Enabling Others: Strangers And Clients


Enabling Others: Strangers And Clients by David Merkel, CFA of The Aleph Blog.

Whether on a micro-level (a business) or on a macro-level (a government) the way to build value comes from a simple concept.  What can I/we do to enable the goals of others?  Growth and success come through service.

Balzac famously said, “Behind every great fortune lies a great crime.”  There’s only one problem behind this statement — it’s only true in crony  economies, where connections to siphon tax dollars matter more than meeting human needs.  It is false elsewhere.

I know there are some who will begrudge anyone the wealth that they have, because they are envious.  Envy is a bad guide to life and public policy.  If you want a poor society, encourage envy.  If you want a rich society, encourage service.

WSJ Techlive: IPO, SPAC Or Direct Listing? The Path To Going Public

investThis year has been a record-breaking year for initial public offerings with companies going public via SPAC mergers, direct listings and standard IPOS. At Techlive this week, Jack Cassel of Nasdaq and A.J. Murphy of Standard Industries joined Willem Marx of The Wall Street Journal and Barron's Group to talk about companies and trends in Read More

Division of labor is an amazing thing, and it aids the well-being of all.  I could see a business created that would aid rich people who are stretched for time, where many people would work for them, directly or indirectly, solving their needs.  That could employ a decent number of people, much like things were in the UK in the early 1800s, where the wealthy gentlemen, living off of rents from their lands, employed servants.  Those servants gained a better life, and so did the families of the gentlemen.  Was it perfect?  No, nothing is perfect aside from God, but when we help meet the goals of others, society improves, and the economy does as well.  It reduces unemployment.  People who work are far more happy than those that don’t work, even if the wages are small.  We were created to work, and it is no surprise that when we don’t have work, we tend to be sad.

Governments should think along these lines as well — what can we do to enable our people to work hard and produce valuable goods and services?  Some parts are easy:

  • A predictable legal structure
  • Regular enforcement — enforcement is not a surprise
  • Don’t be burdensome — government can’t solve every problem, so limit regulation to the most important aspects of society.
  • A tax structure that doesn’t change often, and reflects economics rather than politics.  Tax businesses and individuals on their increase in value on an accrual basis, and at a single rate.

These policies would free businesses to produce, while meeting the most important goals of society (don’t force pollution on others, etc.)

Personal Application

Do you want to be well-off?  Meet the needs of others, even if those needs are not well-known yet.

Mark Zuckerberg met the need of many people who want to share their lives with others via Facebook Inc (NASDAQ:FB).  The same applies to Twitter and Instagram.

Bill Gates created the operating system of Apple Computers at a much lower price point, enabling many people to have a GUI that could not afford a Mac, even if it had a lot of bugs.

Samsung Electronics Co. Ltd. (LON:BC94) (KRX:0059935) created a competitor to the iPhone at a much cheaper price point using Android, software free from Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL).

People want to look thin, sexy, etc?  Provide shapewear for them a la Spanx.

The list could go on and on… there is a surfeit of human need, particularly on the low end of income, and those who meet those needs can do very well for their clients and themselves.

As for me

So what about me then?  Well, I don’t charge anything for anyone to read me.  I write this as a public service.  People can evaluate whether it is really to their benefit or not.

That said most of my clients started as readers of my blog.  What good do I do for my clients?  Several things:

  • I leave them free.  I don’t ask for all their assets, I don’t want to control all of their finances.
  • I free them from greed and panic.  let me adjust risk to market conditions, and we will do well.
  • Transparency.  My fee is my only income.
  • In general, my performance has exceeded the market in the past.  There is nothing that says it will be true in the future.
  • I’m not going to lie to clients or deceive them.  After all, 80%+ of my own liquid assets are on the line with them in the same proportion– clients get a clone of my portfolio.

My clients get peace of mind.  I am focused on improving my own wealth, and they travel along with me.  My interests are entirely aligned with theirs.

I do think that all of us should have an attitude of service toward others.  It makes for a better society, and better business practices.  Beyond that, Jesus said, “Do to others what you would have them do to you.”  Everyone wants good service, well, go deliver good service.  The world will be better, and you will be happier with your own life.  After all, no one is truly happy who cheats others in order to prosper.

Updated on

Previous article Investment Management: A Science To Teach Or An Art To Learn?
Next article John Hempton Sides With Allergan Against Valeant
David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.

No posts to display