The Irreverent Economist

Paladin’s Valor Added Campaign – Part I

In a missive to clients on March 19th, I suggested that one positive result of the coronavirus—which is much more than a silver lining—is that we will begin to fix the things that are broken in our society.  That may seem wildly optimistic, if not downright delusional now.  The official response to these events has been profoundly disappointing, as my last post suggests.

I cop to being an optimist, but I am not delusional.  And while I acknowledge how terrible this illness is—indeed fatal for too many of us—I suspect what’s depressing spirits is the generally poor response of our leaders in managing and mitigating the crisis.  Mind you, the response hasn’t been much better in other countries, but we Americans claim to be superior!  There are too many disappointments to name, and you are probably aware of many of them, so I won’t list them here.

It goes without saying that these are unprecedented times; none of us anticipated something this extreme, happening this quickly.  That said, many public health professionals—and none other than Bill Gates—have warned of the possibility of a pandemic for several years now.  If a small firm like Paladin can create a cash reserve, I would have expected the largest and most successful organizations—especially hospitals—to have set aside funds (or have access to sufficient lines of credit) to cope with an emergency. The unexpected should be expected. The inevitable conclusion one draws is that we, as a society, have been living far too close to the edge, for far too long.  We have sacrificed resilience in the name of efficiency, to an absurd degree; that was the theme of my summer letter, Valor Added.   Fortunately, as St. Augustine said (hat tip to Ben Hunt):


Hope has two beautiful daughters - Anger and Courage 

Anger at the way things are, and Courage to see that they do not remain as they are


Anger and courage are prompting responses at the local level that are mitigating the failures of government and large business.  As time goes on, I believe these examples will become the new standard of performance in a character-driven economy.  The incredible generosity of spirit that is on display in our communities is providing essential material and emotional support to people in need—which is now almost everyone.  Paladin aims to help this process along; two weeks ago we asked our clients to donate their Q1 fees to individuals, small businesses and service organizations in their communities who need help NOW.  Here is how we're doing it:

  • If they have not already done so, over the next two weeks (we’ve set April 15th as a deadline) clients will identify who in their community they plan to support, in an amount equivalent to their quarterly advisory fee.  Since their investments did not decline too much over the quarter, we consider the Q4 fee to be the right ballpark for their gifts. 😊
  • In order to keep funds in portfolios, we are asking that (if possible) clients make the donations from outside their investment accounts.  We realize that cash flows may not allow that—especially at this difficult time—so we will facilitate transfers as needed.
  • We are not asking clients to explain, much less justify, their choices.  More often than not, those who need assistance most are individuals or families they know personally, small businesses they patronize, or community groups that serve an informal but important function.  Many who need support are either overlooked or cannot access other programs and resources.
  • We do ask that clients document their donations in some fashion, as we want to make sure that funds are getting out of the financial system and into the hands of those who need it.  There are no forms!  Clients must simply let us know by April 15th exactly how much they have given away; at that time we will process any quarterly fees that have not been offset by donations.
  • Many clients have chosen to share their stories with us, and with each other.  We will be working with our friends at UniteTheStates to convey the inspirational stories behind our clients' choices.  With any luck other advisors will be motivated to join in!

Although Paladin staff are welcome to participate in what we are calling our Valor Added Campaign, I have not suggested they sacrifice financially in order to help us to fulfill this pledge.  The year ahead will bring challenges for all of us—from many unexpected directions—and the Paladin team will be called upon to help in other ways.  This is just me putting my money where my (big) mouth is!

The book of Luke (12:48) says:  To whom much is given, much will be required.  And, even though it is April Fools Day, that is no joke.

Onward & Upward!


P.S.  Here is my Chinese fortune from early March—I have it taped to my computer


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