I just got a seat at the plenary session of the Investors Circle Conference. Speakers include Peter Kinder (KLD), John Fullerton (Alerian Capital), Joel Solomon (Renewal Partners Company) and Leslie Christian (Progressive Investment Management).
They've just answered the question "what is the purpose of capital?" Sustaining life is the shared answer.
Having taken on that easy question the panel shifts to a slightly more challenging question - "Don't the strategies deployed by the speakers defy the principles of risk management, maximizing return, and modern portfolio theory?"
As Kinder points out, reconsidering the reality of this theory - which, he claims, has ingrained "risk adjusted maximum return" into our common definition of fiduciary responsibility, requires taking on 6 Nobel winning economists who developed the theory. Say the panelists: "Hey, its just a theory." It ignores lots of risks that can't be quantified, it equates risk today with risk tomorrow, and it assumes the lives of our children are worth less than our own.
The rate of return that we should be interested in is the sustainability of the whole system.
In other words, we're off to a good start.
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