you’re obviously of course welcome to speak to as just a general encouragement. What do you have your eyes on?

Matt Monson [00:35:01] Yeah, we’re watching the 10 year closely. So historically there’s been a really well laid playbook where the moment that we come into volatility, the moment people are fearful, it was a buy US treasury, sell anything else kind of playbook. We’ve not seen that this time around. We’ve actually seen the opposite where people are saying, well, what are good safe havens other than the US dollar and everything else is really small Swiss francs is really small. Gold is small, Bitcoin is small. And when I say small, I mean, the asset class is just small. Like the amount of dollars you can put to work is small so if ever there’s a day where a significant buyer is buying any of those safe haven assets, and I’m not trying to say that I think that they’re safe. I’m saying in general, some folks in the market have claimed that they are safe. So I’m endorsing them. But they’re just such small asset classes that you can see their asset prices spike on a day that folks buy them. And so this is the first time that we’ve seen that this playbook hasn’t worked to go by U.S. Treasury. So the problem there is you’re seeing the 10-year yield tick up. And when that happens, I think that I believe that the administration is also watching that closely and keeping their eye on that as they determine which path they want to take forward and how long they have to negotiate when it comes to tariffs. Do you think we’re gonna go…

John Coleman [00:36:21] Rate cut this year, Matt, what are you thinking about the rates?

Matt Monson [00:36:25] You know, I was around looking at rates when they were averaging 4%. And so I think a lot of folks want to see low rates of 0% because they maybe want to seem mortgages. They want to seed demand pick up, but I don’t think that we’re necessarily going to see rates back at 0% unless you have an economic scenario that demands that we drop rates. And I don’t think any of us want to that economic scenario that needs to take place in order to get rates significantly lower. So maybe they go down 25 basis points. I don’t know if that’s what we’re going to see this year, but I’m certainly not calling for.

John Coleman [00:37:01] A significant rate cut. Yeah, I think it’s gonna be modest, if anything. A few weeks ago, I mean, by the time this airs, I might have a different.

Intro [00:37:08] I don’t know if any of us…

John Coleman [00:37:10] A few weeks ago, I thought we were headed for a rate cut, probably, honestly, when the equity markets were declining and it looked like they were predicting an economic slowdown, which is probably the one thing that could trigger a rate cut on meaningful economic slow down. Absent some fundamental indicator moving in the wrong direction dramatically, if I’m the Fed, I have a really tough time cutting rates right now, right? I don’t think they’re going to hike them because of the signal that that Good sin. But my best guess at the moment would be they take a wait and see approach to see what the fundamental economic indicators are for the next few months.

Matt Monson [00:37:44] I agree. And, you know, double back to something you said earlier, too, John, like there’s been really strong growth in the United States. However, think about your personal household budget and your neighbors and your friends who went out and made a purchase when tariffs were being highly rumored or maybe announcements had just come out and they pulled forward some of their purchases. So I’m actually really curious to see what’s going to happen of growth rates in the month of May and in the month of June and July. So we shall see.

Richard Cunningham [00:38:15] That is an interesting thought, Matt. Yeah, and just as a reminder for folks out there, as Matt kind of said, he’s got his eye on the tenure. It’s hovering around four or five right now, climbed pretty steadily in these last couple days. And then the rate cut conversation that John is speaking to. As a reminder, 50 bits cut last September, followed by 25 bits cut in November and December, and there has been no cut in 2025. All right, gents, let’s pivot one last time here to the broader FDI conversation. Matt would be remiss not to talk about some of just the things you’re seeing. As it relates to just the broader framework that we all know, which is avoid, embrace, engage and some of the inspiring work you’re doing or you’re seeing colleagues and peers do in the broader FDI space as you think about loving on companies, shining a light to companies, challenging them to kind of go further on some of their spiritual integration or human flourishing practices.

Matt Monson [00:39:04] You know, there’s a few big themes right now in the faith-driven investing movement that I think are getting people really excited as they become aware of that theme and then really get their arms around it. So I think for the longest time, Christians who had their money invested in the market felt that their money was only going to have a positive impact once it was taken out of the market and it was given away to a charity of your choice. And so what we’ve really seen happen in the Faith-Driven Investing Movement, you know, and pick up steam over the last few years. Is the recognition that your capital can have impact while it is invested in the market before it is given away. And so being able to be part of that ecosystem where we’re encouraging people to give yet delivering an incredible amount of impact along the way has just been such a thrill for me to be a part of. And then when it comes to the companies, and I’m just speaking from a perspective of what we do, the companies that we invest in. That are having the greatest amount of impact by way of creating just these exceptional cultures for their employees, are also the companies that generate the best financial performance. So I think historically there was this thought in people’s minds, a bit of a paradigm, whether they were consciously aware of it, or it was just subconsciously in the back of their minds that impact investing must require some trade-off and the trade- off must be returns. And so it’s been really fun to be part of this story and sharing with folks. That impact investing can drive better returns. And so if there’s no trade-off, then why wouldn’t you pursue it to let your capital have impact over those 60 years while it’s growing before it’s given away?

John Coleman [00:40:43] You know, pivoting from the prior conversation, I am incredibly optimistic on two fronts. One is I’m just optimistic about the environment I’m seeing where company leaders, real estate developers. Are thinking a lot more about the way in which they run their company, about the advantage of culture. We see companies every day, CEOs every day trying to adopt practices which are good for their people. I think there is a broad theme right now that morally people just feel that they should try and help their employees to thrive, that they should trying to help their customers to thrive. And then financially they’re starting to really believe in this idea that great cultures outperform. There’s a lot of data around that that Matt and team have been great about. Alex Edmonds out of the London Business School has put out some, McKinsey’s put out, some our team, you know, Matt and Justin have put out. Some there’s real evidence that great cultures can outperform over time companies that have poor cultures. And so we’re seeing people both realize they have this. Moral commitment to people to try and create thriving workplaces to address this crisis of purpose and meaning that we have to help their employees flourish and thrive. And I think as a part of that, we’re also seeing a re-evaluation of the impact or values-based investing ecosystem. It was so dominated by the ESG framework for some period of time, for better or worse. Now I think people are looking at that differently and they’re starting to think about the impact on individual employees and customers within company. There’s a shift from some of the macro issues that ESG might have focused on into employee care issues, for example. We’ve recently encountered a guy named Terry Teeley from Impact Evaluation Lab, who’s doing a lot of good work on this, trying to evaluate how different fund managers are approaching this, how they’re thinking about their companies, and there are a lot other initiatives. And then on fate-driven investing specifically, I think we’re seeing a lot really positive movement among the managers that we’re saying rise up in the ecosystem for adopting some of these practices, a lot interest in it. Companies really wanting to be partnered with capital partners who can support them and the efforts to build great cultures. And so I am, if I think about when I joined. Our sovereigns capital four and a half years ago and really got introduced to faith driven investing versus now, even over that four and half year time frame. I just see way more clients, companies, fund managers talking about creating flourishing with the dollars that they’re putting to work and how they can create cultures that can both outperform and treat people well. And so I think we’re at the very early innings of a really transformative period in the economy where people are focused on that. I’m very optimistic about that at the moment.

Richard Cunningham [00:43:22] Yeah, to summarize you guys’ points, I don’t know who said this, and I wish I knew who it was so I could give them credit, but they said, hey, when you think about kind of the movements of God across the investing or like financial landscape within the church, someone said it started with the bad debt. The debt is bad movement. Think of like Dave Ramsey and just avoid debt at all costs, credit cards of the devil. And then it went into this kind of recent movement, which is the generosity movement. Matt, that’s what you were talking about. Make as much money as you can in one hand so you can give the rest away. And I think the point you guys are speaking to that we’re stepping into is this balance sheet movement. And when capital is in motion, what is on your balance sheet can also be leveraged for kingdom impact, not because God needs us because we get to participate. Matt, you’re about to say something.

Matt Monson [00:44:01] Yeah, I just really wanna lay this out that let’s use a hypothetical household that makes a hundred thousand dollars a year in income. And let’s say they’re tithing on that. So they’re giving away $10,000 a year. Let’s say, they have a million dollars saved. And this just is our hypothetical couple, right? The million dollars that they have saved is 100X greater than the amount they’re tithing every year at the 10,000. So back to your balance sheet example, Richard, this is why I wanted to jump in. The balance sheet is 100x greater than the amount that’s being given every year. And so the impact that that can have is phenomenally larger than what’s being given away every year and it’s being left aside and not focused on.

Richard Cunningham [00:44:47] Not to downplay giving, because it absolutely has a role. But there is an exceptional opportunity now to lean in with the balance sheet. All right, fellas, take us home with some scripture. Let’s go to God’s word. John, we’ll start with you. What’s the Lord been teaching you in and through his word lately? And then we’ll let Matt close.

John Coleman [00:45:01] My gosh, thank you for starting with me. We’re just testing you making sure you’re on top of your reading You know, I’ve been thinking about the Psalms a lot lately and reading through some of the PsalMS I think maybe on a prior podcast. I mentioned my favorite new Christian music is this song called still waters That’s about Psalm 23 and there are just so many Psalms where David in the midst of uncertainty Is seeking a sense of peace, right? He does want to be led by still waters, right He’s asking God to be a good shepherd to really help reduce his anxiety, to stand up against his enemies, to give him a sense of comfort. And when life is moving so quickly, I think our natural predisposition is to take things on our shoulders. It’s to try and be in control of the outcomes that we can drive. It’s become anxious about the future. Matt and I live in a pretty anxiety-inducing industry at the moment to some extent, but it’s to be anxious about it. And David was so good, I mean, he was also anxious. He lived in uncertain times at various parts of his life, obviously, and he just kept returning to this idea that God is the good shepherd, that he can lead us beside still waters, that he could calm our souls, that even in the face of death, that we should have no fear, that God’s with us, right? And as I return to those Psalms, it’s just such a great reminder for me that I’m neither the first nor the last person that’s experienced that kind of uncertainty and anxiety. It’s a permanent part of the human condition, often far more serious than the type of anxiety or uncertainty I experienced working in financial markets. And God is a God of peace, right? He’s a God that cares about us individually. And that if we really return to Him, if we trust in Him, if we submit ourselves to Him that He can give us a peace that surpasses all understanding. Right. And I think that should be a hallmark of us as faith driven investors is that even in the midst of uncertainty, we focus, we pay attention, we’re detailed. You know, we strive for excellence, but in the midst of that, we have a sense of peace because we serve someone greater than ourselves and because we’re promised that the God we serve is in control. And our momentary anxiety or uncertainty is not something that dominates the rest of our lives or certainly in the grand scheme of eternal life. And so those Psalms have just been really comforting to me lately as I’ve kind of thought about David’s own journey and how he had to process the things that he dealt and how God was able to give him comfort. In even the most uncomfortable situations.

Richard Cunningham [00:47:27] Leanna Crawford, Still Waters.

John Coleman [00:47:29] It’s a great song, so no security recommendations today, but if you haven’t listened to Leanna Crawford’s Still Water, song 23, you absolutely should, wonderful song.

Richard Cunningham [00:47:39] I think that’s compliance approved too, which is a good recommendation. All right, Matt, what a privilege to have you on and join us today. Thank you for your commentary. What would you say? Has you been kind of spending time in God’s word?

Matt Monson [00:47:50] This has been really fun. Thanks for having me. You know, it won’t surprise anyone that all scripture seems to rhyme with other pieces of scripture. So what I’m about to say is just really dovetailing off somewhat John said. So I think that one of my weaknesses can be putting together big to do lists and checking things off the list and feeling like I’m in control and solving problems. And so. You know, you read a verse sometimes and you maybe have heard it a hundred times but it just talks to you in a different way. And so for me, over the last few days, this Proverbs 3, 5 to 6, you know, the part I’m gonna highlight for you here is trust in the Lord with all your heart and lean not on your own understanding. And this, and lean on your understanding part is the hard part for me because it’s really easy for me to default and do that and then to finish it out and in all your ways submit to him and he will make your path straight. So if anyone can identify with me and using this first, just to serve as a point to get you back on track, I’ve really been dwelling on this one over the last few days. Thanks, Richard.

Richard Cunningham [00:48:58] Well folks, thanks for joining us for this late May recording of a June 2nd Marks on the Markets, but I think you’ve probably enjoyed this and found the insights refreshing like I have. For John Coleman and Matt Monson, I’m Richard Cunningham, and we will catch you next time.

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