“Ethics, in the Judeo-Christian tradition, is the affirmation that all men and women are alike creatures. There is only one ethic, one set of rules of morality and one code, that of individual behavior in which the same rules apply to everyone alike. Business ethics assumes that for some reason the ordinary rules of ethics do not apply to business.” —Peter Drucker

Readings

  • “The 500 Gets Religion: Why big companies are in the business of solving the world’s woes. “What business are you in?” Peter Drucker famously asked his clients. The wisest of all management thinkers knew that fundamental question was most important. If we could ask the same question of the entire Fortune 500 today, the answer would be especially important because the answer is not what it used to be. The implications of the change are considerable for all of America’s big companies and for the country. Here’s the change in a nutshell: Until recent years the Fortune 500 was in the business of solving people’s problems. Now, increasingly, it’s in the business of solving the world’s problems . . . What’s going on? A major part of the explanation is that we’re an incredibly rich society. One must never minimize the plight of the poor, but the reality is that on the whole we live amid greater abundance than any nation has ever known, and that changes people’s priorities. We can worry more about helping the world to the extent we can worry less about helping ourselves. Where that leads isn’t clear, because this is a new model” . . . Fortune April 30th [Note: It’s actually a very old model: that of loving one’s neighbor as self, with neighbor being defined as beyond familial, corporate and national boundaries.]
  • “Doing Well, Doing Good: Good Capital is pioneering a new approach to feel-good investing: private equity. Classic American philanthropy has the ruthless businessman—Carnegie, Rockefeller, Ford—squeezing every last penny from the marketplace and then throwing the money back via a foundation. Nowadays the division of labor between making profits and giving them away is not necessarily so sharp: Avarice and altruism can be married in a single investment portfolio. Witness the growth, over the past several decades, of ‘socially responsible’ mutual funds. Then there is the idea of a for-profit charity, represented by the novel Google philanthropy, Google.org. It invests in good causes but sometimes asks the recipients to return the capital for use in other causes” . . . Forbes, April 23rd [Note: This is affirmation of Peter Drucker’s vision in Post-Capitalist Society that our three sectors——government, markets and non-profits—are mingling in a more “liquid” state rather than remain in the separated “crystalline” state of recent decades. Importantly, it also indicates a “back to the future” approach towards more traditional economics. For example, the Bible tells owners to “round the corners of the fields” so the poor can harvest. Not only does that provide their daily bread, it reminds them how to harvest, or creates job skills for economic development. As Forbes indicated, modern economists and social scientists have suggested businesspeople “efficiently” harvest all the grain and then redistribute it by practicing calculated philanthropy and/or paying taxes. While we like to think we are “pioneering” a “new” concept, the idea has been around for millennia. There is nothing new under the sun!]
  • “Is there a middle ground between Euro stagnation and cruel capitalism? One system that has grabbed lots of attention around Europe and at the recent World Economic Forum in Davos originates in tiny Denmark, which has managed to avoid the Continent’s generally high levels of joblessness even as it maintains an open economy free of most onerous state intrusions into the labor market. The Danes credit a program called “flexicurity,’ which combines light regulation with a generous unemployment and adult-education system for outsourced workers” . . . Forbes, March 12th
  • “For more than 30 years, neoliberals have held up the US and, to a lesser extent, the UK as examples that other countries must follow to achieve economic success and high levels of social well-being. Yet, according to a recent UNICEF report on child welfare, these are the worst two industrial countries in which to grow up. Two years ago, the UN Development Program, singled out the plight of many children in the US and the UK. Child poverty had doubled in the UK between 1979 and 1998, which it called ‘a legacy of the 1980s—a decade characterized by a distinctly pro-rich growth pattern that left poor people behind.’ . . . Swedes and Norwegians enjoy the highest level of social well-being, followed closely by people in the Netherlands. The US is well behind on almost every indicator” . . . The Financial Times (FT), April 2nd
  • “Maimonides, a 12th century rabbi and philosopher, argued that it is better to give anonymously, like the sages who secretly placed coins under the doors of the poor, than to flaunt your generosity. Better still, he said, to pool your charity—by contributing to a tzedakah box, for example—so that neither the poor nor their benefactors know the other’s identity. The club of 22 governments who dominate aid would not rate very highly by the Torah’s reckoning. This week they met in Paris to measure progress on two big commitments made in 2005. In July of that year, they promised to increase aid to $130 billion, and double aid to Africa, by 2010 . . . Sadly, progress on both pledges is weak” . . . The Economist, April 7th
  • “A constant theme heard from thoughtful Chinese is that China’s rise lacks a moral underpinning, and that a moral vacuum lies at the heart of Chinese life. The Dali Lama put the blame on the Communist Party’s ‘radical atheism’ and predicts that ‘sooner or later, a spiritual or moral culture will have to come to fill an internal emptiness; externally there will have to be the rule of law, democracy, freedom of the press” . . . The Economist, March 31st
  • “I find the mass of money that is being accumulated by individuals staggering. If you suddenly have $4 billion in your bank account, I don’t know what you do. It is one thing to decide how you will deal with a fortune of $500 million. I used to think that was a huge amount of money. But to a lot of people, it is not any more” . . . Wall Street investment banker Felix Rohatyn, FT, April 1st
  • “Consumers in five of the world’s leading economies believe business ethics have worsened in the past five years and are turning to ‘ethical consumerism’ to make companies more accountable, according to research seen exclusively by the Financial Times. A five country study by GfK-NOP, the market research group found wide-spread pessimism about corporate practices, with 64 percent of respondents in Germany and 55 percent of the US perceiving the worst deterioration in standards . . . the market research group argues that ‘ethical consumption is perhaps the biggest movement in branding today’” . . . FT, February 20th
  • “Executive Greed is Driving Current Spate of Deals, Say Street’s Legal Minds: Wall Street’s finest legal minds seem to have reached a consensus on what’s driving the current leveraged-buy-out boom: executive greed. Skeptics have argued as much for a while. By going private, many managers have been able to take huge amounts of money off the table through change-of-control provisions and the immediate vesting of options and restricted stock. Then, if they decide to stay on they’re normally lavished with large chunks of the new privatized company” . . . Wall Street Journal (WSJ), March 31st [Note: You’re in trouble when Street lawyers question your morality!]
  • “If owners had a say over managers’ pay, American capitalism would benefit: In America you can usually count on people to stand up for their rights. Oddly, though, the shareholders of American companies are like the disenfranchised citizens of a rotten borough. Investors in capitalism’s heartland have remarkably little sway over managers in the company they own. Rather than chivvying them to perform better, investors shrug their shoulders, sell and move on . . . British companies have been required to hold an advisory vote on pay since 2002, and this has helped to defuse hostility between shareholders and managers. Votes against management are rare because institutional shareholders talk to firms about pay long before any confrontation threatens. American managers should try a bit of democracy too. It is, they will find, marvelous stuff” . . . The Economist, March 24th [Note: As usual, those businesspeople who preach loudest about authoritarian government are the last to practice democracy in their own little kingdoms.]
  • “According to Lombard Street Research data, the ratio of non-financial companies’ earnings before income taxation, depreciation, and amortization to operating assets—a good raw measure of corporate profit margins—peaked at 15 percent in the first quarter of last year, close to the post-war high of 15.8 percent set in 1966. It has now slipped to 13.9 percent. The reduced profit share is not necessarily bad news for the markets. The war between capital and labor is not always a zero-sum game. Privately, and sometimes publicly, senior financial figures are nervous about deepening inequality. It brings the risk of a political backlash. And as the sub-prime debacle shows, there are dangers for everyone in an economy where many live through recession while the rich get richer. Some redressing of the balance is healthy. But Wall Street may not want to see the profit share fall too much” . . . FT, March 30th
  • “Where Art Thou, Business Spending? Business spending was supposed to save the economy from the housing downturn. That lifeline would come in handy right about now. In the fourth quarter, business investment in equipment and software registered its biggest drop since 2002. And it doesn’t seem to be picking up. Businesses are flush with cash. A lot of investors and economists thought business would use the cash to ramp up equipment spending and that this would help counter a weak housing market. There might be some wishful thinking at play here” . . . WSJ, April 2nd [Note: For years, we’ve written of Alan Greenspan’s mentor, Ayn Rand, who thought salvation lay in our getting our resources in the hands of super-human corporate leaders. I still think she over-estimated the capabilities of super-humans in the corporate arena as much as Karl Marx did in the governmental arena.]
  • “What Me Save?—Wall Streeters Put Bonuses In Homes, Art, Not Banks; Not a ‘Generous’ Group: According to a survey of more than 200 Wall Street professionals who took home at least $2 million in cash from their 2006 bonuses, respondents are spending 11 percent of their payouts, on average, on jewelry. The Street crowd is spending the biggest share of its bonuses on homes, particularly second and third ones: Some 16 percent of last year’s bonuses went toward purchasing residences, with another 10 percent going toward home improvements. Respondents say they’re spending about 12 percent of their money on fine art and collectibles, while 14 percent went toward ‘other’—a category that includes hobbies such as horses and flying lessons, as well as ‘mistresses and other lovers’ . . . And despite the notion that the really rich give more to charity, the rules didn’t seem to apply in this survey. Respondents gave about 4 percent to charity” . . . WSJ, February 23rd
  • “If borrowers and lenders alike agree the corporate debt boom can’t last, why isn’t anyone stopping it? Lenders have been doling out increasingly large sums of money and accepting increasingly crummy terms and meager returns on their loans. Remember those ‘low-doc’ loans that got sub-prime home-buyers in trouble—the ones that required minimal proof of ability to repay? These are their corporate cousins. Waves of money are coming at the markets from investors around the world. Bond and loan buyers have to put this money to work, even if the deals are shoddy. The fuller answer tunnels into the Street’s cynical heart, and why it has always been so profitable to work there: Hedge-fund managers, buyout artists, and bankers get paid for short-term performance. The long-term consequences of their actions are, conveniently, usually someone else’s problem” . . . WSJ, March 27th
  • “Blame Greenspan for this bubble too: Amid all the confusion over sub-prime lending, it’s worth bringing one fact to the fore: Alan Greenspan was recommending adjustable rate mortgages in February 2004—just as short-term rates were making their lows . . . .Without the Fed’s policy—notably Greenspan’s during his entire 18-year tenure—of repeatedly bailing out reckless speculators, the problems we face would, in all likelihood, never have reached such gargantuan proportions. This is not to absolve Corporate America, Wall Street or Joe Six Pack of their greed and cutting of corners” . . . Bill Fleckenstein, MSN Money, March 26th
  • “World faces more disease, starvation and mass migration: Wet areas of the globe will get wetter, and dry areas dryer, under the warming climate, scientists concluded yesterday. ‘It’s exactly what you don’t want,’ said Martin Parry, co-chair of the Intergovernmental Panel on Climate Change, the UN-convened group of more than 400 scientists who drew up yesterday’s report. By the middle of this century, there will be 10 to 40 per cent more water at high latitudes and in some wet tropical areas, but there will be 10 to 30 per cent less water in the dry tropics and at mid latitudes. Global warming ‘skeptics’ quickly lined up to dismiss the ‘alarmist’ findings. However, the report, which took six years to write, could scarcely be more authoritative” . . . FT, April 7th
  • “It is not often that this newspaper finds itself in agreement with Fidel Castro. But when he roused himself from his sickbed last week to write an article criticizing George Bush’s unhealthy enthusiasm for ethanol, he had a point. Along with other critics of America’s ethanol drive, Mr. Castro warned against the ‘sinister idea’ of converting food to fuel. As more land is used to grow corn rather than other food crops, such as soy, their prices also rise. And since corn is used as animal feed, the price of meat goes up too. The food supply, in other words, is being diverted to feed America’s hungry cars” . . . The Economist, April 7th
  • “Once upon a time, there were dozens of mutual funds that doubled your money in less than a year. It was March 2000, a time when, as the Wall Street saying goes, trees really did grow to the sky . . . Of course, this turned out to be a fractured fairy tale. So what exactly happened to this once-elite group, the ‘triple-digit club,’ as the media dubbed them? Ninety-seven of the funds no longer exist as investors in 2000 knew them. Morningstar was unable to determine the fate of another 31; they had dropped out of its database. Of the 179 survivors tracked by Morningstar, only 37 topped the broader market’s modest average return of 1.7 percent a year in the seven years since March 2000. For nearly a third of these funds, an investor who bought on the day the NASDAQ peaked would have averaged double-digit annual losses since” . . . WSJ, April 3rd
  • “Lust of all kinds feels right at the time but can get you in trouble. This includes the wanderlust now captivating American investors, as reflected in their ardor for sending their investment dollars abroad. Since the start of 2005, 85 percent of all net inflows into stock mutual funds went to international funds, says Citigroup, and last year the percentage was more than 92 percent. The fever has intensified so far this year . . . Here we see the same old performance-chasing habit of retail investors” . . . Barrons, February 5th [Note: This ever impoverishing habit will only be broken when investors focus on the future needs of people rather than the past returns of investments.]
  • “Money managers say many Americans are still getting used to international investing, and generally have too little invested abroad. Indeed, many investment advisers now recommend investors keep about 15 percent to 20 percent of their equity portion of their portfolio in foreign assets, up from about 10 percent recommended a few years ago. Securities regulators also are trying to encourage Americans to hold more international assets by making it easier to buy them” . . . WSJ, March 27th
  • “Green is good: No, it’s not just greenwash. Business in the U.S. really has become cleaner and greener. Environmentalists actually have embraced market-based solutions. And the politics are about to get very interesting. As a result, the changes that have swept through business are huge. So is the economic opportunity. Here is a look at what could be the business story of the 21st century: The Greening Of Corporate America” . . . Fortune, April 2nd [Note: I believe that’s just one dimension of the true “story of the 21st century”: the movement toward social responsibility by business, governments and individuals alike.]
  • “This month, the Commerce Department’s Bureau of Economic Analysis put the nation’s personal saving at negative $116.6 billion for December 2006. To get that number, the bureau starts with after-tax disposable income then subtracts ‘personal consumption’ of all sorts. Here what doesn’t get counted, though: the increased value of stocks or mutual funds in brokerage accounts or the rising value of your home [nor, as the article noted, investments in education, home improvements and so on that increase true wealth]. There’s no need to let the government figures depress you. You may not be a total spendthrift after all” . . . WSJ, February 17th
  • A Sojourner’s email just reported the legislative arm of the Quakers has recently estimated that “41 percent of your 2006 tax dollars go to pay for current and past military activities.”
  • “Putting Faith in Religious Mutual Funds: Socially responsible investing has become increasingly popular in recent years, with lots of mutual funds available for investors who want to keep their portfolios inline with their ethical beliefs. Probably the fastest-growing subset of SRI funds is religious mutual funds. Such funds have grown from less than $500 million in total assets ten years ago to more than $17 billion today . . . Whether or not to invest in a religiously oriented mutual fund is a very personal choice. Most of these funds tend to be somewhat expensive relative to their category peers, so you’ll generally have to pay up for religious screening. And while some of these funds will do better than others over any given period of time, we haven’t found any good evidence that SRI funds in general, or religious funds in particular, do any better (or worse) than the broader universe of mutual funds over the long term” . . . Morningstar, March 13th
  • “Why Investors Should Consider Real Estate; Though Many Flee, Strength In Some Segments Makes Case For REITS and other Vehicles. It is true that residential real estate is struggling in many parts of the country. But commercial real estate is driven by job growth and the economy, and both are relatively healthy. In fact, commercial-building occupancy is growing nationally, while rents are up about 4.25 percent in the past year, according to CB Richard Ellis” . . . WSJ, April 10th
  • “Barnes and Noble Inc, said an internal investigation found pervasive backdating of stock options, along with incorrect entries in board minutes, but attributed the bulk of the problems to a ‘widespread misconception’ on the part of senior management that the practices were proper. The company placed some of the blame on its outside lawyer, saying senior executives recalled receiving advice from the attorney that its options practices were appropriate. The company said the lawyer ‘did not specifically recall giving such advice’ but told investigators he would have done so if asked” . . . WSJ, April 5th [Note: Wouldn’t it be wonderful if senior management would let shareholders look back several months to determine the best time for us to buy our stock? And wouldn’t it be wonderful if we could use corporate funds to pay an attorney who would tell us it’s all right to engage in an activity we wouldn’t think of allowing others to do? Of course, the new golden rule for business management, that we can do what we would not let others, only creates jobs for other attorneys in the regulatory agencies. That less than ideal world is why many of us recently celebrated Easter. For among other things, Christ died telling us the law is fine but is far less than a spirit that loves neighbor as self, particularly when it comes to this world’s wealth.]
  • “Sacrifice Can Solve The Entitlement Crisis: Why are entitlements untouchable, politically speaking? Any real reform will require many of us to give up something or to pay more for it. But we do not want to give up anything. Shared sacrifice for the longer-term good is something people support in abstract and fiercely resist in the particular . . . What is to be done? It is time to remember what the German theologian Dietrich Bonhoeffer, said: ‘The ultimate test in moral society is the kind of world it leaves for its children.’ It is time for us to become worthy and moral ancestors” . . . Pete Peterson, FT, March 20th (Note: The God of sacrifice awaits rebirth.)
  • “Christians have been set in positions of significant leadership, but their business influence has accelerated way past their spiritual preparation. I have colleagues with tremendous business influence who are starving spiritually in their local churches. There’s zero feeding; there’s zero reinforcing of the call they have in the marketplace” . . . John D. Beckett, Chairman of R.W. Beckett, Christianity Today, February (Note: The God of business is buried deep in the church.)

“Auden called his era the age of anxiety. I think that what was at the heart of the dread in those days, just a few years into modern times, was that we could tell we were beginning to lose God—banishing him from the scene, from our consciousness. And it is a terrible thing when people lose God. Life is difficult and people are afraid. I don’t think it is unrelated to the boomer’s predicament that as a country we were losing God just as they were being born.” —Peggy Noonan, President Reagan’s Speech Writer & Columnist for The Wall Street Journal

Reflections

Twenty-some years ago I was a senior broker with a major investment firm. It is no longer in business so I freely share this story, which, along with others, illuminates Drucker and Noonan’s sentiments. They suggest the Judeo-Christian ethic is in a lot of trouble in American business, among far more than the highly visible Christian CEOs like Ken Lay of Enron and Bernie Ebbers of WorldCom. At the time our regional manager was one of the most visible Christians in the firm. He was a nice guy. But when I suggested during the late 80s that the firm’s investment activities may threaten our very existence, he tartly responded with the company’s marketing slogan about how solid and wise we were. Well, I moved to another firm and often wondered whether that man didn’t know what he was doing or was blinded by vested interest.

Similar experiences later caused me to consider seminary but I decided to become an independent investment counselor. I did what most independents do and associated my practice with a broker-dealer who specializes in independent advisors. An old Christian friend had done the same and introduced me to his firm. I was impressed that the head had been an investment banker with a most respected firm but also had one of those laughing Jesus pictures above his desk. He too was a truly likeable fellow. But as the bull market peaked in the late 90s, he grew as tempted by greed as the rest of the Street, as he later confessed to several of us who love him. As problems arose back then, we would have lunch and he would speak of late-night sessions with his Bible and in prayer. He would assure me, as the top producer in the firm, that he would personally guarantee me as a Christian brother that my pay would never be in jeopardy. Sadly, that did not prove to be true.

When that firm went out of business, I decided to associate with the brokers of the Mennonite Church. There are a lot of Mennonites in our community and I admire the way their faith influences their business practices as much as any Christian group I know. However, it is a small group, so they too clear their business through a broker-dealer. That seemed of little concern, as its president impressed me as a fellow of integrity, if not religiosity, which was no longer of paramount importance to me for obvious reasons. Unfortunately, he soon quit. His replacement was a highly religious fellow, but there were some important questions about his capabilities. I learned why so many people say that if you’re about to have surgery, you prefer a competent pagan to an incompetent Christian surgeon. Or, as Peter Drucker liked to say, “Good intensions are not always socially responsible.”

Doing what we do here at the Financial Seminary, I understood only too clearly that many ministers compartmentalize the world of faith from the world of business. They often cocoon in the church as they don’t understand or care for business, government, and so on. So I knew this attitude would necessitate my packing up and finding a new broker dealer. But again, I got a personal lesson in why many investors now tell me they have considerably less trust in Christian businesspeople than businesspeople in general.

It should be clear why I was far more concerned with ethics and expertise than religion when I looked for a new broker dealer. And I believed I had found one that had both. Unfortunately, at our very first firm-wide meeting, the vice-president told a room full of brokers that investing could be combined with any client interest, with the sole exception of religion. Sherry and I were in the front row, only five feet from her, when she said that. You can imagine how we felt. During coming years, the firm tolerated our faith, but let’s just say we didn’t sense any urgency to help us serve the needs of our religious clients. They did suggest forming a non-profit to keep our ministry and business separate.

Of course, it’s quite difficult for those of us teaching the total integration of life, which is what holiness, actually is, to keep business and faith in different compartments. Still, we were tolerated as our business had moved us into the very top ranks of the firm. But again, there’s that old rule about no good deed going unpunished.

Thousands of Christian financial professionals working within the growing number of faith-based mutual fund companies and Christian financial associations combine their faith and business every day. But this VP thought the best approach was to push them ever further apart. It was soon suggested that we “disassociate our religious philosophies from our income-producing activities.” I replied that would be seen as a distinct negative by about 80 percent of our clients and would likely require us to find yet another broker/dealer.

Our discussions ended with a founder informing me they once had a group of nutty Christian brokers trading stocks solely “by listening to God.” It didn’t seem to matter that we haven’t traded a stock in twenty years and spend a lot of time doing our homework in publications other than the Bible, as you can see from the Readings section of this newsletter.

To be honest, I can understand management’s concerns. I’ve spent a large part of the last decade cautioning people against treating everything they hear and read in the Christian media as economic and financial gospel. Still, my local paper has just described yet another case of a broker defrauding investors of $7 million by working primarily through churches. As I’ve often said, investors do not need a Christian financial planner; they need a Christian financial plan, complete with all the prudence and ethics that has historically entailed.

As Christ said, despite what we often hear today, not the smallest piece of God’s law needs to be done away with. But we Christian businesspeople do need to transcend the law of our land with the ethics and spirit of our faith. Former national security advisor Zbigniew Brzezinski himself recently cautioned that: “Government at every level has stimulated the paranoia. Fear obscures reason, intensifies emotions, and makes it easier for demagogic politicians to mobilize the public on behalf of the policies they want to pursue.”

From my perspective of thirty years in this business, its actually not all that bad an idea to listen to God as you’re utilizing other resources. John Wesley, the founder of Methodism, said the Judeo-Christian worldview is a combination of scripture, church tradition, sound reason, and personal experience. I think he might agree that securities regulations are very important to our money culture; but even better when complemented with the wisdom of Solomon; two thousand years of economic morality developed by Luther, Calvin, Templeton, and so on; the mind of Christ concerning the true Golden Rule; and this old broker’s experience from the crash of ’87 that trading moving averages and investing by modern portfolio theory is less than a fool-proof investment plan.

The good news is that we now believe we may have found a broker dealer with the experience, wisdom, and expertise to not only tolerate our faith-based clients but actually help them. The painful lessons we’ve learned to date might be summarized this way: Christians should never simply look for a “Christian” anything. We should look to “yoke,” to use a biblical term, with others who have integrated the Christian ethic and spirit with their professional practices. Religious sociologists like George Barna tell us that this is only 5 percent of the Christian population. The percentage who truly integrate our faith with money, which has always been the most difficult of spiritual challenges, are even fewer. So you can probably understand why we feel that is a miracle to find a firm that seems to understand our obligation to do so.

We may need all the help we can get in coming years. I continue to believe the United States faces what economists call “stagflation.” That essentially means slower economic growth, which may mean weak returns from stocks, but continuing inflation, which could mean weak returns from bonds. Now that Sir John has put his mind to far higher matters than the stock market, the only forecast of potential returns that I pay serious attention to comes from investor Jeremy Grantham (www.gmo.com). He expects about 5 percent returns from most classes of financial assets during the next seven years.

John Bogle, the founder of the Vanguard funds, recently predicted 7 percent a year for the stock market over the next decade. I’d consider that view too; but if you subtract inflation, taxes, and costs from either 5 percent or 7 percent, the results aren’t great. That means security selection and/or allowing wise and prudent managers to search far and wide for appropriate risk/reward opportunities will be crucial. I continue to hope for better after-tax and inflation-adjusted returns from carefully selected income-producing real estate trusts with properties in lesser-appreciated areas. I also continue to like foreign bonds as a hedge. Yet in even those two areas, things will most probably be tougher than during recent years. Investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. These opinions are provided for informational purposes only and should not be construed as an endorsement or recommendation. As with any financial or legal matter, consult your qualified securities, tax, or legal representative before taking action.

We understand that both the ethical and investment environment painted by this newsletter may be unsettling, but ethics and abundance have long had at least indirect connections. Surveys tell us “trust,” the lubricant of capitalism, is not all that abundant. People seem as politically cynical as I’ve seen them since I studied political science during the Vietnam years. As Peggy Noonan so eloquently stated, our dilemma in the markets most likely began when our generation decided God was dead, which allowed the church to throw business ethics out the stained glass windows. That may be about to change for the better; and we hope we’ve indicated our belief here that a new economic order is being incubated. But for the immediate future, it is crucial for investors and advisors to think a little more about transcending the law with spirit and ethics. A good first step might be more Christian businesspeople understanding what Garrison Keillor meant when he said that “going to church no more makes one a Christian than sitting in a garage makes one a car.”

REITs may not be appropriate for all investors. Certain REITs may have limited transferability and lack liquidity. The value of an investment in a REIT may fluctuate based on economic, regulatory and environmental factors. The value of the units of shares of the trust will fluctuate with the portfolio of the underlying real estate properties. Redemption may be at a price, which is more or less than the original price paid for the units by the investor.

International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks and differences in accounting methods.

Gary Moore offers securities through NPC of America (NPCOA), Member NASD/SIPC. Gary Moore & Company, The Financial Seminary, and NPCOA are separate and unrelated companies.

Readings & Reflections is an email and web publication of The Financial Seminary, a nonprofit whose sole interest is to encourage the reintegration of spirit and ethics into political-economy and personal finances. While R&R is written by an investment professional who gladly submits this newsletter to officials trained in the intricacies of securities regulations, nothing in it should be construed as counsel to consider any particular investment opportunity. That should only be done after far more research, consultation, and consideration of your personal needs, time horizon, and risk tolerance.