Wednesday, September 30, 2020

Bits & Pretzels (B&P) is the German equivalent of the South by Southwest (SXSW) startup event.

B&P is Europe’s biggest startup/founders festival. The event will be held from September 29 to October 2, 2020. Speakers include:

  • Eric Schmidt, Former CEO Google, Co-founder Schmidt Futures
  • Dirk Nowitzki, Basketball superstar
  • Arianna Huffington, Founder & CEO, Thrive Global 

Former speakers include Barack Obama, Richard Branson, Jessica Alba and many other world leaders in the global startup ecosystem.

Bits invented Table Captain Networking for startups to connect face-to-face with experts in small networking sessions. Each session is 40 minutes long for up to 6 attendees and are perfectly timed and sized for startups to ask questions.

We will host a Networking session at the event on September 30th. 

Saturday, September 26, 2020

Emerging Managers Summit Virtual 2020. Yuyang Zhang, Impact Investing Intern. Boston University.

September 24, 2020
In a discussion led by William Michael Cunningham, Mr. Tarrell Gamble, Ms. Wendy Garcia, and Dr. Ruchi Dana spoke about their experience with diversity within the investment management business sector. 

Starting with women in the workforce, Dr. Dana noted research that shows companies with more women are also more capital efficient. 

Dr. Dana also noted that gender diversity is an important starting point when considering balanced executive boards. She stated that female consumers make up $20 trillion of consumer spending. This is larger than the GDP of both India and China combined. Therefore, Dr. Dana notes, it is important to have women on corporate boards who understand this perspective. She finished with noting that "In a society where firms are mainly white male owned, there exist many systemic barriers. When looking to hire investment consultants, firms must also be conscious of the language they use to refer to their employees."

            To summarize the comments mentioned above, it is not only important to hire women in investment firms but to also have them on corporate and executive boards. Having multiple genders making decisions leads to more inclusive populations being considered. Different experiences would be also be considered and there would be more perspectives within the decision making process. California is one of the few states that, by law, encourages gender diversity within the corporate boards. While this may be a good first step in the right direction, enforcing this policy has proven difficult.

 Mr. Gamble mentioned Proposition 209 which prohibits consideration of race, sex, gender, nationality, and ethnicity when hiring individuals within California. While the proposition might be seen by some as a good thing and a way to discourage prioritizing certain groups, it also hinders groups who, because of intentional discrimination, qualify for this assistance. This remains problematic in California, a state that is "majority minority", with a population that is 30% Hispanic, 15% African American, and 10% Asian.

While gender equality is an important concern, racial equality remains an issue within many companies. With systemic racism so persistent in society, it is difficult to pinpoint on a set number of things to do to remove all racial and gender focused barriers. However, one of the starting points, as explained by Mr. Gamble, Mr. Garcia, and Dr. Dana, is to modify investment management contract language. To diversify contract language is to make these contracts more applicable to a wider audience.

The panel noted that certain investment funds have been designed to be set aside for minorities and women who, because of systemic racial and gender discrimination, need assistance in rising up in the investment management business hierarchy. As these opportunities are often unequal, specially designated pools of investment funds may help remove unfair outside competition and offer a space for growth.

Some on the panel suggested that, in order to engage the new generation, it is important to tackle these inequalities now. One tool that was discussed is the creation, within corporations and funds, of the Chief Diversity Officer (CDO).  Where this position reports within the organization was also determined to be important. The panel noted that, when the CDO reports to the CEO, more impactful diversity outcomes can be expected, relative to a CDO who may work within a Human Resources Department. The panel concluded that the younger generation needs role models who have this diversity activist mindset. Not only is it important to include minorities and women, we must have white individuals who are willing to speak up and help.

Saturday, September 19, 2020

Reuters Events Investment Summit (Dec. 3-4, Online)

On December 26, 2016, Creative Investment Research noted that:

"Under any conceivable scenario, the current situation is very bad, and I mean toxic, for democratic institutions in general and for people of color specifically. Bottom line: our Fully Adjusted Return Forecast** indicates that, over time, things will get much, much worse....." (See:

Now, after months of economic uncertainty and volatility, we find ourselves at a crossroads.

Reuters Events Investment SummitReuters Events Investment Summit
With markets in decline and economies around the world pointed towards recession, Reuters Events' Investment Summit (Dec. 3-4) unites financial institutions and investors to tackle the future of investment at this unprecedented moment.

Combining onstage inspiration with intimate peer-to-peer networking, the two-day flagship will cover four key themes:
  • Market Drivers and Outlook: Learn how macroeconomics, geopolitics, China and market volatility have impacted investment outlook and how you can prepare for 2021 and beyond.
  • Asset Management Strategies: Go beyond data and learn the methodologies employed by the most successful managers to enhance their understanding of the market and extract financial rewards. Watch out for opportunity identification techniques, industry specific expert takes and great debates.
  • Leadership in a New Reality: A deep-dive into how long-term government, regulatory and investment initiatives will drive change for investors around the world.
  • Learning from COVID-19: Crisis has created both opportunities and risks. Are you moving fast enough? What does progress look like? Get exclusive insights from industry forerunners, leading asset owners, senior regulators and influential international players as investors look to tackle economic calamity.
As the world comes to term with the events of 2020, this 2 day strategic summit will evaluate the investment community's response to the current crisis to identify opportunities that lie ahead. Join institutional investors and asset owners @ #ReutersEvents Investment Summit (Dec. 3-4, Online) to help set the investment agenda for the year ahead. Find out more here:

We are pleased to partner with Reuters and are committed to helping investors on their road to profitability and resilience.

Saturday, September 5, 2020

What is Investment Research And Why Is It Broken?

What is Investment Research And Why Is It Broken?

Investment research studies of the performance of stocks, bonds, metals, mutual funds, and other assets. This is done, most often, to influence investment decision making. It seeks to "produce a guide to what investments to make.”

With the capture of regulatory authorities (who are, supposedly, looking out of the public interest) by financial institutions, the number of investment "assets" has increased. There are now more than 5,000,000 different types of investment vehicles. Many have little actual value.

A new investment class with actual value may be cryptocurrencies. A cryptocurrency is a digital program or asset designed to work like currencyBitcoin is a cryptocurrency.

What is Investment Research?

As we note in our online class, investing is "the process of spending money in order to increase the original dollar amount." Investment research provides timely information that, combined with expertise, provides advice." One goal is to reduce or eliminate information gaps and to reveal "potential issues and dangers associated with specific investments, known as risk." In other words, "investment research is designed to..make investors more profitable."

The current era of investment research started with "the Amsterdam Stock Exchange established in 1602.." Key issues included fraud, information validity and accuracy, and understanding true risk.

With the growth of the "market culture", in the 20th century, one set of investments, the stock market, "became a common way to invest, and because of longstanding issues investors have faced for centuries, banks began delivering equity research to their customers through private mail.

Beginning in the 1990s, investment research was provided through email newsletters and other online channels. Advanced research portals like the Bloomberg Terminal, which actually dates back to the early 1980s, have become widely used by serious investors looking for sound advice and reliable data."

(While employed by Merrill Lynch, we had dinner with Michael Bloomberg in 1987. We discussed our research paper on the future of market information systems.)

Many "investors have accessed research through paid subscriptions. As of 2017, the aggregate size of the global investment research market is $16 billion, with more than 40,000 pieces of content delivered each week by bigger banks and brokerages."

Investment Research Is Broken

Our position with respect to capital markets regulation recognizes the primacy of protecting investors. Investor interests, broadly speaking' are not served by fraud and malfeasance. Securities laws and traditional investment research have failed both to protect investors and to promote efficiency, if efficiency is defined as lowering aggregate losses.

Investment analysts issue biased research reports to curry favor with management. Rating agencies, like Standard and Poor's, Moody's and research providers like Bloomberg and Morningstar, issue defective investment research reports. The former are supposed to “base their ratings largely on statistical calculations of a borrower's likelihood of default,” but one news report noted that:

“Dozens of current and former rating officials, financial advisers and Wall Street traders and investors interviewed by The Washington Post say the (NRSRO) rating system has proved vulnerable to subjective judgment, manipulation and pressure from borrowers. They say the big three are so dominant they can keep their rating processes secret, force clients to pay higher fees and fend off complaints about their mistakes.” (See: 

In response, the European Union (EU) "implemented new rules in 2018 requiring asset managers to pay directly for their own research." This is also an attempt to correct flaws in the investment research field: "a study from Bespoke Investment Group in 2015 examined 12,122 ratings in the broad market index. Just 6.67% had a 'sell' label, with the rest either being 'buy' or 'hold.' ” This is clearly indicative of a lack of objectivity.

Also, one study noted that, "in 2012, 49% of (Wall Street Investment) analyst ratings on Dow 30 stocks were incorrect..."

The industry has long been due for reform. Banks, large asset managers, hedge funds and others have controlled the investment research industry for their own benefit.

If you want to learn more about the most objective, insightful and independent research available for investors of any size or strategy, please see:

Wednesday, September 2, 2020

Impact Investing: What is it? Who does it? Why?

For many majority-owned institutions, the concepts of "monetary gain" and "social good" have long been regarded as mutually exclusive. We see this most directly in the recent attempt by the Labor Department to shut down Environmental, Social and Governance (ESG) investing: “Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan,” said Secretary of Labor Eugene Scalia. But this ignores the facts: investing has always been used to further social goals.

Claims that it is difficult to determine the worth of "ESG" or "Social Investments" have not prevented majority-owned institutions from using these factors while making decidedly "anti-social" investments. For example, on July 24, 2020, major "investment" bank Goldman Sachs was fined $3.9 billion by the country of Malaysia to settle criminal charges that the bank conducted "a massive scheme to launder billions from one of the country’s investment funds."

What is Impact investing?

"Impact investing" (also cited as social, environmental, social and governance (ESG) investing, or corporate social responsibility (CSR) investing) describes a style of investing combining a desire to maximize financial return with an attempt to maximize social good (social return).

As one report noted, "Impact investing has experienced increased popularity in recent years: A recent Google report found that search volume for impact investing has overtaken that of angel investing in the past decade. Silicon Valley startups and established corporations alike are seeing a surge of impact-driven initiatives, and throwing financial weight behind such projects. There’s also evidence that suggests impact investments frequently outperform those with strictly financial motivations."

In 2006, our statistical and investment analysis found that our thesis about the higher alpha for a portfolio comprised of companies that are top performers within the sector diversity/inclusion were also top performers with respect to investment return.

Who is involved? 

Major institutional investors include:

The United Nations. Via a set of  "Sustainable Development Goals," the UN is seeking to refocus investment attention to non-financial factors. Impact investing looks to factors that aren’t explicitly part of the conventional schools of economic thought. We now know that there are social impacts that cut across all companies, all industries, and that impact a broader community, and you have to account for that within your financial models.

Another major institution in this sector is the Interfaith Center on Corporate Responsibility (ICCR), which "pioneered the use of shareholder advocacy to press companies on environmental, social, and governance issues." The group represents a "coalition of over 300 global institutional investors..with  more than $500 billion in managed assets. Leveraging their equity ownership in some of the world’s largest and most powerful companies, ICCR members regularly engage management to identify and mitigate social and environmental risks resulting from corporate operations and policies."

Impact Investing Tactics: Social and impact investors use four basic tactics to maximize financial return and attempt to maximize social return. These are outlined below.

SCREENING excludes certain securities from investment consideration based on social and/or environmental criteria.

DIVESTING is the act of removing stocks from a portfolio based on mainly ethical, non- financial reasons.

SHAREHOLDER ACTIVISM. Shareholder Activism efforts attempt to positively influence corporate behavior.

POSITIVE IMPACT INVESTING involves making investments in activities and companies believed to have a high and positive social impact.

How to get involved with Impact Investing.

We suggest you visit the following websites:


UN Principles for Responsible Investment:

US Sustainable Development Goals: An attempt to address global challenges, including poverty, inequality, climate change, environmental degradation, peace and justice.

Want to learn more about impact investing? Check out our online resources to learn more about putting your money to work in more ways than one.

Impact Investing:
Social Return Anlysis:
Social Return Strategy:
Social Return Tools: