The Resilient Investor: A Plan for Your Life, Not Just Your Money

By Hal Brill, Michael Kramer, Christopher Peck and Jim Cummings

Make the most of your assets, financial and otherwise: “Brings to investment what the periodic table brought to chemistry—clarity, order, and understanding.” —Michael H. Shuman, author of Put Your Money Where Your Life Is
 
If you want to build a better life and a better world—and really be prepared for any possible future in these turbulent times—you need to become a resilient investor. This trailblazing guide will expand your ideas of investing way beyond Wall Street. Your time, your energy, and the things you own are investments too, and you’ll learn to diversify them in ways that move you toward your life goals.

The Resilient Investment Map lays out all your assets—personal and physical as well as financial—and then provides three essential, timely strategies (Close to Home, Sustainable Global Economy, and Evolutionary Investing) that will help you grow each of them. The goal is to become more resilient: able to anticipate disturbance, rebuild as necessary, and improve when possible. You’ll discover that the choices making you more resilient also enhance our communities, our economy, and the planet—building real wealth for all.

• Language: English
• Publisher: Open Road Integrated Media
• Release date: Feb 15, 2015
• ISBN: 9781626563391

Book preview

More Praise for The Resilient Investor

This book is brilliant! By redefining and broadening what it means to invest, it helps chart a course toward making the most productive use of both your money and your time and live a more fulfilling life in alignment with your values.

—Jenny Kassan, CEO, Cutting Edge Capital

"Today more than ever, investors must cultivate the virtue of resilience. The Resilient Investor shows us exactly how to do so with expansive vision, solid money advice, and practical wisdom, establishing beyond a doubt that resilient investors are, in the long run, the most successful investors."

—Patricia Aburdene, author of Conscious Money and Megatrends 2010

This unique original treatment of investing is holistic in the best sense of the word: it connects investing to the rest of your life, brings it down to earth, normalizes it, and offers valuable insights into how you can truly think anew about your money while deploying it mindfully in the service of personal and societal goals.

—Joe Keefe, President and CEO, Pax World Management LLC

"The Resilient Investor shows how thoughtful investment, in all senses of the word, can both protect and buffer us from an unpredictable and worrisome future. But this book does something even more important: it also shows us how the right investments can influence that future and ensure it is the one we want."

—Auden Schendler, Vice President of Sustainability, Aspen Skiing Company, and author of Getting Green Done

"The global community is headed for increasingly turbulent times with greater risk and volatility. The Resilient Investor teaches us how to prepare by considering every aspect of our lives in mapping our future scenarios."

—Carsten Henningsen, Chairman, Portfolio 21

What could be more important, in the world of ultrafast trading, rogue computer algorithms, and climate change, than weaning ourselves off Wall Street? We need to reinvent investing in the 21st century. The thinking that informs this book is a vital part of that urgent process.

—Woody Tasch, founder and Chairman, Slow Money

"A timely and refreshing rethink of what it means to invest. The Resilient Investor takes the big view, while helping readers create a holistic investment plan that will serve their goals—no matter what the future holds."

—Amy Cortese, author of Locavesting

The Resilient Investor

A Plan for Your Life, Not Just Your Money

Hal Brill

Michael Kramer

Christopher Peck

with Jim Cummings

The Resilient Investor

Copyright © 2015 by Natural Investments, LLC.

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First Edition

Paperback print edition ISBN 978-1-62656-337-7

PDF e-book ISBN 978-1-62656-338-4

IDPF e-book ISBN 978-1-62656-339-1

2015-1

Cover design by Brad Foltz. Cover illustration by Vetta/Getty Images.

Interior design and composition by Gary Palmatier, Ideas to Images.

Elizabeth von Radics, copyeditor; Mike Mollett, proofreader; Rachel Rice, indexer.

Contents

INTRODUCTION

Standing Up to Uncertainty

CHAPTER 1

Facing the Future

Why We Are Expanding Your View of Investing

CHAPTER 2

More Than Money: Recognizing Your Real Net Worth

Personal, Tangible, and Financial Assets

CHAPTER 3

Weaning off Wall Street

The Three Investment Strategies: Close to Home, Sustainable Global Economy, and Evolutionary

CHAPTER 4

A Field Guide to Resilient Investing

A Tour of the Nine Zones of the Resilient Investing Map

CHAPTER 5

Find Yourself on the Map

What You Are Already Doing: Self-Assessment

CHAPTER 6

Be Ready for Anything

Qualities of the Resilient Investor, Scenario Planning, and Plausible Futures

CHAPTER 7

Dancing with the Future

Resilient Investor Profiles: What Is Your D-Type?

CHAPTER 8

Your Resilient Investing Plan

Designing, Implementing, and Evaluating Your Resilient Investing Plan

CHAPTER 9

Tales of Resilient Living

The Authors’ Stories

CHAPTER 10

The Invisible Heart of Resilience

How Becoming Personally Resilient Helps Create a Resilient World

Resource 1: The Case for SRI

Resource 2: The Investor’s Eye

Resource 3: The Resilient Investor Online Resources

Notes

Glossary

Index

About the Authors

About Natural Investments

INTRODUCTION

Standing Up to Uncertainty

DOES THE CHALLENGE OF MAKING INFORMED DECISIONS ABOUT YOUR life seem far more complex today than it did even a short time ago? Does the future—your own and that of the world—feel highly uncertain, perhaps even precarious?

We can sense you there, nodding in agreement. We would also wager that you would love to have a crystal ball that could tell you how the future will unfold, enabling you to make prescient decisions as you glide through life. Indeed much of today’s media aims to quench that thirst for guidance, projecting a steady stream of experts onto our screens, each of whom is rife with insight to help us understand how things will unfold. And we lap it up, even though we have seen all too often how their predictions are mocked by the actual turn of events.

So we need to say right at the outset that you’ve just picked up a book that is not going to tell you what’s going to happen this year or next. It would certainly be much easier to market a book that reveals our three smart money secrets—everyone’s a winner! Once in a great while, those sorts of books guess right—but we cannot in good conscience make that pitch for one simple reason: the future has yet to be written. There are no simple formulas that can be relied on in this complex and unpredictable world.

The good news is that this book offers something even more valuable: a dynamic framework that will help you navigate the stormy times in which we live. The tools we offer are designed to keep you nimble, which you’ll need to be as the ground continues to shift. Because although we cannot tell you how things will change, we do know that they will change.

Although humanity has faced immense challenges before, the sense that things really are different this time is one that is shared by the US military. They coined the acronym VUCA, which stands for volatile, uncertain, complex, and ambiguous. Interestingly, they started using this term before the 9/11 attacks, superstorms, the financial meltdown, and all the other events that have pummeled us in this fledgling century. At the same time, forward-looking companies have turned the complexity of our times into opportunities; Fast Company calls this the Age of Flux, defined more by fluidity than by any new, settled paradigm. If there’s one consistent pattern, it’s that there is no pattern.¹

It is ironic that in these turbulent times, when we most crave a road map to show us where we are going, our visibility into the future is most limited. It’s like trying to drive through a thick fog and realizing that no one has invented a fog light that really works and that the maps we have are useless because we cannot see the signs.

Many investors swerved to the side of the road, stopping wherever they were when the fog rolled in. They have bailed on Wall Street but don’t have a clue about what to do instead. Even while the Dow was steadily climbing after the crash, individual investors kept yanking money out of stock mutual funds right through 2012.² Much of that cash has been parked in today’s version of a mattress: bank accounts earning such minuscule interest that they do not begin to keep up with inflation or even bank fees. Stung by previous declines, and bewildered by today’s complexity and uncertainty, it’s too easy for investors to imagine falling into a giant pothole if they take their foot off the brake.

Others, with a stiff upper lip, kept driving just as they did before. They stayed true to their investment discipline; and despite bone-jarring earthquakes (two of the worst bear markets in modern US history occurred within the first decade of this century), they stayed on the road, followed all the rules, and actually, as of this writing, are feeling somewhat vindicated, as the market did come back. Probe a little deeper, however, and you’ll rarely find anyone who’s confident that things have returned to normal. The widely used term new normal implies that the old rules about how to be a successful investor may no longer apply and that we need to fundamentally rethink our assumptions about economic growth. Even with the strong bounce of 2009–2014, overall stock market returns since the peak of 2000 are measly by historical standards: as of June 2014, real returns after inflation for the S&P 500 were just 1.2 percent annualized.³

This book is for both kinds of investors: the ones shivering in their parked cars, waiting for the fog to lift, and the ones on cruise control, telling themselves that everything is fine but unable to tune out the disturbing news that keeps intruding on the hour. Of course most of us can relate to each of them; some days we jump behind the wheel and crank up the tunes, just like the old days, but other times, perhaps after seeing too much carnage along the highway or hearing about an approaching storm, we hunker down and stay put.

Wherever you have been, our focus here is on helping you get where you want to go. To guide your way forward, this book offers a pairing of two central ideas: resiliency and embracing an expanded view of what it means to invest.

The first, resiliency, offers an invaluable set of principles that can guide our decisions in this fast-changing world, keeping us responsive in the decades to come. The second arises from our experience as investment advisors, through which we have come to appreciate the pivotal role that investing plays in shaping the wholeness of our lives and our collective future.

By weaving together these two essential themes, we developed the framework that you are about to learn: resilient investing. This toolkit can help you build a life in accordance with your dreams, no matter what the future may bring. With it you’ll learn how to take action, stand up to uncertainty, and stay flexible.

Here is a first peek at these two complementary ideas.

Resiliency

There’s a new word in town, and its name is resilience. It came out of the blue and unseated the reigning champion, sustainability, which, as many had noted, was getting kind of soft (Barbie now comes in sustainable packaging). Everywhere we look resilience is poking in its fresh new face: in economics, climate science, leadership, online security, community planning, and psychology (actually that is a place where it’s been in common usage for some time). Amazingly in these partisan times, it has managed to span the ideological spectrum. The Post Carbon Institute recently launched a companion website, while the World Economic Forum in Davos jumped on the bandwagon by focusing its 2013 conference on Resilient Dynamism. If resilience science speaks simultaneously to relocalization activists in their transition towns, as well as the 1 percent gathered in their enclaves, we should clearly be paying attention!

Let’s look at what is meant by resilience and why it has arisen from so many quarters as a concept that is truly emblematic of our times. Andrew Zolli’s 2012 book, Resilience: Why Things Bounce Back, frames resilience as the capacity of a system, enterprise, or a person to maintain its core purpose and integrity in the face of dramatically changed circumstances.⁴ Zolli sees resilience as an essential skill in an age of unforeseeable disruption and volatility. A unifying and powerful lens, resilience can focus our awareness and actions at all levels, for individuals, businesses, communities, nations, and the entire planet.

Many people become aware of the importance of resiliency only after a disaster. Do an online search for Hurricane Sandy resiliency and you will find numerous articles and conferences convened as decision makers tried to figure out what we could learn from this superstorm and how we might rebuild in ways that will leave people less vulnerable. But the time to focus on resilience is before disaster strikes; in 2014 President Barack Obama proposed a $1 billion resiliency fund to help communities protect themselves from climate change impacts such as floods, drought, and wildfires.⁵

Futurists and systems theorists are having a heyday, creating a menagerie of frameworks⁶ describing resilience, but it really doesn’t need to be a difficult concept—we see it all around us. Everyone over 40 knows that they are not as physically resilient as they used to be; injured children recover more quickly than injured grandparents. Healthy ecosystems bounce back from fires and storms better than degraded ecosystems. Technology companies become irrelevant if they fail to respond decisively when circumstances change: perhaps the most striking example is Kodak, once synonymous with the very idea of photography but left in the dust by the shift to digital imaging.

For those with a strong bent on ensuring that we maintain the viability of the biosphere, it is worth taking a moment to see why resilience is starting to displace sustainability as an organizing concept. Zolli points out that sustainability tries to come up with an equilibrium point in which a system stays in balance, but this is counter to how many natural and human systems operate. As architect and systems thinker William McDonough wryly asks, Who simply wants a sustainable marriage?⁷ Resilience does rely on the principles of sustainability (unsustainable investments weaken the capacity of a system to maintain integrity), but it strives for a healthy dynamism rather than stasis.

The lens of resilience makes us more cognizant that for better or worse we have entered the age of the Anthropocene—a new term for a geological age in which humans have become the dominant factor shaping the world. Natural systems have been damaged to such a degree that we need to be prepared for random, extreme disruptions.⁸ At the same time, resilience points out that we should be designing our systems, and our lives, so that we do more than survive such disruptions. We will want to capture the upside, thriving and growing when exposed to volatility and disorder, while also seizing emerging new opportunities as they come into view.

For some, resilience has a flavor of hunkering down, waiting for disaster to hit, and coming out unscathed. That’s not a very juicy way to live, and it is not what we mean by resiliency. Our goal as investors is to make things better, for ourselves and for the world. We