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John Cortines had a plan to become a millionaire by age 30 and retire by age 40. He had all the spreadsheets and the “Big Oil” job to prove it. But while pursuing his MBA at Harvard Business School, John took the class “God and Money,” where he ended up writing a term paper that became a book—and it changed his life forever. He began studying God’s Word to answer the question “How much do we need to give?” John ended his exploration with the question flipped to “How much do we really need to keep?” In this Faith Driven Entrepreneur Podcast episode, we talk to John about the book that he co-authored, entitled, ‘God and Money: How We Discovered True Riches at Harvard Business School.’ Listen in as John shares practical tools for how Christ-following business leaders can give biblically and responsibly. 

Episode Transcript

Henry Kaestner: Welcome back to the Faith Driven Investor podcast and indeed welcome back. Today we’ve got a special guest that John and I have on the program, John Cortines. John has written a couple of books now, the one that you may already know about. If you’re listening to Faith Driven Investor podcast, it’s preaching to the choir here a little bit. God and Money. How he discovered true riches at Harvard Business School is a formative work in the space of an ambitious marketplace investor that’s wrestling with Where does God have them? As we before we get back and we get to the regularly scheduled program here, I wanted to set this up because the work that John has done and through the organization, he’s spent a tremendous amount of time with generous giving. And then the Maclellan Foundation has had such an impact in my life. At age 28, I came to faith. It changed everything. I had a career on Wall Street. I pursued all the things that an investor might pursue on Wall Street that does not yet know God. And then at age 38, as bandwidth was becoming more successful, I met Daryl Heald at the Maclellan Foundation and the co-founder of Generous Giving, the organization that John has spent a lot of time working with. And he asked me this simple question and I alluded to this a little bit in the outset when we talked about may we do this out of gratitude, of gratitude for the gift given us? Daryl asked me, Henry, why do you give? And I had no frame to think about the answer there. I probably mumbled through something theologically […]. I think at the time Kimberley and I were probably giving away 20% because God had really blessed bandwith and we thought we should do it. I may have even answered something like, I don’t know, I want to pay it forward. I hope it wasn’t something as corny as that, but it might have been. But through the next six months and God’s Word, God and Jesus and the and the teachings of the Bible helped me to see that so much of the Bible has something to do with money. In fact, it felt that every single one of those six months, every single one of the days in the six months, had something to do with money. And it changed my completely changed my walk with God. I credit Daryl and that time in Scripture with my born again again moment, I credit the whole season one in going from black and white Christianity to Technicolor. And John’s here to talk about that. John, thank you very much for being with us.

John Cortines: Thanks so much for having me on, Henry. It’s great to see you and John as well.

Henry Kaestner: So as we get started, give us a foundation. And I think this is really important and that is we have some certain assumptions that we make as a foundation in thinking about how we invest, investing for the glory of God. How do we think about that across different asset classes, stocks, bonds, real estate? We’ve recently had some folks in talking about investing in cinema and in culture, but there’s this underlying premise and belief that we as Christ followers, have a different way that we might think about money, but we really haven’t gotten into that that much on the podcast. So there’s the formative experience that each of us has that we can go through that then leads us to how do we invest our assets for the glory of God? John, speak to us a bit about your work. As we do with every guest, we like to start off with an autobiographical flyover. So do that, but then bring us right up to the work that you’re doing right now and help us to understand how you came, to understand how you might answer this question. They’re all asking, like, why do we give? Why do we invest?

John Cortines: Absolutely. Thanks, Henry. Well, you know, the quick flyover would be I grew up in North Dallas, grew up in a wonderful Christian home, so thankful for my parents. And I’m going to focus on the money element of this because this was transformative. I love how you called it Born Again Again. And I really point to that in my own journey. So I love Jesus from an early age, wanted to follow him with my whole life. And I also had imbibed this, you know, Christian money formula, which is something like work really hard, live frugally, save a lot, don’t have debt, and by the way, give 10%. Like there’s this obedience thing. And I thought, Hey, that’s cool. And I really started loving accumulating money, starting with mowing lawns in high school, socked away $10,000. I went to engineering school and had scholarships, and before I ever stepped foot into my first full time job, I had $100,000, you know, internships and scholarships and all of this. And so my plan was to be a millionaire by age 30 or retire by age 40. And I had all the spreadsheets to prove it. And giving for me was actually that annoying cell in my spreadsheets that I could toggle lower and I’d be able to retire sooner. But I knew that I had to keep a certain level of giving to be an obedient Christian. And I was kind of the way I thought about it. I even enjoyed some of the giving I was doing, but I just it wasn’t a source of life for me. And so fast forward in my journey, I was working in Big Oil. I wanted to pursue a career track with them and I ended up at Harvard Business School after having launched my career with Chevron, and I was going to go back as an expat after my MBA. And that’s a very lucrative opportunity for those who know about, you know, that kind of a deal. So very, very excited about that. My classmate and I, who are in the business school, found a class at the divinity school called God and Money, and it just piqued our interest. We said, this is so cool, you know, a theology class on money and God and we love God and we love money. So how can we not take this class? And long story short, the next few months we went Genesis to Revelation. We were digging into Scripture and we were meeting all kinds of extremely generous Christians who had been impacted and were living their lives in radical ways, ways that we’d never heard about, even growing up in the church in terms of the ambition and percentages and commas and zeros in their giving. And we thought, this is unbelievable. The most striking thing was that it wasn’t an act of obedience. It was an act of joy and gratitude, as you were just alluding to. And so that led us to write a term paper that became the book, God and money and really changed our lives forever. And so for the last seven years I’ve been working post MBA was called by God out of Big Oil. I let Chevron know, hey, I’m going to work for a small nonprofit in Florida called Generous Giving. And they didn’t even try to talk me out of it. I think they thought I’d lost my mind. You know, this guy’s a lost cause. So 60 to 70% lower pay than what I had thought I was going to be going into. But it’s been this rich adventure with the Lord and so on. My coauthor, Greg and I have had both sides of the adventure. He’s been in the corporate world and has been living and giving in a radical way. And now I’ve had the privilege of being on the ministry side of this and meeting hundreds, if not thousands of givers and talking to people about their journeys and getting to spread the joy, the message that this is a source of joy and intimacy with Christ rather than the way I used to view it. Right. Just obedience.

Henry Kaestner: The highest education I ever had was the University of Delaware. Some people call it the University of South Jersey. We did not have a class on God and money. It comes as a bit of a surprise to me that HBS had a class called God and Money, but maybe it shouldn’t have, because I know that much of John’s formation is through some really great Christ following men also at Harvard Business School. John, did you take the God and Money class?

John Coleman: Well, to be clear, I think it was at the divinity school, right, John? So I actually was aware of it while I was there. But I would say, you know, HBS was a much better Christian community than I had anticipated. And John, I don’t know if you had this experience, but there was a very active Christian fellowship on campus with small groups in the different sections. And so I found that my faith was actually able to grow during that time in groups with others. And John, I don’t know if you experienced the same thing, but it sounds like you you did, at least to some extent. What was that like for you?

John Cortines: Yeah, I’m really thankful for the Christian Fellowship. It’s such an awesome community, you know, it’s a small minority, but it’s very vibrant. And yeah, it was a Tuesday morning men’s Bible study that formed actually what has become lifelong community. So there’s a a text chain and some annual get togethers in this group that I’m a part of from my time there. And these guys have been a real catalyst for spiritual growth in my journey. So I really praise God for that.

John Coleman: That’s awesome. Now, you did make a very different decision than most HBS students do or HBS graduates do. First, I’d love to hear just what the reactions were when you came to this decision. First, when you gain this insight about giving and then came to the decision to enter the nonprofit world first, how did that conversation go with your wife? I know you were probably married at the time. And then secondly, how did your classmates react?

John Cortines: Sure You know, I want to answer on a personal level first, because God did this foundational work in my life and honestly, my coauthor, Greg’s life for both of us, where we talk about this and God and money, it flipped the question we were asking. We kind of came into this big project of studying God’s word to ask, how much do we need to give? Is that a 10% tithe? Is that something different? Is there another way to think about it? And we left that exploration asking how much do we really need to keep it just flipped it for us and God has abundantly provided for us. We had these educations, these careers, these salaries. And so to the extent we can define what enough looks like and live, you know, not this poverty lifestyle, but just live a nice life and be blessed and put a guardrail in place. The upside and the financial upside of our career gets allocated to God’s kingdom in a different way. So there’s this really freeing mindset shift. And then when the call to go into nonprofit arrived for me and for my wife, who is, I would say, more sensitive to the Lord and more able to make those pivots than I am. We had already reframed our lifestyle expectations around a finish line, so then it was like, okay, we may not have that upside we were thinking where we can give six figures every year, but we already recalibrated our lifestyle. And so it actually becomes more possible to move into the nonprofit sector and live on those kinds of salaries. That’s the personal side to it. And then how did people react? You know, certainly surprise. I mean, that’s the big thing, because you just I was surprised. Right. Is like I didn’t go to grad school to take on student loans to then go earn less money and work in a nonprofit that it just it’s an upside down formula. So all I can say is that God made his calling very clear. And that’s what we told people like, you know, I don’t know what your faith position is, but this is a call from God situation and all we can do is answer it.

John Coleman: That’s awesome and encouraging. Talk to us. I mean, if you don’t mind. For listeners who are unfamiliar with the book, talk to us about the thesis of the book and what you offer to people who are trying to consider the role that money plays in their life in God and Money. The book.

John Cortines: Sure. So the book grew out of our term paper. So those who have done business school will appreciate this. You know, we don’t really write papers. John, I don’t know if it was harder when you were there a few years before me, but not a lot of paper writing going on. And so then we when we were in the divinity school, the professor says, Hey, you have to write a 15 pages paper to conclude the semester. And we said, Wow. So we said, Can we write it together? And he said, Sure, just make it 30 pages. So we’re like, Oh, shoot. So we started a research paper. Honestly, we said, I want to investigate Scripture and interview experienced Christian givers. And try to build a framework around how do we think about money and giving and the Christian life. So that’s really the foundation of the project. And so it starts, you know, the whole first chapter is just a fly over Genesis to Revelation. What does it say about money? And it was funny, even the publisher saying, you know, people aren’t going to hang with you for a chapter one that’s just a Bible flyover. And you say, well, we got to anchor it on that. And what we do throughout the course of the book is try and build a framework for a higher income or a more financially successful business leader in the 21st century who’s wrestling with what do I do with this money that God has provided and how do I be faithful? And so we propose down to numbers and frameworks around what that looks like.

Henry Kaestner: So John, I want to get into something right off the bat that I think is really applicable to our audience. I think that some number of folks are coming to understand that actually there’s a great opportunity to understand that God owns it all and we can worship by giving to God what is already His, participate in the work that He’s doing. And there’s been a movement of biblical generosity that I think is really picking up steam in the church, which is to be celebrated. It’s not as clear that the concept of investing according to faith through this knowledge that God is at all is at the same level yet. I think it’s building toward that. But as you come at things from the foundational level, which I think is the most important level about God owning it all, do you have any reflections on how we might think about our investment portfolio in light of God and money?

John Cortines: Thanks, Henry. You know, one of the most compelling things I heard a few years ago, and I know these concepts are familiar for the listeners of this show and the work that you all are doing and advocating for. So I just I’m really thankful for your partnership in this space biblically to advocate for this perspective. But the thing that changed my perspective on this was when someone said, you know, if you think about all the giving that someone will ever do or all the giving that even Christians will ever do, in aggregate, it’s a small slice of the overall wealth. And if you think about the investment portfolios, the size is just radically, radically different. And, you know, we could even say in round numbers, you know, the giving is in, I don’t know, tens of billions probably. But the investment portfolio is in the multiple, multiple trillions, even the tens of trillions. And so how we allocate our giving dollars and the fact that we do give radically, generously as believers, that’s a that’s a mandate. That’s a call. That’s an invitation. But I think you’re right. There’s less of an awareness to say, hey, what does it look like to invest according to these principles? The one thing I’ll say and I love your reaction to this, too, as an expert here, we see this real push around ESG in the secular world. And depending on when people are listening to this podcast, you know, the FCC has even just come out and said they’re building frameworks around this for disclosures of publicly traded companies around ESG. And that’s coming from our, you know, the postmodern, confused ethical soup that we’re all swimming in as a broad society. So I think there’s a massive opportunity for believers to be out in front of that, which we honestly haven’t been, but to really articulate so many incredible faith driven business leaders who are running their companies by these principles, but probably haven’t written that down in a thoughtful way or publicly disclosed it necessarily. So I would love to see us be more forward and articulate in saying, here’s how we’re running our companies, here’s how we’re investing our money. Not necessarily in this same exact definition of ESG that the secular culture may create, but in a biblically anchored way, some of which is going to overlap and some of which is going to look a little bit different. I’d love to hear y’all’s reactions to that.

John Coleman: Yeah, John, I think this is such an important topic. You know, what’s ironic is that Christians and other believers, whether they be Muslims or Jews for a thousand years, have been at the forefront of this issue. You know, some of the earliest codes about how you should invest, what you should invest in, what you shouldn’t invest in, actually came out of the great monotheistic religions in particular. And yet if you look at the modern ESG movement, as you described, it’s largely been a mainstream or secular phenomenon for the last 20 or 30 years. And I think we had gotten to the space for many Christians you mentioned earlier had divided their life in two and said, I’m going to make money and then I’m going to give, which was kind of a false dichotomy. And I think that many business leaders and investors had also said the same thing that, you know, the corporation’s only duty is to its shareholders and the investors only duty is to make a profit or to maximize return and had segregated those two areas, living their values in one area and giving, but not really trying to impose those on the way in which they ran companies or gave. In the meantime, I think the mainstream world led by a lot of large international institutions. Decided that it had to enforce its values or they had to live their values through their investing. And so they started to require companies to meet certain criteria on climate or on governance, etc. And that’s grown now. I won’t go off on too much of a tangent here and to something like a $35-40 trillion segment of investment management is ESG now. And yet if you look at Faith Aligned Investment Management, it’s really between $50 and $100 billion right now. It’s a tiny sliver of the market. And so what we encourage people to do I think is to not draw a false dichotomy in their lives that if they truly believe in the values of their faith and how those can help people flourish, and how loving God and loving your neighbor can actually transform the world, that they try and exhibit those through their investing strategies and even through the ways that they lead companies, not necessarily as Christian companies, quote unquote, but really embracing the values of their faith and beginning to live those out in every sphere of their lives. And we kind of have a catch phrase for that, which is all investing is impact investing. It’s this idea that impact investing isn’t 2% of what you do when you’re feeling generous. It’s really 100% of your portfolio because that whole portfolio is having an impact. The question is whether you’re going to control that impact, whether you’re going to wield the influence that you have through that portfolio or yield it to others who have their own agenda to pursue. And so I’m seeing and Henry, I think you’d agree with this. I’m seeing a lot more people and institutions waking up to that. But it’s interesting to see how the faith aligned or Christian world actually fell behind after starting this whole movement, you know, hundreds of years ago and is only now waking up to what the mainstream world has been living for a couple of decades.

John Cortines: Yeah, and I so appreciate that. And the historical context is fascinating as I reflect on my own personal journey. You know, I’m very analytical and I anticipated building this nest egg. Hey, retire by 40. So what does that look like? And I kind of cut my teeth in the bobble head world, if that’s a familiar term. You know, the founder of Vanguard, and it’s this idea of index and forget about it and you’ll be okay. And even the idea that you’ll probably be a head of active investments anyways, net of fees, and even if you’re not, you haven’t spent any time thinking about it so you can sleep easy at night. You know, I think there are many believers who would fall into that camp. And so the argument needs to be, you know, regardless of what you think about what the return, you know, returns one way or the other. I love what you said, John. All investing is impact investing. So when you buy an index, you’re buying a lot of stuff you probably don’t want to buy. And so to set it and forget about it and just collect your returns for 30 or 40 years, I think we can start setting that aside in light of a broader picture of the kingdom and the impact that those funds are having.

Henry Kaestner: So, John, we do a segment here toward the end of every podcast called Lightning Round, and we’re not there yet. But I just want to prepare you just so you can start getting ready. We can up the tempo a little bit, but I want you to spend as long as you need to answer this question, because I think it’s really, really formative. We know from Scripture that God loves a cheerful giver not to give out of reluctance or compulsion. And I think that it’s fair for us to take that and extend it towards how we think about faith driven investing as well. He wants to have a joyful investor, one that doesn’t feel like they have to go ahead and invest in this fund or that fund, because otherwise they’re going to be beaten with many blows. Right. How is it that you are able to find joy in giving and joy in investing? And what are some of the things that you’ve seen others employ as well?

John Cortines: Yeah, thanks for that question, Henry. I would say that here’s the biggest thing about how to become a joyful and cheerful giver, and we can apply this to investing as well. You know, why do we give let me start from that. We start from the character of God. As Christians, we believe that God is the giver. He gave his only son. We have eternal life. We’ve received so much. And if we’re made in the image of God, we are made to be givers. And so if we start from the character of God and we recognize the priceless gift of the Gospel, then we move into a posture of gratitude. And so that is actually my answer of how do we maintain joy in our giving and in our overall stewardship of money is to wake up every day with a posture of gratitude for what we get to do and for what God has blessed us with. And I would argue we talk about this a little bit in the book. True Riches, that the opposite of gratitude when it comes to stewardship, the opposite of gratitude is pride. And those two words aren’t often put together in contrast to one another. But I believe financially it’s true, if you think about King Nebuchadnezzar in the Old Testament is the ultimate example of financial pride. He says, look at this, Babylon, the great city that I’ve built to display my power and my glory. And he’s struck down. You know, he’s a negative example for us spiritually. But if we start from that posture of gratitude and receiving all that we have. As a gift from God, it becomes so much easier to have open hands and to give or to have the freedom to do our very best in our investments. But know that we’re going to miss some. We’re not going to be perfect. We’re not going to pick the perfect fund, but we’re living in the freedom of gratitude for what God has given us. So that’d be my one tip on living with joy in our financial gifts and investments.

John Coleman: That’s awesome, John. What a great testimony. I want to pivot to some of your work at Maclellan here shortly, but before we jump off of the topic of God and money and how you started to investigate this, I was really fascinated that you went Genesis to Revelation through the Bible and then part of your term paper was studying people who were good at this or were living this out. I was wondering if you could make it real for us. Who are, you know, one or two or three people that inspired you on this front in the Bible? And then who are a couple of folks that really inspired you out in the world today on this topic of God and money and living generously?

John Cortines: Absolutely. You know, one thing I’ll highlight in scripture is this awesome contrast. Luke is the most financially oriented gospel writer. So the gospel of Luke has all these extra money stories we don’t get in the other gospels. And there’s a contrast between the rich young ruler who actually does appear in multiple gospels, and Zacchaeus who actually appears in the we don’t need to get all into biblical theology and interpretation here, but Zacchaeus appears at the apex of the journey into Jerusalem that Jesus is on. It’s a key story for Luke in writing his gospel and the rich young ruler comes to Jesus, has a bunch of money, can’t get over the hump of realizing that He’s called to give in a radical way. And he walks away, sad, and Zacchaeus is met with the grace of Jesus Christ and in his joy, he gives away half of his assets and beyond to do restitution for where he’s wronged people. And Jesus says today salvation has come to this house, you know, an acknowledgment of what Zacchaeus has done. So just kind of looking at that contrast like, man, I want to be a Zacchaeus, not a rich young ruler who has the money but walks away from God because of that. Yeah. Making it real in terms of some people. I’ll give one example. I’m a saver. I know many people listening that will have that saver mentality as well. And I met this guy. We spoke over the phone. He’s a hedge fund guy and shared quite openly, you know, hey I am blessed with like a $5 million plus kind of an income in the last few years. And and he said, but I don’t save money. And it was kind of on the phone. It’s like, come again, you know, tell me what that looks like. And he said, Well, you know, we have our house. Our house is paid off. We’ve got some money set aside for college, for the kids. I have really good life insurance and disability insurance. So, you know, my family’s covered. But, you know, as far as retirement, I’m not in a hurry. I’m in my forties, you know, why would I save up a big retirement nest egg? And so we make all this money. We live a decent lifestyle, and then we flush the rest. We give it to God’s kingdom every year. He said, I think I need maybe 3 million bucks to retire on, but I’m on a glide path to save that. I’m not in a hurry. And we just give whatever we make beyond what we live on, we give away. And I just was so floored. I think I probably hung up the phone and sat down on the floor of my living room, you know, just like I can’t believe what I’m hearing, because if I was him, you know, I’ve saved for six months and then call it quits. And I think just kind of hearing that kind of ambitious generosity was very transformative in my own journey.

John Coleman: And I’ll tell you, one of the most encouraging things for me, entering the faith driven investing world about a year ago was just the extraordinary number of examples of that, you know, whether it be people like Alan Barnhart or Casey Crawford or others who are so generous with their financial resources and live so radically differently. I wanted to pivot here quickly, John, to your work today. So you’ve joined the Maclellan Foundation in a role related to giving. Tell us a little bit more about Maclellan and about what you’re doing there.

John Cortines: Absolutely. Well, you know, it’s been such an honor to be a part of the Maclellan Foundation, who is the founder of Generous Giving, where I worked for five years, and I’ve been directly on their team for two years now, and the foundations existed for over 75 years. And so the family and this foundation has been passionate advocates for this perspective on biblical generosity for literally longer than I’ve been alive on this earth. And so I’m so grateful to benefit from that. And there was this key revelation for them that giving is not just a means to spiritual ends. You know, it’s not that we give in order to see people discipled and baptized and all these things. But giving actually is spiritual fruit in the life of a Christian believer. It is a component of our discipleship journey with the Lord. And in recognition of that, they started this organization generous giving that shares that message. Many people will have heard of a journey of generosity, retreat, or their celebration of generosity conference, which are these no pressure environments where people who have, you know, more resources than the average person. Come together with peers and explore the kind of conversation we’re having today and hear stories like we’re talking about today and just get fired up as givers and in that journey. And so through that, it was really impactful on my journey when I was kind of wrestling through these topics, watching some of their videos online and meeting people who got their start at these conferences. So yeah, it’s been a great joy to be a part of it. And I’ll just say that for anyone who’s thinking about stepping into those kind of environments, the beauty of it is the neutrality. It’s just this is not a fundraiser. This is not a conversation with a certain end in mind. This is a non prescriptive but prophetic environment to talk with people and say, Hey, what is God’s calling on my life as a giver given that He’s entrusted these resources to me? And how do I make the most of the opportunity I have?

Henry Kaestner: All right. That’s beautiful. I want to affirm that. I also want to encourage people that might be listening to this is that while traditionally generous giving and the work of Maclellan foundation have tended to help people who are struggling and trying to figure out how do they give well? It’s the biblical message of generosity is equally applicable for a college sophomore, somebody who’s in India. I remember one of the things that really brought me into the work that you all do out of Maclellan was Daryl going over to India and spending time with the Dalits, the Untouchables, and preaching to them about how rich they were. And that translator like, Dude you know who you’re talking to? And Daryl was like, No, no, just translate like that. And of course, he is preaching a second Corinthians 8:9 and just, you know, to that God who was rich, became poor so that we are poor and might become rich. And so they could understand the new view of riches through the biblical message of generosity. And there’s a beauty in there that’s really about heart transformation. And I think that that has so much overlap with Faith Driven Investor, because Faith Driven Investing at one level is yes, absolutely. How do we steward investment capital across? Yes, it could be patient concession return, but absolutely market based return as well. How do we think about doing that? Well, how do we respond into that? And I hope that listeners will get a good sense for that. But ultimately, all of this is about bringing us back to God and knowing God and how much He loves us. So much. So anybody who’s struggling with money at all, the spirit of Mammon, if you will being able to understand that biblical message of generosity that you all have espoused for so long, sets us free regardless of our financial background. And I think that that’s an important thing to mention. Okay, we are here at the end of our time together. Just so you know, this is how this is going to end. The question you’re going to get at the end. You are not going to get the questions early on because it takes away the fun of it. But the question you’re going to get at the end is what is God speaking to you about through his word? And maybe it’s today, maybe it’s over the course of last week, maybe sort of last month. That’s what we can end with. That’s when you know this is all going to be over. But John and I have a couple of Rapidfire questions we’re going to throw at you first. Okay. You ready?

John Cortines: I’m ready.

Henry Kaestner: Alright good Okay. Number one, we see the exercise equipment in the background. I also know you enough to know that you’re really fit. What’s your favorite thing to do to stay in shape?

John Cortines: It is lazy exercise, which I would say is fasting.

Henry Kaestner: I was not expecting that

John Cortines: Trick answer Once a week, 24 hour fast spiritual and physical benefits. So that’s my lazy exercise.

Henry Kaestner: Wow. Okay, so that’s the second podcast cast that we’ve had on today that’s talked about how important fasting is in their spiritual life. And so you’re not spending time on that exercise equipment. That’s for somebody else behind you. You do fasting.

John Cortines: It’s theoretically for me, but I’d be ashamed to tell you how often it’s used.

Henry Kaestner: Theoretically. Okay. All right. Number two, we’re talking about the biblical message of generosity so I am going to put you on a spot here and maybe you shouldn’t have a favorite in this. And no, I’m not asking you about your kids. I’m asking you about a charity, a ministry that you and your wife have given to over time, that there’s just something about them that’s really inspired you.

John Cortines: Oh, man, I have developed this beautiful relationship over the years with Compassion International. Everything they do is about Christ and children and working through the local church. Those are their three C’s and they are so I’ve known their executive leadership and I’ve talked to their volunteers through translators in the field, and they all speak the same language, so gospel centered. So I can’t say enough about them. They’ve been our number one allocation as a family.

John Coleman: That’s awesome. We love compassion in our house, too. One of the great things you can do if you have kids we found is that for each of the kids, we have a kid overseas who’s about their age that they’re a pen pal with now that we’re supporting. And it’s an easy way for any family to get into supporting others overseas. I have a slightly different question for you all. Preface this by saying, you know, John has written two books, God and Money and True Riches. Everyone should pick those up, I think. And we can be certain that any proceeds from those are going to good used, as you’ve heard today. So buy extra copies for your friends. But John, what are you reading right now or what have you read? Recently that you think would be helpful to people investigating these topics?

John Cortines: You know, I’ll give a very unique answer, something people haven’t heard of, but especially if somebody has read three or four books I’m giving and they’re kind of like, Hey, I wonder what’s out there. There is a guy named Saint Basil the Great, and he preached some sermons on money and giving 1600 years ago. He’s one of the church fathers. And so you can find a translation of several of his sermons that’s called On Social Justice by Basil the Great. Man. It is good stuff. He’s a little bit in-your-face. The church fathers were a little bit in-your-face. So if you can get past his aggressive style, it is convicting and inspiring sermons on money and generosity. So in centuries past, the message was the same as it is today.

John Coleman: It’s awesome. So maybe we’ll close it out. John, what do you think is God’s call in your life right now and what are you learning from him?

John Cortines: You know, it’s interesting that there’s this theme I found in the community of biblically generous people that God has allowed me to be a part of. Whereas you start giving your money away, you start giving your time and your life away. And then very often the call of God emerges to adopt or foster. It kind of comes inside the home. So Isaiah 58, beautiful passage. Bring the homeless poor into your house. The glory of the Lord will be your rear guard. And God has really spoken that into me in my wife’s life over the last few years. And so we have foster twins who we received from the NICU 5 pounds each and they’ve been with us since then. They’re now two years old and I’ll be in court tomorrow on their case. And we’re praying for an adoption this year. So I would just say that there’s all this professional stuff and flying around and conferences and that’s a great joy. But but the conviction and the challenge and the fellowship with Jesus and trying to live this out every day at home and in my wife, who’s a hero, doing that even more intensely than I am day in and day out. That’s been the real area of growth for us lately.

Henry Kaestner: That’s super motivating, very encouraging. John, I’m grateful for our friendship, our partnership in the movement and just the way that you challenge us all, challenged our listeners. So listeners, thank you for having dialed in. Thank you for the support and encouragement we’re getting from emails and suggestions on people we might have on the podcast. Yes, as you might imagine, if you think this might be a podcast that might be an inspiration or encouragement to others, please pass it along. We have a new Faith Driven Investor group study that we’ve rolled out that you might really enjoy. It’s six weeks study. You get together with your peers to talk about how you can process what God is saying about investing. It’s some great lessons from Tim Keller, Andy Crouch, Mark Sheard, Finny Kuruvilla, a whole bunch of others. It’s just really super motivating, encouraging. I think you enjoy that. Thank you for having tuned in and may God bless you as you endeavor to understand how to invest capital for God’s glory. Until next time.

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Intel CEO, Pat Gelsinger, has been a leader in the Faith and Work movement for decades. 

In this interview from the 2022 Faith Driven Investor Conference, Pat talks about some of the most important lessons he’s learned as he’s sought to bring his whole self into the workplace over the years. 

He also gives insight into how leaders can balance their work and family life, empower their communities, and love their employees, partners, and coworkers who come to work with different faith backgrounds. Let’s listen in. 

Episode Transcript

Henry Kaestner: Welcome, Faith driven entrepreneurs. It is an incredible honor to be here with Pat Gelsinger, CEO of Intel. And when we think his faith driven entrepreneurs about what it looks like to be a faith driven leader. A lot of us think, well, gosh, we can talk about our faith or be informed by our faith if maybe we’re running a small company in maybe the Bible Belt or something like that. But other than that, we just really have to buy into a secular spiritual divide and maybe leave our faith at home and maybe just look at it on weekends in a church. If there is a place in America, at least that people think is not very faith friendly, a lot of people think Silicon Valley or they might think of big, publicly traded company. But we’ve got a guy here who is the CEO of one of the very biggest publicly traded companies in the Bay Area who’s very serious about his faith. So, Pat, what an honor and privilege and a blessing for you to share some time with us. Thank you.

Pat Gelsinger: Hey, thanks, Henry. Appreciate what you do for the entrepreneurs. And a real pleasure to spend some time chatting today.

Henry Kaestner: Thank you. Thank you. So maybe we just start off with that, which is what does it look like to be driven by your faith and be a leader of a really big company?

Pat Gelsinger: Well, you know, it’s been a journey for me since early on. And in fact, maybe a little bit of the story of how I got here is funny, where I was very young in my faith. You know, I was working at Intel a few months and, you know, I felt compelled by God to go into ministry. And I’m a very young Christian and I’m, you know, at Intel, maybe eight months at this point, you know, had just become a Christian, maybe five, four months earlier. And God says, go into full time ministry. And I started arguing with God. I said, I don’t want to be a minister. I don’t want to be one of those pastor folks. I love this technology stuff while I’m doing it. You know, I’m wrestling with God for a while and okay, God, I give up, right? If this happens, I’ll go into full time ministry. And the answer from God was The workplace is your ministry. And Colossians three, 23 and 24 became my life verse work heartily. As for the Lord and not them, not from men. Knowing that you receive the reward of the inheritance, it is the Lord Christ whom you serve. And that’s always been saying, okay, you know, I’m in the workplace, but I’m a full time Christian, full time minister, you visible for my faith in those roles. And boy, that’s been the journey of almost 40 years now as a Christian, as a leader in the workplace. And to me it’s been occasionally challenging but extraordinarily rewarding, knowing that, yeah, I work for Intel no. I work for the Lord Jesus Christ on a daily basis.

Henry Kaestner: So how does that work out? A lot of people talk about Saint Francis of Assisi, and that’s the way to kind of inform what we do. And, you know, just preach the gospel, always use words when necessary. Of course, what’s missing in that is that he is also one of the most famous open air pastors of all time. Right. But you’ve navigated through deed and excellence and also sharing your faith. This is not the first time you’ve talked about your faith in front of a public audience. How do you navigate that tension?

Pat Gelsinger: And, you know, in many ways, I’ll say, you know, there’s a couple of key rules that I’ve learned over time to navigate that. Well, you know, one is I’d say, you know, first the thesis behind how you bring your faith into the workplace. And today there’s a lot of discussion on diversity and inclusion. And it turns out that for humanity, over 70% of all humans on the earth claim that faith is an or the most important thing in their lives. So if we’re going to talk about diversity and inclusion, but we’re not going to allow faith in the workplace, I’m telling 70% of humanity. No, the most important thing that you can’t come into the workplace. So, of course, diversity and inclusion means that faith needs to come into the workplace, it needs to be visible. Otherwise, I’m telling you, keep that at home. But other aspects of inclusion you’re able to bring into the workplace, you know, that doesn’t work, right? You know, diversity and inclusion is all about bringing your whole self into the workplace, your ethnic self, you know, your sexual orientation, your social and your faith. So I say I’m proud of bringing my faith into the workplace. And in fact, if I, as the CEO who’s the chief culture officer of Intel, can’t demonstrate my diversity in the workplace, then how can anybody? So, in fact, I need to be representing my faith, what’s most important to me or other aspects of my personality in the workplace. But then the second piece of it is, is I also then, as a Christian CEO, need to make it okay for everybody else to bring their faith perspectives into the workplace. And, oh, you’re a Sikh. Tell me about being a Sikh. Oh, what’s Ramadan? Yo, let’s go. Hey, you know, I just was talking to my board of directors was celebrating Ramadan. I said, next year, I’m going to celebrate it with you and I’m going to do the fasting with you next year as well. I want to know about your faith and your perspectives and so on. And for that, you know, people might say, well, you’re proselytizing if you talk about your faith. No, I’m bringing my whole self into the workplace. And I must make it okay for all other faith perspectives, including no faith. I hear someone say, you know, I’m an atheist. I don’t believe in any faith. Well, great, that’s your worldview. And I need to make that okay too when they’re part of my team, part of the workplace that we’re together [……].

Henry Kaestner: So presumably when you encourage that and allow someone to bring their whole selves to work, people feel more welcome and they stick around more. They do more excellent work and and probably even flow through to the bottom line.

Pat Gelsinger: Yeah. And in fact, you know, there’s lots of studies now that have shown that a more diverse, inclusive workspace brings better outcomes. You know, people, hey, if I’m able to, you know, bring my whole self into the workplace, I feel honored in my faith traditions or, you know, my cultural and ethnic predecent. Then I’m able to participate more effectively in work discussions as well. And I can bring those perspectives where, you know, I mean, the famous story of the first version of the Apple Watch, right, where it didn’t detect the women’s period because there was nobody on the design team who was a female. Oh, right. It’s sort of like you immediately just saw, hey, not having a gender diversity was a total design flaw in the product. Well, this is every aspect of bringing yourself into the workplace. And how will this product or this decision be seen by different ethnic groups, different social groups, different genders, etc.? And of course, as we said, faith has one of those.

Henry Kaestner: So that’s fascinating to me. I have a friend of mine named Chris Seipel, who is a big proponent for religious freedom, and he has a phrase that I really like, which is truth stands out in the marketplace of ideas, and that as faith driven leaders, we should welcome that and include that and encourage people to bring their whole selves work. So I think that’s really cool. And one of the things that will probably be a surprise to most of our listeners and most of our watchers is that the concept of faith driven employee resource groups really started out here right at Apple and then Facebook and then Google.

Pat Gelsinger: and in Intel.

Henry Kaestner: And of course at Intel. Of course at Intel. But that would be a surprise to a lot of folks to think that maybe they’re in Chicago right now are thinking, well, I don’t really know. I could yeah, maybe if I’m in Nashville, I could but can’t do it in Chicago actually out here that’s now accepted business. Right.

Pat Gelsinger: And we have over 30 different employee resource groups now with the company. And one of the earliest ones was the Intel Christian Bible Network that I helped to start, you know, many, many years ago.

Henry Kaestner: How long ago is that? So that’s a long time.

Pat Gelsinger: Over 30 years ago when we first did that. And in fact, you know, the first outline for the juggling act book was in preparation for my first speaking at the first Intel Christian Bible Network. You were talking about having a lunch time brown bag kind of event where people would show up and people sit Pat, Pat. You know, as a leader inside of the company, we really want you to, you know, be that Christian face as we kick off the Intel Christian Bible Network. And I said, Well, what should I talk about? Right. I don’t know. You know, maybe, you know, how do you make faith work and your family fit together? Oh, okay. And that became the outline for the book. And I’ve given that talk, of course, you know, now probably a thousand plus times or.

Henry Kaestner: 20 years ago, maybe, you.

Pat Gelsinger: Know, the first version of the book was over 20 years ago. The second version of the book was, I think nine years ago now. Right. The juggling act. And it was really born out of okay, I got to come up with some talk for our kickoff of the Intel Christian Bible Network. And now that whole theme of […] is really flourished inside of Intel. And we have, you know, different faith groups, different sexual orientation groups, different ethnic groups. You’re also, you know, different classes, you know, a black leadership group. We have a, you know, a veterans group as well for those coming out of the military into the workforce, you know, and of course, across some of the other regions of the world, you know, different slices that are important for them. And in fact, last year, we were recognized by the United Nations as one of the most faith friendly companies. And I and our head of HR were recognized for that as well. Right. It’s sort of like, wow, that’s came full circle, you know, 30 years ago and now being recognized by the United Nations, it was like, okay, this is pretty special.

Henry Kaestner: It is really special. Okay. So let’s go back to the juggling act a bit and this concept because all faith driven entrepreneurs wrestle with this, what does it look like? You’ve got four kids and they’re all at home when you’re writing the book. Talk to us about how you manage that. What was the juggling act about? Give our listeners a little bit of encouragement on that, please.

Pat Gelsinger: Sure. And it is you know, it’s sort of why the title is very fitting, right because you’re being stretched by work. And, you know, if you’re a good employee, how much do you want to work more? How much time does your family want more? How much time does your spouse want more? More. Right. So you’re just being stretched and, you know, how do you make that all work? And, you know, the juggling act was really my journey and how to make it all work. And, you know, some of the key themes that we developed in the book, one was a mission statement. Yeah, right. Where do you want to go? If you don’t have a plan of where you want to go, any path will get you there. So get very deliberate about your goals, your priorities, your values, and then systematically take things out of your life and consistent with those goals. Yeah, right. And allocate your time to those goals and then build clear your value driven priority and mechanisms to live that way. So set a mission statement. Another is to have mentors. Right? Okay. Henry, you are my mentor. Here’s my mission statement. Help me to live this way. Hold me accountable to what I said would be the case. Another is keeping score. And one of the things that people always get a kick out of is we had the at home chart, right, where, you know, you just sort of keep working a little bit later, a little bit later in the project and soon you’ve squashed the family hours in the evening. So we said, Hey, if I’m home by 6:15, that’s a point. If I’m home by 5:00, that’s 2.0. I like if I’m home after 6:15, that’s zero points. If I’m going weekend days, that’s a negative point. So that was the numerator. The denominator is the number of workdays and my secretary, an independent arbiter, would produce the at home chart on a monthly basis. So Linda would say, hey, you haven’t been home much lately. Yes, I have. No, you haven’t. Yeah, right. Well, now we have data, right? We look at the data and then she might say something like, Well, I felt like you haven’t been home much. Well, that’s different, right? The data says I have been home, but you haven’t felt that way. Oh, that’s totally different. But keeping score, keeping track. Are you living according.

Henry Kaestner: To talk about that though? So because one of the things I wrestle with a bit is kind of switching from my work life to coming home and I know so sometimes can really say like, I don’t know that you’re really kind of here, but I’m here. I mean, my independent arbitrator say you are absolutely home at 6:15, but I’m still thinking about customer acquisition or intellectual property or channels to market or whatever it is. Yeah. How do you have that discipline where you say, okay, now I’m focused on Linda and the kids. Yeah.

Pat Gelsinger: And I think, I think COVID has made this worse because now the day has no beginning and the day has no end. Yeah. So I think these matters in exactly this question have gotten harder in light of COVID work from anywhere, you know, hey, I’m four paces from my study to get started the work right here. So the day has no beginning. The day has no end, I can be, you know, in Europe in the morning and in Asia in the evening. I get you know, it’s pretty easy to have very long days that way. And it’s super important that, you know, you just develop the habits that allow you to disconnect, you know, become digitally naked, right? Turn off the devices, get them out of it so that you’re not in that immediate distraction mode. You know, listen, on purpose, go off and Linda will come back as as you really weren’t listen to me when I said I told you that yesterday. Yeah. Those should prick your soul when your spouse says things like that to you because you’re really not interested in their lives and priorities. Also say that particularly for entrepreneurs that might have kids at home, you know, they don’t care what time you get up in the morning. They don’t care what you do before breakfast. But they care an awful lot what you do between five and 8 p.m.. Yeah, yeah. Those are the Golden Family hours. And I’d say as a parent, you want to just like build fences around those, right? And really give those to your kids. And if you go back and work after 9 p.m., okay, that’s okay. But you know, really build fences around those evening hours, show up to their events, their sporting events, be all there. You know, sometimes I would take red eye flights just so I’d be home for, you know, a soccer game where my kid only got to play 5 minutes. Okay, but I’m going to be there. Yeah, right. That matters. Show up. Yeah.

Henry Kaestner: You mentioned mentorship as one of the things that you mentioned, of course, in the juggling act. And last time I saw you a couple of years ago, right before COVID, you’re talking about the fact that you’re still involved in mentorship. You know, I would imagine that the line of people want to be mentored by Pat Gelsinger, thousands long. But you still practice that. And do you still talk to a mentor?

Pat Gelsinger: I just spoke to Steve this morning. And, you know, last year was a very hard year on this subject for me because I had really five significant male influences that really influenced my life. You know, one was my dad. He passed away September 4th of last year. One was Andy Grove. You know, we just passed the sixth year of his passing. One was Luis Palau. Right. And, you know, he passed away just over a year ago. Another was Bryce Jessup from Texas.

Henry Kaestner: Of course.

Pat Gelsinger: He was another and he passed away a little bit over a year ago. So all of a sudden, you know, except for Steve, all of my yeah, he feels like I’m the old guy all of a sudden. And that was a rather startling experience. So my dad passed away last year and Steve was going through a major heart surgery and at the time, somewhat like yours and yours, all that’s happening, it’s sort of like, Wow, I’ve lost my mentors, but thank God, Steve still healthy and may I have to add one to my mentor list, but it’s really important, you know, and he’ll ask me hard questions regularly, you know, like, how is Linda doing? You know, how are you in her life? And are you continuing to be that person that is working with God to make her all that she was meant to be? And so holding me accountable to that, in addition to being a good advisor on some of my work trade offs. And, you know, that trusted voice, that speaking into your life. So, you know, I would be saying to all of the listeners here, if you don’t have good mentors, then you’re not serious about being everything that God intended you to be.

Henry Kaestner: So if I remember from our past conversation, it’s not just that you have these older people in your life that you occasionally talk to. There’s a discipline, a regimented discipline. Do it to How often do you speak to Steve and what would you recommend to folks that are establishing that relationship either with a mentee or with a mentor?

Pat Gelsinger: Yeah, Steve and I speak every Friday morning, 6 a.m. and obviously schedule and stuff like that. So we probably end up about twice a month, but we’ve been doing that for over 20 years.

Henry Kaestner: Wow. That’s awesome. Okay. You mentioned Bryce Jessop, and I want to switch conversation a little bit to philanthropy and giving and being actively involved in your community. So you’re CEO of Intel, you’ve got four kids, you’ve got eight grandkids. You get a lot of stuff going on. You would be forgiven if you just decided to just kind of write checks and be, you know, they’re going to get somebody else to do that. And yet you’ve gotten really, really involved in the community. So talk to us about TBC. Talk to us about this calling to an area and the leadership you provide not just to Intel, what you do so well, but the vision that you’ve provided to other Christian leaders in the Bay Area. Yeah.

Pat Gelsinger: Your overall backing up just slightly handling know Linda and I made a commitment very early in our marriage that we were going to give an increasing percentage of our gross income to philanthropy every year. Right. So that started with the tithe that 10%. And well, now we’re at about 50%, so about 50% of our gross income. So it started about 10% of nothing know now it’s 50% of a lot. Right, that we’re giving every year to charity. So, you know, first, I would challenge all the entrepreneurs, you know, build a lifestyle of generosity. Right. And hey, I am really excited about the cool things that we’re doing at Intel. But if you really want to hear me get passionate, let me talk to you about what’s going on at my philanthropies. Yeah, because those are really eternally life changing. And like one of them, Linda’s on the board of now. She’s going to Africa, to Kenya to invest in that. We have, you know, now the largest church planting organization that we helped start. So we’re the largest in the world with stadia. You know, we helped to start that, you know, been super involved with the Palau also forever. Yeah. We just had dinner with John Jackson, the president of William Jessup, this week with them. And, you know, these philanthropy investments can be the most fulfilling aspects of your life, and particularly as entrepreneurs, how you want to create success, you want to create wealth, but what do you want to do with that wealth? Right. If you start pouring it into ministries that truly become eternally shaping for humanity, okay. That can really release a lot of enthusiasm, energy, you know, passion. And ultimately, that’s what God would call us to do with our wealth and capabilities. Now with TBC, obviously, when we came back to the Bay area.

Henry Kaestner: Tell us about what TBC is.

Pat Gelsinger: Yeah. TBC transforming the bay with Christ and Melinda and I moved back to the bay. It was funny because she was not excited about coming back to the Bay Area. I say, you know, we’re living in Boston, enjoying ourself there with the […]. And she sort of scratched her claws across the nation. She came back to the Bay Area is like, I want to go back to the bay. Right. You know, there’s sort of crazy there. And then it was we came back, God brought one, two, three of our kids to the Bay Area and all eight of the grandkids, so were like, okay, he bless her decision to come back here. She’s thrilled now with that. But I also felt like when I became CEO of VMware that God was calling me to use this position of leadership in a much more influential way. And out of that came bringing together of business leaders that were Christians with the key faith leaders of the Bay Area to start a movement to truly transform the Bay Area with Christ. TBC And that now has been in operation for eight years now and really is about networking the churches of the Bay Area. It’s about, you know, helping them to be engaged in ministry in the Bay Area and ultimately multiplying the churches of the Bay Area. So we call it Unify, Amplify and multiply, right? The impact of Christ in the Bay Area and the Bay Area know, as I’ve said, it’s the richest area on earth, one of the most influential areas on Earth. It’s also one of the least philanthropic. Areas on earth and one of the least faith areas on Earth. Wow. That’s pretty hard soil. That’s my mission field. Right. You know, I get excited that, hey, you know, Christ shows up in the Bay Area. Yeah. He can show up anywhere physical, show up here in a powerful way, particularly coming off of COVID. I think the role of TBC in the Bay Area is maybe the most unique and impactful that it’s been since we started the effort eight years ago. The church is looking for, Hey, how do I get my footing again on the other side of COVID? So truly thrilling to see the momentum of it. It’s alive and well and the church in the Bay Area is alive and very well.

Henry Kaestner: Indeed it is. I can attest to that. So and encouragement that we’d have to all of you that are listening to this is what does it look like for you to be thoughtful and how God might have you love on folks where you’re planning, wherever the town, the village, the city, the region is, as it would, I think, encourage and challenge you as that. If you can do something like that in a kind of a bigger area like this with 54 different towns, you can think about doing it in your backyard as well as you bring together people in this network and say it again. It’s unify, amplify and multiply in your town. I’m so grateful for a time I can’t let you go before I just kind of throw out this kind of a grab bag one for you and you can answer any way you want to an audience of Faith driven entrepreneurs they’re trying to understand How do I know God more fully through my work? How do I do my work with excellence, how to lead my family? But gosh, how do I just make sure that I don’t lose my faith in the midst of this? All the things that are going on, anything that you have as an encouragement or a warning admonition, anything.

Pat Gelsinger: And you’re clearly your work can become so consuming. You’re, you know, in particularly you’re a couple of years into this entrepreneurial journey, you know, maybe you’re succeeding, maybe not, you know, you’re just pouring yourself into it because you’ve given so much of your life and passion to it. And I ask you all the question, are you still putting God on the throne every day? And, you know, if the answer to that is no, then what are you going to do to put God on the throne every single day? Every single morning? You know, where you in devotion, right? You know, are you really honoring him with the day? And, you know, some days, hey, he might stay on the throne till about 8:02. Okay, well, tomorrow we’re working on keeping God in the throne till 8:03, right? Yeah. I mean, stuff happens here, but are you putting him on the throne daily? Are you in fellowship with him or are you in regular worship in church? Do you have mentors who are keeping you accountable to the relationship and position that you would want God to have in your life? You know that iron sharpening iron. Okay, how is your devotion time going? However, you know people who are really to challenge, do each one of you have those kind of people that are challenging you and you’re going to screw up, you’re going to fail and so on. But then also seeing that the most important thing you do as a leader is to be a great leader, right? You know, make your company successful. You know, that is the most God honoring thing that you can do, right? You’re not doing work instead of faith. You’re doing faith through your work, right. In the workplace. And the most God honoring thing you can do is do that with excellence. And every day that you show up into the workplace, do it with absolute excellence. And then finally, it would be that as a leader and particularly now as a public company leader as well, I mean, I am thrilled that I get to speak through today 121,000 people at Intel. Right. You know, I get to make their lives better every day. You know, I get to help them create wealth for their families, improve the communities that they’re in, you know, demonstrate through, you know, our benefits, through our foundation and philanthropies that we do as a company, that I want to unleash their passions into their communities and to what’s most important to them. I want to create a workplace that they truly are thrilled with so I can be my full self when I show up at Intel and as a leader, as a CEO, that’s what you get to do each day. You know what could be more thrilling than to say I’m positively impacting 121,000 lives on a daily basis? Wow. You know, but then I also get to say through what we do at Intel, you know that we are here improving the lives of every human on the planet through the power of technology.

Henry Kaestner: I was going to suggest that if you didn’t. Yes.

Pat Gelsinger: You know, it’s just so cool. It’s just you know, and I you know, I helped to create USB, I helped to create wi fi. I helped to create the personal computer. I helped to create the cloud. Okay. You know, we’re now at 60% of humans are connected to the Internet. By 2030, that’ll be 90%. Wow. Yeah. I’m going to touch the lives of every human on the planet and make their lives better. Right. You know, we’re going to educate, right? And education, the best way to lift people out of extreme poverty is. Yeah, that’s the stuff we got to do because technology. And you’re impacting the world. And what can be more thrilling than a Christian to say, that’s right, I’m improving the lives of every human on the planet.

Henry Kaestner: It’s really awesome. It’s really awesome. Pat, I’m so grateful for your time, for your leadership, for your friendship, for your encouragement in the Bay Area and beyond. On behalf of our audience. Thank you very much.

Pat Gelsinger: Thank you, Henry.

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Today on the podcast, we are joined by Henry Kaestner, co-founder of Sovereign’s Capital and Faith Driven Investor, and Ron Blue, founder and president of Ronald Blue Co. Our conversation focuses on the recently released book “Faith Driven Investing: Every Investment Has an Impact. What’s Yours?” This global movement is all about investing in human flourishing and driving capital into initiatives that stand for something significant. Put the collective words in the palm of your hands. If you haven’t downloaded the book yet, click here. Get a free copy if you’re one of the first 200 to register now for a Faith Driven Investor Foundation Group launching in January 2023. 

Episode Transcript

John Coleman: Welcome back to the Faith Driven Investor podcast. We have a very special episode for you today. This is John Coleman and I am joined by two legends of the faith driven investing movement. Ron Blue is here with us today as well as Henry Kaestner. And we’re celebrating the launch of the Faith Driven Investor book, which has come out now and is available over electronic copy. It’s launching soon in hard copy. And we’re just so pleased that the book is out there that so many people have been able to tell their stories and that both Ron and Henry can talk to us about the launch today. Those of you who are listeners of Faith Driven podcast generally will know my business partner, Henry Kaestner. Henry, co-founded Sovereign’s Capital. He co-founded Bandwidth, co-founded Faith Driven Investor and Faith Driven Entrepreneur, and has really been an encouragement to so many of us. He’s one of the reasons I got into this industry and has helped so many others get activated. And of course, Ron Blue has been at the center of some of the most important institutions in the faith driven investing world. The founder of Ronald Blue Trust, one of the founders of the National Christian Foundation of Kingdom Advisors, and such a counselor to so many other folks. And so we’re really privileged to have both of you join today. Thank you for coming on.

Henry Kaestner: Thank you, John. I think that’s if he call it a legend alongside Ron Blue is very deserving of a chuckle. I’m anything but that, but Ron is indeed that. And so it’s a great honor to be on this episode, to talk about the book. And then for somebody like Ron Blue to spend time with us, both with the book and on today’s podcast is a great honor.

Ron Blue: Well, you’re very kind, but you let me tell the truth. So thank you. I appreciate that. And the reason you become a legend is you don’t have a long time. I’m 80 years old. So have you just said this ten years ago? I wouldn’t be a legend, but today I am maybe.

John Coleman: Well, thank you both for being here. And maybe just to kick off Henry, I know this is the second book in a series of books on Faith Driven. The first was Faith Driven Entrepreneur. Maybe just to start with, what made you want to try and pull together folks around a Faith Driven Investor book and tell us what your hope is for the book?

Henry Kaestner: We really enjoyed the Faith Driven Entrepreneur book that we put together, and one of the things that was great about it was that I did get an opportunity to share a bit about the way that God had worked through bandwidth, through David and I. But we also had J.D. Greer write some of the chapters and Chip Ingram, write some of the chapters, and Lecrae wrote the foreword, and it was a great joy to work on this is a team of four and I wanted to double down on that. I thought as we look at something like faith driven investing with the complexity that’s involved in stewarding the resources that God has entrust us with across market return investments, concessionary return investments or patient capital. And then on the third end of the spectrum, of course, philanthropy and giving, there’s a lot there is also a lot of history there. And if we want to be able to tell the story the right way and I still think that there’s so much more of the story to be taught, but if we wanted to be able to approach it the right way, it would be most beneficial for the movement and for our readers if they could hear lots of different perspectives from people who are really experts in the space. And some of those people are experts in the world of finance and investing. Ron Blue Of course, being a great example and others like Finny Kuruvilla and it will be McKinsey, Cathie Wood, Will Thomas, Ofosu Jumo, just the list goes on and we’ve got I guess maybe 15 people worked on this project, but also people like Tim Keller and Andy Crouch, who ostensibly when you look at it, you want to think of them as being finance experts, and yet they are experts in culture and identity, spiritual formation and discipleship. And so we wanted to get their voices into a really important project.

John Coleman: That’s fantastic. Henry And maybe dive into that a little bit deeper, because I think as you approach the book, you note that this is not just about sin screens, although that may be okay. It’s not just about negative screens. This is about a more comprehensive look at what it means to invest with faith aligned values. What does that mean for you and why is this a different contribution to the literature on this subject?

Henry Kaestner: Great question. So I think it is core of the book and the core of all of our lives is this desire to know God and enjoy him forever. And what we wanted to convey in the book is a lot of practical advice about how we might go about doing that with the investments that God has entrusted us with. But to start that off on this formation of the two principles that really guide our Faith Driven Entrepreneur and Faith Driven Investor movement, which is number one, is to receive the gift of the gospel, a new and even deeper level to be reminded of the God who loves us so much that sent His son at great cost to reconcile us to him and allow us to steep in that where we are as disciples, but then also where God has us in the marketplace as entrepreneurs and investors. And then to accept the invitation. To participate in the work that God is doing in his kingdom, to have a different sense of what God might have in store for us and His Kingdom as it is brought about on Earth, as it is in Heaven under His power for His glory, and just the joy that comes along with that. So we know that there’s great utility in having practical advice and wisdom, but we wanted to steep it again. A new in a gospel and kingdom message and then to build off of that with some concepts of, okay, so how do you bridge the discipleship, the gospel through to markets? Well, how do we think differently about risk? How in a world in which there’s been some great work done on making sure that we know about the products we invest in and how to avoid investing in so-called sin stocks, things like gambling and adult entertainment, etc. But how are we known for what we’re for? How can we have our investing that reflects the image of the Creator? God, how do we redefine return? What does that look like? How do we find beauty in broken things? How do we, as I said before, think differently about risk? How do we do it in community? God create us in community. The temptation, especially with wealth, is that wealth isolates. How can we invest well in a way that rewards those we invest in in ourselves and community? How do we think about partnerships and then really looking at this concept of point from one pocket? And I mentioned this before, we want to be able to look at investing in this newer, holistic level, which is, okay, we have these financial resources that God has entrusted us with. How might He have us deploy those assets to participate in the work he’s doing, but then to deploy them with market rate return when it’s called for it, when the opportunity or the cause that we see calls for market rate return, because that’s oftentimes the best way to be able to deploy capital. Sometimes it’s patient or concessionary. And then let’s bring giving and philanthropy into the equation as we’re really investing not just for financial return for ourselves, but like in the parable of sowers, we’re investing for eternity here. And so I think that when we get up to heaven, it’s not going to necessarily be this key distinction of what our investment portfolios did or what our philanthropic portfolios did, but just holistically, how do we deploy capital? So how can we look at that? And that’s one of the reasons why we have so many authors, because that’s a complicated question and dynamic. We wanted lots of people to speak into that.

John Coleman: Ron, I want to turn to you, if that’s okay. I mean, you’ve thought as deeply and as long about faith driven investing is probably anyone on the planet. Maybe you could just reflect on some of what Henry said and your own understanding what the Scripture tells us about investing and what our calling as investors is with relation to our faith.

Ron Blue: Well, Henry just used a word that I wrote down because I didn’t want to miss it. And that was think. Okay. We think differently as believers than those who aren’t, because our thinking is Holy Spirit driven, God’s word as our source. And so we think differently. And I like to illustrate faith based investing and faith based finances. And when I speak and I hold up the Wall Street Journal and I said, Now here’s the best of the best that comes out on a daily basis. But when I look at it and I say now, however, the date on this is April 20, 2021. Now. How relevant is it today? And the answer is, it may be there may be some things that are relevant, but I’ve got to read this every day, and it may or may not be relevant for some length of time. And then I hold my Bible and I say, this was written 3000 years ago, and it never changes. And I, I take the Wall Street Journal then, and I put it inside the Bible, and I say, this is faith based finances. And faith based investing is applying God’s wisdom to the best of the professional world. And it looks different when you make wisdom based decisions. You need the knowledge. No question about that. But that alone will not necessarily give you the right thinking on investments. And you know what’s really interesting Colossians 2 versus two and three, say for in Christ are hidden all the treasures of wisdom and knowledge. Isn’t that interesting? That is my answer to what is faith based investing. It is applying God’s wisdom to the Holy Spirit and His Word to the best that there could possibly be out there in the professional world. So I look at a guy like Henry who’s been incredibly successful in the investing world. Now, a lot of people have been really, really good in the investing world. And I think if any, you know, one of the brightest guys that any of us would ever want to meet or Jerry Bowyer or Bob Dole or a lot of the people that are out there are the best of the best. But you know that they begin their day talking to the Lord. And God then can work through them, through the day. And I know I’ve experienced and I’m sure you have to, John and Henry, but I’ve gone into a meeting with someone and I prayed for wisdom. And I go in there and something happens. I’ll ask a question that I did not plan on asking or make a comment that I did not plan on making. And I’ll say, Wow, God was at work. And I’ve walked out. And I said, That was one of the best questions I’ve ever asked. And I knew it didn’t come from me. It wasn’t mine. So that to me is the combining of the wisdom and the knowledge. So I’m combining two languages into one and making my decisions on that basis. That’s the way I would think about it. The other thing I would think about, Henry said something else about eternity, and I was asked a question by a really successful investment guy a couple of weeks ago, and he said, I’m getting ready to have a meeting tomorrow with a client. And he’s really concerned about this economy. And this morning at coffee, I was asked by somebody, what’s the stock market going to do? You’re a financial expert. And I said, Well, let me answer it this way. I said, Some of my friends think it’s going to go up. Some of my friends think it’s going to go down. And I’m for my friends. So we don’t know, of course. But anyway, I was answering this question about how do I talk to this person? And I say, What is your client a believer? And he said, Yes. And I said, okay. Number one, I would ask him, So have you sold? And if the answer is no, and then I say, Well, then you haven’t lost any money yet. And that’s where people make a mistake. They tend to think it’s kind of like buying a house. Markets go up, markets go down. And that and I said, secondly, if you’ve planned well, you’ve planned for the ups and downs. I mean, that’s a part of the economy. And we know that we live in a fallen world and markets are going to go down. I’ve lived 80 years. I’ve seen a lot of markets, a lot of crashes. But then the third thing that I say, and it’s coming back to what Henry said in terms of eternity, I said to this adviser, I said, you know, if the person believes that God owns it all, then he hasn’t lost anything yet. Yeah, it’s God’s. Yeah. And God has a right. And it changes my perspective if I think of it that way. I think God is I’m doing this, I’m investing. And you said it already that God entrusted me with these resources and they are going to go up and go down in terms of the investments that I do. They don’t always go up. And if he owns it, I can’t lose it.

Henry Kaestner: Yes. One thing I want to add in and, John, that I should have mentioned before about the book, because this is so important, because it underpins the movement, is that while in the book you’ll see great examples about public markets investing in private investing and real estate investing, etc.. What undergirds all of this is the concept of hard posture, which is this movement is not meant to be prescriptive or presumptuous. It’s an invitation for us all to get down on our knees with our spouses or with our investment committees and ask God how we might steward the capital that He has entrusted us with. It’s an opportunity to commune with the living God, and that’s something that’s really, really powerful. And so it’s not meant to be this big yoke around. It’s like, Oh my goodness, guys, give me this money. And it is just if I make this mistake. No, no, no, no. God wants us to be faithful and obedient. Yes. But he’s invited us into something greater, which is just being with him in our 9 to 5 job to include the money that we invest. And it’s a beautiful thing, but it’s not meant to be a negative thing. Like, don’t do this, don’t do that. Or if you don’t invest this way, it’s going to be bad. Or, you know, you can get down on your knees with your spouse. And the answer may be from God to invest in solar farms in Nevada desert. Somebody else may get down on their knees and the answer may be to invest in an emerging market. It’s in developing entrepreneurs. There is somebody else. Real estate. There’s no answer other than to seek God in his wisdom.

John Coleman: When did this first hit home for you, Henry? With regards to both entrepreneurship and investing, I know it’s been some time, but do you remember that moment where this hit home for you?

Henry Kaestner: Well, when I was running bandwidth with David, I had a verse. It was printed on my computer to remind me not to. Every hour, check out the latest going on in the sports world at the espn.com, which was effectively. To whom much is given. Much is expected. And effectively, if you don’t deliver, you’re going to be beaten with many blows. It was meant to keep me focused, and there is a performance mentality that I had about my job and then the investments I had, which is I’m going to be held accountable at the end of time about all the things I thought and did. And my view of God was so much different than it is now. It was an incomplete and I think a false version of God. Now, while all those things are in Scripture, the totality of Scripture is an invitation to the life that is fully life. And the fact that we are actually participants in what we pray for every day, that God’s kingdom would come about on Earth as is in Heaven. And I can’t remember exactly when it happened, but there is a transition from me believing that I was earning my own salvation to one where I finally realized I couldn’t I couldn’t do it, couldn’t do it under my own power. And it brought me deeper into the gospel. And actually a big pivotal point for me both in my entrepreneurship and my investing, is when I met a really good friend of mine and Ron’s when I was 38. So I came to faith at 28. At 38, I met this guy named Daryl Heald. Kimberly and I were given maybe 20% at the time, Bandwith was doing well, given 20%. I thought there’s probably a special place in heaven for the double tithe. I don’t know what we’re getting, but it’s coming to us. Right. And he asked me this question that sent me reeling, which is. Henry, why do you give. Why do you give? And I don’t know what my answer was at the time, and he doesn’t either. We’ve become great friends, but it’s probably theologically seem like something along the lines of, I don’t want to pay it forward. I don’t even know. But it seemed that everything that happened in my scripture reading over the next six months, it had to do something with money. Wow. Even the ones that even the passages that didn’t. So things like God taken five loaves and two fish from that boy and feeding 5000. And I realized that he had all of that boy’s heart, but he had 20% of mine. Ron mentioned something a little bit ago about the concept of God owning it all. When I came to understand that and I came to understand he actually didn’t need me to advance his kingdom, but he invited me into it is a gift and it’s not a burden, but it’s an invitation to something much bigger. It completely changed my world and gave me a sense of a God who loves me and wants something better for me in my vocation and in my investments. And a countercultural view as I came to understand that God owned it all in a way that freed me up. To have more joy is just you can only see that in God’s economy. So that’s what it happened for me. Thanks for asking.

John Coleman: And this holds a special place for me because, you know, when I came to the industries, God led me into faith driven investing. But he used a guy named Henry Kaestner and another guy named Luke Roush who really exposed me to this. And it’s exactly that authenticity and passion, I think, Henry, that were first attracted to me. I want to turn back to Ron momentarily. But Henry, what do you hope people reading this book leave with? What are the kind of two or three things that you hope as people read this book that they really come away with?

Henry Kaestner: Just this deeper realization of the God who loves them and just an invitation to participate in the work he’s doing in the world that will give them more, more joy. And in doing it and community being a part of the story that he is working in our backyards, across real estate, across private equity, public equity, and then also overseas. He’s got something beautiful in store for us and the gifts that he’s asked us to store and he’s given them to us because he wants them to be a tool to bring us closer to him. And if people can come away from this with a different view and a fuller view of the loving God, that’s a win. If people can come away from this and do nothing other than getting down on their knees again and just say, God, I now I think I understand the financial assets you’ve entrusted with me more. Direct my steps. Help me to understand. That’s the big win.

John Coleman: That’s a good word. And I know we’ve all talked about how we can’t earn our way to heaven, but I have heard that you can get a leg up if you leave a five star review on Amazon or your favorite review site or purchase more than ten copies. And I have heard that that makes a difference. Correct me if I’m wrong. And so, Ron, we’ve heard from Henry what he hopes people take away from the book is you think about your own contribution, which was, as you touched on earlier, being attuned to God’s word in the course of investing. Or if you’re in financial life, what is it that you hope people really take from your contribution to the book?

Ron Blue: Well, I think that the most significant question we referred to it a couple of times, but that is who owns it. You know, and until you answer that question, you’re not a steward. And when you answer that question, it changes everything. Because money transcends all of life. So if we just look at money being investments are being how I spend my money, if God owns it all, my decision making is different. And I believe that, you know, your checkbook reveals your spirituality. It is one objective measurement of spirituality. So what I would hope people take away from it is that God owns it all and He gives you all the wisdom you need when you need it to think right about what you’re doing, be in investing or whatever. So that question I guess the second question, John, would be Hebrews 13:5. I used to say this until you set a finish line. You’ll never stop accumulating. There’s nothing wrong with accumulating, but accumulating for what? And then when you have a finish line, it allows you to go beyond even in your giving. We helped a lot of people in our firm give away, a lot of money, but they had to set a finish line first and then they understood that the rest of it was really excess. And it’s okay to have it. It’s okay to have wealth. There’s nothing wrong with that. But the people who give major amounts away have set a finish line. And I come back to the question, how much is enough? And the answers in the Bible, Hebrews 13:5. It says, Be content with what you have. And so I believe this, that if if you’re not content with what you have, you’ll never be content with what you don’t have yet. And I think we fight a real battle today against greed because it is so prevalent in this affluent society that we live in. So I would like for people to come away asking the right question, because you don’t ask the right question. You never get the right answer. Who owns it? How much is enough? Are you content? That would be my hope.

John Coleman: Ron, one of the things we’ve heard from Henry and from so many others is how you’ve inspired them in the area of faith driven investing, of managing your capital in a way that’s aligned with faith as you think about your own career in life. Who have you looked to as an inspiration in that world of people? Obviously, the Scripture very much so. But are there people who have really encouraged you on that path, or are there people you look to today who you think are innovating and are really helping us to move this idea of faith driven financial management or investing forward?

Ron Blue: Well, yes, kind of in the past and in the future, I was really, really fortunate, I think, in that when I became a believer in 1974, I was in a discipleship group. Within a week, and discipleship, especially one on one discipleship is pretty rare today. And that’s really unfortunate because we need that accountability. We need that direction. You know, the guy that was discipling me, he and I were getting on an elevator, a five story building, and we stepped on the elevator and the doors closed. The elevator was full. And he said, Ron, tell me what you think of Jesus Christ. And, you know, I muttered and stuttered and so forth. And we got off on the fifth floor and he said, I wanted to just to teach you the value of a 10 seconds testimony.

John Coleman: Wow.

Ron Blue: I’ve never forgotten that, of course. And that was 50 years ago, probably now. And he stayed a mentor of mine throughout his life. He died not too long ago. In fact, the three people that impacted me the most, he was one. Dr. Howard Hendricks from Dallas Seminary, was a person in his generation who may have done about as much for the kingdom as anybody. But I called Hendricks all the time. He had the ability to take a concept or a thought and put an end to saying, for example, he said, You don’t know whether you’ve been a successful parent, until your children have raised their children. Well, that gives you a whole different perspective on raising kids. He also said, never forget it. He said, You know, if you want to find out how important you are, you should put your fist in a bucket of water, take it out and see what kind of impression you left. He had the ability to say things like that. And so I quote Hendricks a lot when I speak, and he meant a lot to me. And then the third person that had a real impact in my life was Dr. Bill Bright, the founder of Campus Crusade. I was on the Campus Crusade board for about 25 years, and I stayed on that board because he gave me eight days a year ago, right? And Bill was a man of faith. Incredible faith. If there was ever a problem, I call him one time. And I said, I got a real problem, Bill. I need some help. And I told him of my problems and he said, Wow, what an opportunity to trust God. And that was. Bill. He was famous for saying that because that was his life and the way he lived his life. So Dr. Bright taught me a lot about faith. He taught me a lot about leadership. He taught me a lot about vision. There is no greater visionary. He taught me a lot about leadership. He let people lead. You know, I think of the ministries that came out of Campus Crusade with the Jesus film and athletes in action and family life radio and on and on and on and on. 50,000 staff around the world. It was such a privilege to have a world perspective and to be in the shadow of such a man of faith. So I’ve been a very, very blessed man, John. You’ve gotten to know a lot of leaders and see those that succeeded and seen those that failed. And I tell you, quite frankly, my concern right now is that we’ve in the Christian world, we’ve become somewhat of a celebrity culture. And that’s scary because that is really hard to handle. Celebrity. I wouldn’t consider myself a celebrity, but I’ve done a lot of speaking and I just I discipline myself when anybody complimented me on a speech or thought or whatever. I never denied it. But in my heart I said, thank you, God, because God did. And I just am concerned that I would become a celebrity culture in the Christian world. And so the humble man of faith is rare. Now, frankly, I consider Henry to be one of those guys and a guy like Bob Dole that I know really well in the investment world, same thing. I don’t know much more humble man than Bob. So there are examples out there, hugely successful people who have humility and we need it. It scares me when people become famous. Whether they can handle it or not.

John Coleman: When we’ve seen so many instances where that’s gone wrong recently and you’re right. You know, it feels to me there’s a careful balance to strike in the sense that God does raise up men and women to do his work, to do great things. He’s done that since biblical times. At the same time, with that profile comes risks, right? With the elevation comes risk. And how people manage that with humility is such an important part of their legacy because it’s so easy for that to go wrong. And you’re right, it does seem to me that humility is the key component that keeps people from going off track, right? The ability to credit credit where it’s due to know that it’s not about them and to constantly remind themselves that they’re on a mission and that that mission is not their own advancement, it’s not their own celebrity. And to never become too enamored with that, because we know that’s all ephemeral. Right. And that we’re really serving something much higher.

Ron Blue: Well, and frankly, in the faith driven investing world. You’ve got a real opportunity there to help people understand. I would say the perspective of wealth and why God gives you wealth. And I believe he gives you a wealth to use. Maybe it’s giving and maybe it’s investing. From a spiritual standpoint, there’s no difference because God owns it all. Okay, so you’re using his resources to accomplish his purposes and people respect those that are experts in the investment world. So there’s an authority there that has been given to Faith Driven Investor and Faith driven entrepreneurs and needs to be handled with terrific humility because it’s a gift. Okay. It is a gift.

John Coleman: That’s right.

Ron Blue: I consider myself one of the most blessed men in the world because I know so many really good people and I’ve seen so many faithful people. So I’m pleased that you considered me to write a part of the book and be a part of what you’re doing.

John Coleman: One that’s Ron. I can say this because I am not a contributor to the book. It is an exceptional group of people. And and you’re right. I mean, there are so many really bright voices in the space right now. There are a number of incredibly smart, incredibly capable, but also incredibly humble people like Kathy, like Finney, like yourself, like Rob, like my partners, Luke and Henry, who I think are really advancing this work in a meaningful way and also avoiding many of the trappings that you described. And I know that we all are incredibly grateful that you chose to be a part of the book, but much more importantly than that, that you’ve chosen to build a career in this area and that you’ve chosen to really advance the ball through Ronald Blue Trust, through NCF, through Kingdom Advisors, through your other efforts in a way that’s inspired so many others. So we’re really grateful to have you on today, Ron, to talk about this.

Ron Blue: I consider it a privilege. John, thanks for asking me.

John Coleman: And I would be remiss if I didn’t end the show by just reiterating the Faith Driven Investing book is out now, an electronic copy. There will be hard copies available in January of 2023. It’s from Tyndale and if you go to Faith Driven Investor dot org right now and register for one of the Faith Driven Investor Foundation groups launching in January. If you’re one of the first 200, you will get a free copy of the book. So there is a great deal if you’re going to do that. We encourage everybody to check it out. There are wonderful contributions by Ron and Henry and others, and we’re so grateful to you for listening to us today. Thank you.

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Once a month, we take a look back at what God is doing in the world of Faith Driven Investing and the global markets. We also spend time looking at current trends and outlooks with great interest and discernment in hopes to identify God’s redemptive work in the world. Bob Doll, Chief Investment Officer at Crossmark Global, and David Spika, who leads the GuideStone Investments Line of Business, have both served as guests and contributors to media outlets such as CNBC, Bloomberg TV, Moneywise, and Fox Business News. They join us for a look at market activity from July 2022. This is Marks on the Markets.

Episode Transcript

John Coleman: Welcome to the Faith Driven Investor podcast. This is our monthly Mark’s on the Market podcast, where we hear from experts around the world who are leading faith driven investment firms, who are people of faith and who are intimately familiar with the operations of markets, and can help us to understand what’s going on day to day in the financial markets around the world. Today, we’re really privileged to welcome two legends in the space. David Spika is the CEO of GuideStone, the largest faith driven investment mutual fund manager in the world. And Bob Dole is the CEO of Cross Smart Global Investments. Faith Aligned Institutional Investor. And both of these gentlemen also have long and storied careers in the investment industry. Hopefully most of you have heard from them before and they offer a great perspective on markets. And we’re just so pleased to have the two of you with us today. So thank you, Bob and David, for joining.

David Spika: Happy to be here.

John Coleman: So we’re going to kick off. It’s been a busy week. It’s been a busy month and it’s been a very active month in financial markets. To start off, Bob, I wanted to talk to you. We actually just had the GDP numbers come out today as we’re recording. And the question I have for you is, are we in recession? Which used to be a simpler question maybe to ask. But we’ve heard recently from Janet Yellen in the White House that maybe two negative quarters of GDP wasn’t actually a recession. So in this context, how are you thinking about recession and are we in a recession right now?

Bob Dole: You make a great point. That is, we’re not sure about the future, but we’re going to argue about the past. I think the headlines have just started. Many will say two down quarters in a row. Well, that’s a recession. Other people say not so fast. The truth is, the National Bureau of Economic Research declares when we have a recession, typically months after the fact. So there is nothing magic about two down quarters. Although I went back in my history books and found out the last time we had two back to back down quarters and there was no recession was 1947. So it’s been a long time. So typically when you get a couple of down quarters, you know, somewhere in that zone there’s a recession. So my view is that the weakness we saw in first and second quarter were the most volatile parts of GDP. First quarter it was trade, second quarter it was inventories. And the more traditional, possibly more stable parts of GDP were okay down in the first quarter from the record. GDP we saw last year is strongest since 1984 and of course even slower in the second quarter. My guess is forget the numbers and recession or not, we will continue to slow. That was in place already after the strong year last year, aggravated now by inflation, interest rates and attempts to quell growth, if you will. Let me add one more point. The reason I think we may escape a recession or if we have it, is just going to be short and shallow is the strength of the things that make up our economy, the US consumer not perfect and weakening for sure, but still has lots of excess savings on the balance sheet as a result of COVID either money not spent or money nailed by the government. Secondly, the corporate sector. Cash. Cash flow. Balance sheet strength. All pretty good. Not uniform, but pretty good. Profit margins are still high, albeit under a little bit of pressure. And then most importantly, the job market, we still have twice as many job openings as we have people looking for jobs. That’s a very strong job market. We’ve never had a recession in the US before with a strong job market. Now it’s beginning to weaken. We’ll see where it goes from here. So weakening for sure. Recession. You tell me what the definition is.

David Spika: Can I? If I could jump in. I think we’re asking the wrong question. I don’t think the question is, are we in recession or not? I think the question is how are consumers faring? Consumer spending is 70% of our GDP and consumers are hurting today. No question about it. Just look at Wal-Mart’s results from this week. That really is the key. And if we’re not in recession today, we fully believe we will be, because the Fed is going to have to continue to be very aggressive in raising rates and letting the balance sheet run off in order to bring inflation down. We’ve never seen inflation come down meaningfully without a recession, and we’ve never seen inflation come down meaningfully if we didn’t have a real positive Fed funds rate. And we’ve got a long way to go before we get there.

John Coleman: I want to circle back to the inflation question, but before we dig there, assuming we are entering, Bob, as you said, a slow down or David, as you said, there’s a recession on the horizon. How are the two of you thinking about which economic sectors or asset classes are likely to perform well in that type of environment? And how are you thinking about those that you’re trying to avoid as we enter those two potential situations?

David Spika: I think it is becoming a good opportunity to buy bonds, particularly high quality bonds and treasuries. Obviously, the first half of the year was absolutely horrible for bonds, one of the worst periods you ever seen for the Barclays AG. But with rates where they are and starting to go lower, they will continue to go lower as we move into recession. We’re going to have credit spreads widen. But if you own high quality bonds and if you own treasuries, you should be okay. We’re also going to see at some point an opportunity to see risk in the equity market. We don’t think that time is here yet, but at some point we don’t get these times very often. Very rarely do we get a chance to buy stocks 20, 30, 40% down. We’re going to have a chance to do that. But today, bonds and even cash, cash is yielding better than two and a half percent. What the heck? Let’s put some money in cash. Let’s increase our cash holdings, have some dry powder. So when that opportunity to re-risk comes, we’ll be ready. And on the bad side, I would be very leery of non-U.S. exposure, particularly risk exposure, whether that’s emerging market debt or equities, because the dollar’s likely to continue to remain high. That’s the flight to safety that we see in a volatile environment. And as long as the dollar remains high, you probably want to stick with U.S. assets. And the other thing I would be a little leery of is commodities. Obviously, energy has been great, but commodities are very economically sensitive. We’re seeing oil prices come down. Copper is down about 25% from its high. We need to be leery of those as long as we believe we’re going into a recession.

John Coleman: Bob. Anything you’d add to that?

Bob Dole: Yeah, largely in agreement. I’ll go in the same order. And our fixed income funds, we have length and duration. We’re still below our benchmark, having been way below our benchmark at the start of the year. So while we’re down for our clients, we’re down not nearly as much as the benchmarks. We think, as it sounds like David does that. At worst, we’re in a trading range for, let’s say, the ten year yield. It’s 280 ish as we speak. Could we move down that to 70 to 60? Sure. Could we move back to three? Possible. But the threat, the big negative sign in front of the bond mark is probably removed as the economy slows and we see less bad news on inflation, on equities. You know, the question is, was June 16 the low? It is the fifth close trading where we got a big bounce afterwards since the bear market started. I think we saw off that bottom the best news so far. But I still think we’ve not seen the capitulation that is typically as a bear market. I’m talking about, you know, volatility up the VIX over 40. A big explosion in put to call volume. We’ve not seen that a pick up in volume generally kind of, if I might, puking it out. We just haven’t seen that yet. So we probably have a lower low, but we are opportunistically and only on weakness beginning to accumulate some stocks, commodities. I agree. They had a huge run. Oil’s down. Copper is down for among the reasons we think inflation’s going to get less bad, if you will. And I guess maybe the only area I might put up a little difference is international. International stocks beat the U.S. by 300 basis points in the first half of the year. Very surprising to a lot of people. Despite the dollar’s strength, we expect there might be more of that to come. Non-U.S. markets are a whole lot cheaper than the U.S., although value never gives you a timing tool. And if the economy is weak, this flight to safety and the more defensive nature of the U.S. market could help us do better. So I think the jury’s out on that one. My guess is there’ll be some good stocks in both geographies and some bad ones in both, too.

John Coleman: And maybe before we move on just to zero in those, have you mentioned that there might be further room to the downside in U.S. equity markets? I think, David, you said you’re not ready to kind of start buying aggressively yet. Bob, you said something similar. I believe on our side we’ve been thinking the same thing. We’ve seen a lot of multiple compression back to more historical averages, but haven’t seen the weaknesses in earnings materialize, which could provide further downside if you have thoughts on it. We’d love to know. Maybe starting with you, David, just how much further are you looking for stocks to decline before you think it’s a buying opportunity? Is it 5% or 10% or more? And what would be your sign that we might be hitting the bottom of that trough and that it might be an opportunity to begin getting in more aggressively?

David Spika: Great question and several ways to look at that. We’re trading at about 18 times forward earnings today. Markets have historically bottomed at 11 times. Do I think we’re getting to 11? I sure hope not, because that’s a long way from here. But you hit it on the head. We haven’t seen earnings degradation yet. And if we’re going into recession, earnings are going to come down. So we need to start seeing earnings estimates go lower. Historically, in a recession, earnings fall by 30%. That will be the next leg down and that will create additional multiple compression. That 18 times is still not where we should be if we’re going into recession. So those two combined are likely to take us down further. The average decline for a bear market when going into a recession is 36%. So it wouldn’t surprise me to see us broach that 30% level. We’re down about 14 or 15 now. We did hit the 20 mark, so 30% would not surprise me in terms of when the bottom is in. As Bob referenced, there are certain signs, technical signs, 90% of the market trading above its 50 day moving average is one of those. But one of the things that we think will be a pretty clear signal is when the Fed has ceased raising rates. Now we’re not on board with the Fed cutting rates in the first quarter of 23, but if the Fed’s pausing, that means we’re likely at an inflation level that is somewhat palatable and the market will respond well to that. Now, that doesn’t mean we’re back off to the races, but it does mean that major headwind, which is rising interest rates, tightening financial conditions, is probably in the rearview mirror.

John Coleman: That’s excellent.

Bob Dole: Again, not a whole lot of agreement, maybe a little less bearish than that. I give it one in four, one in three that the June 16th low was the low. So the majority case by far is it wasn’t. And I have said that absent a significant recession, the risk is probably a 5% move below where we were then and we’re up ten since then. So that’s 15% from here. Kind of what we’re down from the high not too far from that. We’ve narrowed that gap. So I was saying the lion’s share of the bear market from a price standpoint is in the rearview mirror with this nice rally we’ve seen. Perhaps not now if we’re going to have a more significant recession with imbalances that we don’t see today, it could either be worse and or last longer. And I agree with David with those technical signs. Fundamentally, we’d like to see that we’ve had a peak in long term interest rates. Perhaps that’s in we’d like to see the end of earnings estimate cuts. We’re not there yet. We’ve only started. And I’d say the Fed thinks slightly differently, visibility on when the end of Fed tightening is likely, and I don’t think we’re anywhere near that yet.

John Coleman: I want to pick back up now on the topic of inflation. We’ve talked about it throughout here and obviously it’s high on people’s minds. There was recently a stop inflation bill. I think it’s come out in Congress, for example, or titled that, you know, as we think about this, inflation is obviously a policy issue as well as an economic issue. And I’m wondering if you could talk about what you’re looking to see from the Federal Reserve as well as from the US government as we seek to tame inflation and how you see that inflationary environment developing now. And perhaps, Bob, if you don’t mind, we could start with you.

Bob Dole: Sure. Be happy to. So, first of all, a little bit history. Put it in context. It seems like inflation was a topic we didn’t talk about forever because inflation was two or lower for years. And then all of a sudden, you know, we wake up and inflation’s, you know, eight, nine, approaching 10% because remember, inflation is transitory. That’s a joke, obviously. And we move on from there. Look, we have said since the first of the year, we think second quarter will register the peak in inflation. And I think that’s the case. Obviously, a couple of weeks ago, we got that June inflation number that was just so devastating after the negative surprise in the month before. So, you know, we’re at some levels that are reasonably high reasons. We think that we’re likely to have lower inflation in the next bunch of months. One, the slow down the economy. Two, as both of us have already commented, declining commodity prices, oil from peak to trough down more than $25, copper down 25%. Dr. Copper tells us a lot about both the economy and inflation. And then three, the supply chain problems. I’m not making the case for solving them, but I think they’re a little less severe and will be as we go forward than where we’ve been. All that takes the inflation rate down some. My guess and that’s all these things your hope, their educated guesses is by the end of the year, we’ll be registering monthly inflation numbers that annualized around four or 5%, down from your 8 to 10 where we speak. And that’s a problem because the Fed says they want too I think they’ll compromise at some point at three, but 4 to 5 is not two or three, which means there’s more work to do. And I think that could create problems for stocks and bonds somewhere down the line. Maybe not until next year.

David Spika: Yeah, I would agree with Bob that we’ve probably seen the peak a sure hope we don’t go above 9.1%, but I’m not quite as optimistic on the decline. You have to consider what the Fed is able to do to mitigate inflation. They have no control over the supply chain issue. The only thing they can have an impact on is demand, and they’ve got to take the consumer out at the knees. How do they do that? By reducing consumer wealth. We’ve already seen that financial assets, housing next and they have to reduce consumer incomes. We’ve got 3.6% unemployment today. Consumer real incomes are not good, but obviously nominal income is very good. Second quarter nominal GDP was over 9%. That’s too high. So the Fed is going to have to continue to raise rates until we start to see some weakness in the job market to really have an impact on consumer demand to materially bring down inflation. And we think that’s going to take a while. We think that could be another 12 months. The belief that the Fed is going to be cutting rates in the first quarter of next year, which is really why the market was up yesterday. And today they perceived Powell’s comments as dovish, which I don’t get. We just don’t think that’s likely at all. And if inflation’s running at four or five, as Bob says, if it’s running at six or seven, regardless, the Fed’s not cutting rates there. They may pause, but they’re not going to be cutting rates. And as long as they’re not raising rates, they’re not doing the damage to consumer spending and consumer incomes that they need to do in order to bring inflation down. So to us, it’s a longer cycle that we’re facing.

John Coleman: Just to pick up on a couple of those themes, because you touched on really interesting things there. One is just very simply, where do you see interest rates going over the next 12 to 18 months? Obviously, the Fed funds rate, but also how those filter out into the economy. What’s your outlook for the interest rate environment over the course of the next year, year and a half? And maybe, Bob, if you don’t mind, we’ll start with you.

Bob Dole: Sure. So let’s start with the Fed press conference yesterday. Chairman Powell, you know, if you read between his lines, he’s basically suggesting there’s 100 basis points to go. They have the luxury of no meeting for a couple of months here. And, you know, 100 basis points probably means 115 and 225. Reading between the lines, what David said, I think both of us believe that’s not the end. That’s just not going to do the trick. So I suspect the market reacting to all that positively yesterday and today probably get smacked across the face again at some point when people realize that’s just not going to do the trick. So I think the Fed’s got more to go. It’s going to take longer. I didn’t say it when I comment on inflation. I should have. David said it. Well, you know, the Fed has little control over inflation because they only can influence the demand side. That’s why the commodity price thing the of solving some of the supply chain problems is so key. If inflation is going to come down regardless almost of what the Fed does out the curve, I think that for now interest rates have found a level we got to that 349 intraday. A few weeks ago. I don’t think we’ll see that level any time real soon. But if I’m right, 4 to 5% end of the year, if David thinks six or seven, even more about what I’m going to say will come true, interest rates will head back up. It’s just not enough to have these big negative real rates in order to have an impact. David said this earlier Getting real rates to be positive is almost always required to tame the inflation. So I would expect they will have out the curve higher rates again starting, you know, months from now, but enough to be painful.

John Coleman: So, David, as you pick up on that question, I’ll raise a potentially frightening question, which is, you know, in some ways, this economic era looks a lot like the late 1970s, right, in terms of the rapid inflation, in terms of action in commodity markets, etc.. I know there are differences, but at that time, interest rates climbed to a truly phenomenal level. I think at some point we’re at 20% or something like that in the late seventies, early eighties. Do you see any risk of that type of interest rate movement? And if not, what do you think moderates this era versus that one?

David Spika: Yeah, I was in high school then, so fortunately I didn’t feel it as much as maybe my parents did. But my first mortgage was nine and a half percent and I recall being lucky that I got that. But in any event, I don’t think we get to that point. The economy, the global economy is much different today than it was then. The Arab oil embargo was a big component there. We weren’t producing the energy we produce today. We didn’t have the global trade then that we have today. And the Fed was, I think once Volcker took control, he really had to work hard because they were so far behind the curve. Now, this Fed’s behind the curve, too, but I don’t feel like it’s the same situation. All that said, one of the things that does concern me and I mentioned globalization, one of the things that is a likely byproduct of the war in Ukraine is the fact that countries around the world, economies around the world don’t want to be dependent on other nations for their needs, for their products, services. Look what’s happening in Germany right now. They’re in a world of hurt, given what the Russians are doing with regard to natural gas distribution. And so that reduction of outsourcing that becomes on sourcing, right? In-Sourcing producing more goods at home is going to create some structural inflation that we’re not used to. Now, that doesn’t mean we get double digit rates. I think the economy would react much more quickly today than it did then to a significant rate hikes. And again, we’re starting from much lower level today than we were there. I can’t remember where we started then, but we weren’t at zero. So on an absolute basis it’s not going to have to go as high. But there are some similarities between then and now that do give me a little pause. And it’s that globalization feature that has been a real positive for inflation over the past 20 years. That may be coming to somewhat of an end at this point.

Bob Dole: Yeah, the three reasons in my view that we had such low inflation for so long were technology, demographics and the issue of globalization. Globalization, as David has said, is disappearing. The nationalism around the world and lots of politics is causing that not to be the negative inflation pro growth thing it was before population. The all the developed world has dangerously low population growth, some places negative. And of course, a technology piece I think is alive and well. So that is among the reasons I agree with David that we’re not going to those crazy inflation rates that we saw before. This is a phenomenon that is painful now, but we should get it under some control. Doesn’t say we’re going back to 1% inflation, but I think we with a lot of work, probably a recession, we can get this thing back to three ish.

John Coleman: David and Bob, you’ve both touched on international markets. I think, Bob, you started by talking about some of the opportunities in international markets over the course of the year so far. And David, you touched on this idea of global supply chains, etc., in your recent comments. Obviously, the Russian invasion of Ukraine was a really negative shock to the global economy. China’s decision to pursue a zero-covid policy has been a negative shock to some extent, continuing to constrain supply chains. Just quick thoughts on what are the risk factors that you see now in the global economy that might impact investors here in the United States or around the world? And. Where do you think there might be opportunity in the global economy right now? And David, maybe you could start us off.

David Spika: Yeah. What’s going on in China is very curious and very alarming. The Zero-Covid policy, we’re hoping this is something that Xi is going to suspend once he’s reelected as lifetime ruler. But it just doesn’t make any sense for a country of a billion and a half people to expect a zero-covid. And that has that been a huge factor. You know, it’s funny. COVID was a black swan and it has spawned other black swans. Right. It’s born this runaway inflation. It’s spawned, I would say, to a degree, the war in Ukraine. It spawned what’s happening in China today. And so it’s almost like this continuous black swan. But to me, what’s happening in China is the biggest concern. China is the second largest economy in the world. They’re a huge factor in the global supply chain, a huge factor in production of goods and services. And to the extent they cannot get back to a level of production that is appropriate for the rest of the world, that could create some headwinds. The other thing to recognize when it comes to Russia. If Putin were to walk out of Ukraine tomorrow, the world not going to say all is forgiven. We’re going to start doing business with you again. He’s a pariah. As long as he’s in office, which is probably going to be an extended period of time. So those two things, which are a couple of the black swans that occurred this year, I think are going to continue to be headwinds to the global supply chain.

Bob Dole: I agree 100% with everything David just said. I’ll add just one point to it. That is a continued risk and that is a supply of energy. You know, I think one of the events I’ll call in an event that has not gotten enough attention is the curtailment of supply in the country that has the most opportunity to create incremental energy. And that’s the United States. If you go back to January of 2021, we were coming out of covid, the demand for oil was rising quickly. And in this country, we canceled the Keystone pipeline. We put a moratorium in many ways on new drilling and made it difficult on the permit side. So economics one on one demand for something. In this case, oil is going up. Supply has been curtailed. What happens to price? Definitionally, it goes up and we’re still struggling with just not enough of this stuff. As the global economy recovers, post whatever recession we’re going to be in. So that remains a risk, in my judgment.

John Coleman: And Bob, just to pick up on that briefly, you know, energy markets have been highly volatile recently. And to your comments, some of that is based on policy decisions. If you have a magic wand right now and could try and convince the federal government to enact policies that you felt like would restore a semblance of normalcy to the energy markets, what would you advise the current presidential administration or Congress to do in order to support energy markets?

Bob Dole: I’ll try not to be political in my answer, but, you know, I think, look, if I were the president and I believe big time in the environment and green this and green that, I think I would say, hey, folks, I believe in green just like you do. But can you give me a couple of years where I can address the problems we have right now, in particular inflation? And just I’ll put it this way, open up the spigots for a while and let’s let the supply try to meet the demand, bring the price down, and a lot of our inflation problem eases up. Not all of it, but a lot of it does. And then we can worry about the green stuff later. That’s why I would advise the administration.

David Spika: The only issue I have with that, Bob, I agree, but the only issue I have is if I’m an oil and gas producer and if I think it’s a two year window, I’m not committing billions of dollars of CapEx into development. Heck no. I produce tremendous cash flow today. My shareholders love me and I’m sitting right where I am today. I love $100 oil, so we need, quite frankly, a change in tone on the energy industry as a whole in the United States. We support you and we are going to we are going to provide what you need to be successful.

Bob Dole: You went one step beyond me. I’ll sign up for that in a nanosecond. Yes.

John Coleman: It’s really interesting and it will be really interesting to see how it plays out practically. Obviously, we’ve got elections coming up. There are two very different platforms at play and there’s the chance of a divided Congress and presidency. And I think that will be one of the interesting questions along with spending as we enter that potential environment, just exactly what happens. I’ll note that on the supply chain question you know in our firm will often be invested in or own companies that have supply chain considerations. One of the things we’ve started to look at with our CEOs, they’ve been struggling in an environment for two years where the supply chain was constrained and where it’s been very difficult to get inventory. Therefore, everyone’s been trying to get in the queue for additional inventory as they can. Everyone’s been ordering. They’ve been telling customers that they’re developing backorder lists, and we’ve been trying to get as much inventory as possible. One of the concerns we’re continuing to navigate is what if that supply chain can stretch and continues? The other, however, is what if that loosens more than we think in the near term and we actually get a glut of inventory, which I know is something that some consumer companies are beginning to worry about as well. And this uncertainty around supply chain could create problems in either direction. Right. You could see people with a glut of inventory with working capital management problems. You could continue to see people not be able to get the components or equipment or goods that they need. And we’re not certain which way that will go at the moment.

Bob Dole: Yeah, I’ll comment and then let David pick it up. Look, the GDP report, we just got 200 basis points of GDP negative as a result of inventory. So it spoke loudly and clearly in the second quarter. I have to go all the way back to the pandemic. When the pandemic came, we shut down the economy. We turned it off. We’ve never done that before. And then we turn it back on. I think the assumption naively was I turn it back on and everything comes back to normal. Well, it’s just not the case. It created all kinds of dislocations that we are still dealing with today, and that’s going to take time to unwind. And my comments earlier, I said, I think some of the supply chain problems are easing a bit and I don’t want to be too Pollyannish here. So I think we’re solving some of them, but we got a lot of them left. Semiconductors, you know, a little less bad than it was, if you will. But we got a ways to go. And this is not going to be smooth and easy. And then if we try to layer a recession on top of it, it’s going to set us back a bit in figuring out how to balance supply, demand and lots of markets. So I think there’s a multi-year solve that we can’t underestimate.

David Spika: Yeah, I agree completely. Just like we’re feeling pain with regard to a significant increase in demand coming out of the pandemic. There’s going to be pain on the supply side and we’re just going to have to work through it. And quite frankly, I would just as soon see the supply chain issue clear up sooner rather than later and deal with those issues today as opposed to an extended period of stagflation.

John Coleman: Yeah, I agree with that, David, for sure. If I could bring it back onshore for a minute. One thing we haven’t talked about directly yet is the housing market, which is deeply related to interest rates. We were with Jonathan Reckford, the CEO of Habitat for Humanity International recently, who quoted a statistic that I hadn’t heard before. That right now is the greatest gap between median income and median home price in the history of the United States, that homes are less affordable for the average American than they have been at any point. And certainly we’ve been living through an incredibly hot residential housing markets. Interest rates are beginning to cool that, it would seem. What are your expectations, David, for the housing market over the course of the next 12 to 18 months? And what are some of the risk factors at play there?

David Spika: I’ll begin just by saying that my daughter is going to be 30 next month and her husband of two years are looking for a house here in the Dallas area. And I said, why don’t you wait another year? I don’t think the time is right yet, but I do think we’re going to see and we’re starting to see it. You’re seeing mortgage applications at 22 year lows. You’re seeing sales start to decline. Prices are leveling off, not falling yet, but with mortgage rates where they are and with the point you mentioned about the disparity between house prices and income, you’re going to see house prices come down. There is no question in my mind one of the good things about recessions that we all think recessions are bad and they generally are, but they tend to do a good job of reducing imbalances in the economy. That’s what recessions are for it’s like pruning the crate, modeling your front yard. You got to prune it back to get new growth. We need the same thing in the economy, and so that’s likely to happen. The good news is, in my mind, this is not like 08, 08 was a hugely demand driven run in home prices as a result of very easy credit. This run feels like, at least here where I live in Dallas, to be more of a supply issue, we just don’t have the supply that we need to meet demand today, and not just on the residential side, but if you look on the commercial side and talk about multifamily, my gosh, is there demand for multifamily? And so that demand is likely to keep a floor under prices for a period of time. But that’s a regional issue. I don’t think it’s going to be the same here in Dallas as it is and say, northern California or someplace else. There’s going to be some differences there. But bottom line, yes, there’s going to be a decline in house prices. It needs to happen. It’s part of the Fed’s plan to eliminate to reduce the wealth effect. But we don’t think it’ll be anywhere near what we saw in LA.

Bob Dole: I fully agree, a business cycle one on one. The most interest rate sensitive part of our economy is housing. And so it typically is the first to go this way and the first to come back out. It is part of what the Fed does when they stimulate to get us out of recession and you start seeing life in housing. So we are in the early days of the downturn, including the price of homes, as David said.

John Coleman: I want to touch on briefly. You know, we’ve gotten a lot of great macroeconomic thoughts here that you’re both extraordinary fund managers and you’ve been investing in companies for a very long time. David, I think it was you who mentioned up front that you were selectively looking at securities that might be worth investing in at companies that you thought were well positioned right now as you’re both looking at specific investments. What are the types of traits you’re looking for? Maybe starting with David that indicate to you that a company is ready for investment or something that you’re willing to bet on through this cycle. And what do you think our listeners should be looking for?

David Spika: I think if you’re going to be moving into the equity market, you need to be very focused on high quality companies, companies with good, strong fundamental characteristics, strong free cash flow, low debt. And really importantly today, pricing power, costs remain high, labor costs, input costs. Companies need to have the ability to pass those through to their customers in order to grow their earnings. Top line growth is great for everybody. It’s that earnings because we’re getting operating margin compression. So that high quality aspect to me is absolutely critical today. Being somewhat defensive makes sense, and that doesn’t mean you just buy health care and consumer staples. There are high quality companies with defensive characteristics in every sector of the market and companies that have good earnings visibility. Right. Not your cyclical companies, but companies with good earnings visibility. That’s where I would be playing today.

Bob Dole: We do not compare notes, but I would have said and I will say quality, quality, quality. And we define it three different ways. One, quality of the income statement earnings. Is it predictable? Are they measurable? Are related to cash flow? And we can call them quality of quality. The balance sheet. Can they service the debt that’s on their balance sheet? Do they have debt? Will it strangle them? The things really get bad. And the third and the hardest to measure is quality of management. Have they done it before, through a cycle? Have they demonstrated they know how to cut costs, the right costs when it’s time to reinvest? Can they do that intelligently? So quality, quality, quality. Now, I will say we’ve been on that theme for a while and as we approach a market bottom, we’ll have to root out some of that quality and with put some low quality in the portfolio, because when the market turns, you don’t want quality, you’ll be left in the dust. You want to own the junk too soon, but start doing your homework.

David Spika: Absolutely. Agree. 100%, Bob.

John Coleman: Yeah, we were just talking here. We’ve had the same advice to people with regards to fund managers quality, quality and quality. Because if you think about it, it’s been 15 years since we had some sort of dramatic correction. Obviously, we’ve had years where the markets were down marginally, that the last dramatic correction was the great financial crisis. And an extraordinary number of company leaders and fund managers really haven’t had experience at the top of the house in leadership positions with an economic cycle like this. And so you’ve got to look to your point to those leadership teams, both at fund management houses and at individual companies that have seen cycles like this before, are intellectually prepared for it, and know what types of steps to take and what type patients to have during periods like this.

David Spika: Can I make a quick comment on that? Because I think you struck a nerve there. It’s been 40 years since we’ve seen inflation at this level, so most people have not experienced this. But I’ll tell you what’s even more important in my mind, it’s been 12, 14 years since we’ve seen a market truly react to fundamentals. A lot of people in this business have only seen a market that’s been driven by monetary policy. They have no idea what happens when the Fed turns the other direction on monetary policy. They don’t understand about quality, as Bob saying, and that fundamentals should be driving stock prices. And to me, that’s a little concerning. And I think that’s one of the reasons why the market is rallying here this week. On something that I don’t think really has any merit. Oh, gee, the Fed’s going to cut rates at some point. Powell told us that. So let’s get back in. Well, that doesn’t make any sense. We haven’t even seen the earnings cuts yet. So to me, that’s something that I think we need to keep an eye on.

Bob Dole: I’ll extend that first of all with agreement. But we’re in an environment and should be for some time where fundamentals really do matter. We have basically a decade where all you want to do is buy high duration stocks with long tail growth. Because like in the bond market, when interest rates fall, you want to own the long duration paper. What’s a long duration equity? One that might earn some money and pay a dividend ten years from now. To exaggerate, to make the point. Now it’s which companies are delivering the goods? Which ones aren’t. And you know what the first outperforming the last don’t. But that’s not been normal in the last decade. It should be a year when those who do their fundamental homework have a better shot.

John Coleman: All right. I want to ask one final question before we move to our true final question about what you all are learning from scripture. Because in addition to being great investors, you’re great men of faith. And I know we would all benefit from hearing what you’re thinking about and what God is teaching you right now. Before we do that, I’ll just ask a 10,000 foot question, which is for those investors who haven’t lived through the cycle and for all of us who haven’t lived through it in a while, what’s your general advice to someone hoping to navigate this well and to steward their financial resources well over the coming couple of years?

David Spika: I’ll go ahead. Jump in. I would say, first and foremost, for believers remember who’s in control? The Lord’s in control. Don’t get caught up in what you’re reading on Facebook or hearing on Twitter or seeing in the mainstream media the Lord’s in control. The other thing I would say is recognize that it has been since 2008, since we’ve had a true recession. 2020 wasn’t a true recession. That was self-imposed. And as I said earlier, recessions do a modicum of good for the economy. They reduce imbalances and they cleanse the economy so that we can have growth again. The third thing is recognize that valuations were way too high and we’ve seen a significant decline in valuations. So we’re closer to the bottom, much closer than we were six months ago. And at some point, we’ll be there. And if you’ve got some dry powder, you can benefit from that.

Bob Dole: You prompt us on this question. So I made a list of five. One recognize that what we have is not ours. It’s the Lord’s. And not just our money, our everything, our minds, our bodies, our relationships, everything two. Therefore, it’s an awesome privilege, but also an awesome responsibility. You know, if the money is really mine. Who cares what I do with it? But if it’s God’s now, all of a sudden I better take care of it and be smart about it. Number three, don’t get caught up in the noise and the emotion of the day. If you name the name of Jesus, people are extra watching you in periods where it’s noisy and bumpy and controversial. Try to have that compass four this is for anybody, faith or not long term view. We’re talking a lot about the near term. But, you know, if your time horizons 20 years, there is no 20 year period in history where stocks haven’t gone up. So, you know, I don’t be stupid about it, but keep that sort of thing in mind. And finally, number five, sentiment. We haven’t talked about that at all. When everybody’s bullish is generally a good thing to be bearish. And when everybody’s bearish, which they have been being a little more constructive makes some sense. So they’re the five points I would consider.

John Coleman: That’s awesome advice, gentlemen. And before we wrap up, you’ve already started to go down this path. But even apart from financial markets, we’d really benefit from just hearing what’s on your mind and what God is teaching you through Scripture right now. David, I wonder if you could kick us off just any wisdom that you’ve encountered lately in your Christian walk?

David Spika: Yeah, this has been a challenging year for me, personally and professionally, and so there have been periods where I’ve gotten a little bit discouraged. But as I’m in my quiet time, a verse to come to me recently is Galatians six nine. Let us not become weary and doing good, but at the proper time we will reap a harvest if we do not give up. Now, that’s very encouraging to know that God’s there. He’s going to help me through the challenges I’m facing. And my part is to be obedient to him and to continue to strive to glorify him in everything I do. And I know that, GuideStone, we’re doing good. We’re serving those who serve the Lord. We’re providing retirement for people who spend their entire life preaching the gospel. And that’s important. And even when we have rough periods for 6 to 12, 24 months, it doesn’t matter. Ultimately, serving God will reap rewards for us as long as we continue to be obedient to Him.

Bob Dole: Mine’s not a whole lot different. I put it under the word patience in tough times. Personally and professionally, having perspective and having the patience. The patience of Job, as we often say. But even the patience the Lord showed us. I remember in the garden he was sweat and drops of blood. But, you know, he maintained his center Lord, not my will, but yours be done. So they’re the kinds of things we try to remember. Look things happen in markets very quickly, but in the real world they tend to happen more slowly. And I sometimes think those of us who are in the markets taking a patient’s pill once in a while will help us do a better job for our clients and not trying to anticipate every jot and tittle, but to get the longer sweep. So patients, my friend.

John Coleman: That’s a, I joke all the time. We’ve got a couple of our fund managers. The problem with the ticker moving every second there as you’re watching it is you can get tied up in the moment. And that idea that we’ve got faith obviously in something else and that we should be patient and think longer term is incredibly important. Bob and David, a tour de force. I would expect nothing less. I know that everyone benefited not only from your knowledge of markets, but just from your wisdom and maturity as believers. We’re grateful for the work that you do in markets and on behalf of clients. We know we’re stewarding resources for God’s kingdom, and we’re grateful to you, particularly for coming on today and sharing your thoughts. Thank you very much.

Bob Dole: Our privilege. Thank you.

David Spika: Thank you. Enjoyed it.

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Keren Pybus is the Co-founder of Ethical Apparel Africa, an impact-driven company based in Ghana and Benin. Ethical Apparel Africa was founded based on the core belief that all manufacturing can and should be done ethically. And they work with international brands who are interested in growing a manufacturing base in Africa with a positive social and environmental impact. Keren joins us on the Faith Driven investor Podcast to discuss the importance of leading a company that is committed to more than just looking good.