Leery Funk’s Open Letter to Sovereign Leaders

Leery Funk’s Open Letter to Sovereign Leaders

By Bill Kelly, CAIA Association CEO

In the interest of brevity, I am going to skip the salutation and get right to the heart of the matter. As my name implies, I am Leery of the lofty promises that depend on solving our long-term problems and I do remain in a deep Funk about our future. Let’s be brutally honest about our bloating balance sheets, unchecked deficits, a seemingly blind eye turned toward a broken entitlement system, and a global GDP addiction to fossil fuels. Your actions, or lack thereof, are at the epicenter of the problem: the challenges have become so big and complex, and seemingly unsolvable, you simply don’t know where to start. You address them with conviction and resolve on the world stage, but back home we are (mostly) left wanting.

Our proxy vote is our ballot and here we must shoulder some of the blame ourselves. The turnout come election day flashes apathy according to the Pew Research Center, and you will not find the world’s largest economies anywhere near the top 10 here. We are the fiduciaries of today and the stewards for tomorrow’s generation, yet we fail to weaponize our responsibility, signaling that we don’t really care enough.

Change is hard and we have gotten ourselves into an intractable hole. Look at the origins of fossil fuels. The first oil well was prospected in China circa 347 CE with a bit fashioned onto the bottom of a bamboo pole. Somewhere in the ensuing centuries, we knew we had a problem, yet we continued to kick the oil drum further down the road. Even the tainted legacy of one Richard Milhous Nixon saw the writing on the wall more than 50 years ago, and it is hard to reconcile the outrage of the 1960s with anything resembling demonstrable progress today.

This column has been a frequent critic of the failure to address entitlements mostly in the area of retirement. How we are managing this issue is emblematic of many of the crises we face today including that of fossil fuels (colossal fools) and our climate. We say we want things fixed but NIMBY is our mantra. Look at what is going on in Paris and this time it is not about an Accord. The outlook for the current pension scheme there is grim, necessitating a very modest first-step fix by the Macron administration. Do the math and you will see that he is 100% right. However, getting there in the face of extreme self-interest has resulted in massive strife, strikes and now even death threats. Imagine when we have to tell any citizenry that the petrol station will have limited hours of operation into perpetuity?

In short, you must step up even if we are not organized enough to do anything about it ourselves. Our legacy cares so much more than our actions. Yes, it is trillions of our dollars that will eventually be passed to the millennials, but that will not go very far when the liability attached to such bestowal carries a cost likely measured in the quadrillions.

My name and my message may bare a certain similarity to another letter writer taking on our captains of industry and that is both warranted and applauded. Capital allocation can certainly be impactful but as more of said capital flows to the private markets, transparency wanes, the stakeholder pledge is gutted, and there is no proxy to vote. Just ask someone at Fairway Market or look at some of the worst offenders when it comes to carbon emissions. The majority of this latter group is state-owned with no pesky proxies to influence any outcome, beyond the status quo.

Do your job even if we are not doing ours.

Sincerely,

Leery Funk

PS: Seek diversification, education and know your risk tolerance. Investing is for the long term.

Bill Kelly is CEO of CAIA Association. Follow Bill on LinkedIn and Twitter.

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