Monday, January 26, 2015

A friend nursing his wife suffering from cancer (and, foreseeably, bar a miracle, dying soon), writes most movingly

He writes he's praying that his wife 'embraces this phase of her life with peace and assurance, and looks forward to a more splendid journey like Stephen's "Behold I see the Son of Man...", or like Bilbo Baggins "I think I'm quite ready for another adventure" as he boards the ship to Undying Lands, or the valiant and indefatigable Reepicheep the Chief Mouse in Narnia where he sets out in joy and faith for the "utter East," a land “where the sky and water meet, where the waves grow sweet," Aslan's country'.

He goes on to say, 'My heart aches and rejoices at the same time. Each time I look at her sweet face whether asleep or awake, I cannot let go. But as I ponder how cancer has brought down a sweet spirit, I ask God to take and restore her "in the fullness of time."'

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Friday, January 09, 2015

Poem: "'Well Done!', she said"

“Well done!”, she said to him,

Echoing a man

Much greater than herself,

Knowing naught of either

Sweat or agony

Or will of steel

Or doubts or fears.

“When all is done”, he said,

Echoing a man

Much greater than himself,

“There’s little done, and what

Is done, is done but

Poorly - or if

It be done well,

It lasts such little time”.

“There is a man, I’m told”,

She said, “much greater

Than ourselves, who took a

Loaf, a fish, or just some

Mud, or even spit;

Whose touch transforms,

Makes whole, gives sight.

Don’t look! Don't look!!

Each frog’s a prince.”

Prabhu Guptara

9 January 2015

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Saturday, December 20, 2014

Poem: My sister’s grave today is elegant and bare

My sister’s grave today is elegant and bare

Bereft ev’n of that stone which pressed her coffin down

And had a little space to hold such poor tribute

As I could bring on my rare visits to the site.

Then I could only lay it down upon the ground

below which rest her bones and hair, for little else

defies this mortal world till He come round who will

Renew the world and us, we’re told. My years fade too,

And I confront the thought that I may never pass

this way again, at least in flesh; the more regret

that this last time perhaps, though I speak here with God

As I am wont to do, I could not bring with me

that least of tokens on her day of birth: a rose.


I used to find travel both exciting and attractive – I suppose because it is associated with childhood visits to the mountains each summer holiday as long as my father was alive. After that, the family could barely survive till I and my siblings started working, and even then could only rarely afford the time and money for holidays. I still find it difficult to initiate holidays. Moreover, after one has been whirled around the world several times on that purposeful but rushed and joyless routine called business travel, I guess expeditions lose their charms. Perhaps age has something to do with it. At least, it is so for me.

In any case, after my sister was killed, I have visited DC only on the rare occasions when business paid for the travel that brought me to town. However, whenever I come to DC, I always visit her grave, bringing with me a single rose.

On my sister’s grave, near the headstone, the gravestone had a little depression, less than half the depth and size of the digit of a little finger. I used to cut the stem of a rose to that tiny dimension, and leave it resting there, on each visit - as long as the gravestone was there.

For reasons best known to the authorities at the Arlington National Cemetery, they remove, some time after the burial, each gravestone, leaving only the headstone to mark each place of burial.

As all the headstones are of a precise height and shape, the effect is to render the entire Cemetery geometric and coldly symmetrical. It is difficult to find a particular grave even after you have been to it several times. You need to know the row and serial number which make it possible to locate any particular grave.

When the gravestone was no longer there, I used to leave my rose on the ground just near the spot where the headstone emerged from the ground.

In 2014, when I was 65 years of age and starting both to confront the relative nearness of my own mortality as well as the fact that that business would perhaps no longer pay to bring me to DC, I found myself in the city again at relatively short notice and, for the very first time since her death, the visit was not only in December but also on the second of the month.

As it turned out, my schedule was too full, so I could neither visit her grave on her birthday (which is on the third) nor even bring with me what I had till then always brought on each visit: a rose.

It is all those regrets and sadnesses and uniformities that stain the hope that marks this poem.

ENDS Sphere: Related Content

Tuesday, June 17, 2014

Investor Governance: Challenge vs. Opportunity. By Colin V. Habberton

Here is an article by Colin V. Habberton, posted by his permission:

Executive Summary

Investment decisions made by asset managers are driven by the mandates they receive from their clients that are, by and large, institutional asset owners. These decisions are underpinned by the principle of maximising the financial returns of each investment, with performance measures for asset managers directly linked to those returns. This article asks the question whether this conventional view adequately takes into account the interests and opinions of the individual investor who is ultimately the source of the ongoing flow of capital into investment markets. It presents the argument through the lens of governance of how stakeholder engagement might offer fresh insight to investor engagement and an opportunity for the investment industry to communicate with the broader base of the investment market.


In a recent Business Day article , the Government Employees Pension Fund’s exposure (GEPF) was put at R437bn, some R100bn higher than the contingent liabilities quoted by the government in the last budget review that interestingly did not account for any liability for the GEPF itself. With R500bn out of pocket of its defined benefit scheme of an increasingly well-paid community of beneficiaries, the taxpayer ultimately becomes the GEPF’s funder of last resort, a worrying proposition. The rational response to this, echoed by the article’s author, is for the Public Investment Corporation (PIC), the GEPF’s principal asset manager, should focus on maximising returns alone for its client. But is it as simple as that?

The ‘Rational’ View

This rational view certainly stands up to the conventional logic that the purpose of investing is the maximisation of returns – you put your money in, you want the maximum amount of money you can possibly get out. The maximisation of returns becomes the key performance metric and analysts decide on the buy/sell/hold positions according to that baseline assumption.

There are alternative views to the conventional approach. The rise of ‘Responsible Investing’ (RI) provides an umbrella category of investment approaches and practices that do not hold the maximisation of financial return as the only metric for investment analysis and decision-making. There is a litany of sub-categories that arguably fall under ‘RI’. ‘Ethical’ investing involves the screening relating to certain ethical filters incl. faith based packaging i.e. Shariah compliant funds. ‘Sustainable’ Investing takes into account the social and/or environmental sustainability (‘E’ and ‘S’) factors as metrics for making the investment decision but are not the core purpose of the business or investment. ‘Socially Responsible’ Investing is similar to Sustainable Investing but specifically includes governance criteria (commonly grouped together to as ‘ESG’ factors) as components of business’ responsibilities and reporting but profit remains its core purpose. ‘Green’ Investing is predictably focused on assets that have a specific alignment or impact towards environmental outcomes. Target Investing purpose is usually specific for the upliftment of a community, area or interest group. With ’Impact’ investing, social and environmental impact indicators are held core to the business and/or the investment decision.

Although there is much noise around these alternative views in the media and from niche product providers in the industry, on aggregate they still amount to a small fraction of the total volume of capital invested on global markets, and particularly so in South Africa. As to be expected, their attractiveness to investors is still by and large judged by the risk-adjusted financial returns they deliver for their investors. Even the alternative views are measured in the terms set by the rational view. One specific critique that could be leveled on the rational view is whether it adequately takes into account the non-financial interests of asset owners, the trustees of underlying pension funds, right down to the individual pension or provident fund contributor. In illustration, consider the case of an asset owner who through their appointed asset manager invests pension fund contributors money into a particular listed entity whose downsizing programme lifts earnings, dividend income and its stock price – an attractive financial proposition - but results in the redundancy of a number of employees that could in fact be, the indirect investors in the loss of their own employment.

The common assumption is that all investors believe in the mantra of return maximisation, and from that foundation, intermediaries author mandates to pursue that mantra, without necessarily providing their clients and beneficiaries with the opportunity to participate in the decisions that are being made and the motivations behind them. Raising the awareness of how and why investment decisions are made to the broader base of an asset owners’ contributors and improving the education of those stakeholders is currently largely ignored. Decisions are made by the very few with the funds provided by the many.

The Governance Perspective

One lens that provides a different perspective on this challenge is the consideration of good governance and how this impacts the investment decision-making processes for asset owners and asset managers. South Africa currently has one of the most recognised and robust corporate governance frameworks in the world, underpinned by King I, II and III, that has shaped business decision-making for more than a decade. One notable paradigm shift with King III was the recognition and revision of the governance principles to go beyond an assessment of the interests of shareholders, to now include and consider the interest of stakeholders affected by the operations and decisions by a business. More recently, the new Companies Act, turned a number of the key tenets of King III into law, notably that all legal entities – public as well as for profit and not for profit structures are urged to implement and maintain a standard model of good governance.

It is widely accepted that good governance within a business is a key requirement in any due diligence process. It is a clear indicator of a well-managed organisation confirming that decision-making processes are transparent and the separate levels of authority within the business are evident and accountable to each other. Good governance is a tangible indicator of a good investment opportunity. But is good governance applied and practiced in the same way by the institutions and their appointees taking responsibility for investment decisions on behalf of significant stakeholder communities, such as the contributors to pension funds?

Pension fund contributors do not have the skills and experience for the complexity of analysing investment opportunities and assessing what the right investment decision would be, or so the argument goes. And so trustees are usually appointed, not necessarily through transparent or widely publicised process but, usually based on their willingness, political influence, financial skill set or combination of all three, to represent the interests of the members of the pension or providence scheme. Governance, tick. However, are trustees the best representatives for the interests of the members, especially when those interests may go beyond the pale of pure financial return? It could be argued that, in the terms of King III, asset owners and asset managers, as entities falling under the requirements of the Companies Act bear a wider responsibility of remaining accountable towards all their respective stakeholders, not just their shareholders. A possible response to this challenge is for asset owners, asset managers and trustees to ensure they critically assess their disclosure, education and awareness policies and practice.

Towards Institutional Investor Accountability

Teaching on governance is slowly but surely bleeding into financial textbooks, it is promoted as a key requirement in the assessment and management of investment assets, but the true experience is largely practiced in the boardroom and the benefit of governance understood by those privileged few who have access to those books and boardroom discussions. In 2011, the publisher of the King III report, the IODSA, in association with ASISA penned the Code for Responsible Investing in South Africa (CRISA) in response and alignment to the UNPFI’s Principles for Responsible Investment, which applies to asset owners, asset managers, and consultants. CRISA calls for the integration of ESG factors into the investment decision-making and management process.

In 2013, ASISA partnered with the Principal Officers Association (POA) and the International Finance Corporation (IFC) to spearhead the Sustainable Returns for Pension and Society Project. This initiative provides industry players with a framework and tools to assist with the implementation of CRISA and compliance to Regulation 28 of Pension Funds Act. A relevant requirement of Regulation 28 is that all trustees of asset owner funds understand what responsible investing is and ensure that their fund’s assets are managed in line with ESG principles. ASISA has taken a lead on this by providing training to trustees through their Academy from 2014 onwards.

Industry bodies, regulators and government are recognising the importance of taking the wider view regarding investment decision-making. Despite these clear, unified steps, only a selection of asset owners and asset managers have committed themselves as signatories to the PRI and CRISA. To date, there are few, if any examples of asset owners and asset managers proactively communicating the reasons and outcomes of their investment decisions to their broad base of stakeholders.

Maximising Value

The opportunity exists for asset owners and asset managers to take the lead in this area and investing time and resources in educating their respective clients on the variety of investment choices that exist and why certain decisions are ultimately taken. This should include awareness of the practice of alternative investment approaches like responsible investing. By actively communicating the reasons for a commitment to ESG (or not) to their stakeholders, asset owners could take a proactive role in making their decision-making more transparent, offering their members the opportunity to engage with trustees proactively, allowing for collaborative decision-making processes. Informing individual investors would equip them to take a personal interest in their investment decisions holding asset owners responsible for the fiduciary role they play in advising third parties such as asset managers and the details of the specific mandate they carry from their members. On the converse, individual investors could become increasingly informed of the state of their investments and connected to performance of their funds. This knowledge could be a powerful tool for collective understanding for the broad base of stakeholders to maximise value when markets or investments face distress and resultant impact that there might be on returns in the short term.

In South Africa, deep socio-economic challenges continue to exist. The collective interests of all investors present a powerful force to shape the flows of capital that not only challenge the assumptions of conventional investor decision-making but also offer exciting potential for new approaches to how and particularly where their money is invested.

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Monday, May 19, 2014

Some global implications of India under the New Prime Minister, Modi

Even if you do not normally follow India, it is the largest democracy in the world, and the 2nd largest country in the world.

So you may want to invest a few seconds in understanding the latest on the situation there.

That is because India has a newly-elected Prime Miniter, Modi.

There are therefore new threats and opportunities for global politics as well as for the global economy.

You can deduce these from:

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Sunday, April 06, 2014

On the rigging of High Frequency Trading (HFT) and the likely impact of Michael Lewis's book Flash Boys

Michael Lewis has exposed to the public what was always known to people of any intelligence or experience in the financial industries: in spite of all the efforts at promoting transparency and level playing fields, financial markets are still, with the connivance of politicians and government agencies, rigged by the largest players.

For an illuminating though short discussion of all this, see:

The particular field that Lewis has now exposed to public scrutiny, High Frequency Trading or HFT, may seem esoteric but its impact is huge.

In fact, HFT is so huge in volume that, you may recollect, some 4 years ago, it caused the famous "Flash Crash" in the entire global economy (that is of course the event to which the title of Lewis's book refers).

If HFT was banned, global trading volumes would be cut in half. In other words, HFT is HALF of ALL global trading in listed shares...

However, the issue MUCH bigger than the rigging of the HFT market, is the IMPACT of the very existence HFT - in terms of shortening the time-horizon of investment decisions and stakeholder-considerations on the part of EVERY company that is listed in the stock market.

Therefore I am in fact for banning HFT entirely. What we should have, instead, is a new structure for companies, globally (see the book recently published titled "Transforming Capitalism from Within").

Meanwhile, we must focus on eliminating the evils within HFT (i.e. the rigging of the market by the large players to the disadvantage of average players)

That can only be done if the US Department of Justice probes the current structure of HFT as "restraint on trade". To be effective, that must be coordinated with the SEC and the FBI. My fear is that these US agencies will either say the market isn't rigged after all (unlikely) or is so advantageous overall that we should leave it as it is (which is what all the big institutions and their paid hacks will now argue in the press and on TV).

Overall, the most likely effect of Michael Lewis's book is that the US agencies will do the usual "face saver" and agree to restrict some irrelevant parts of HFT, or target marginal things - e.g. limits on some types of activity, opening up some minor channels to level the playing field, and other such superficial stuff.

In terms of disadvantaging the average player, we also must not forget that the process (so-called "club deals") of how Wall Street allocates the shares and even the secondary offerings of "hot IPOs" actually creates, for average investors, very much more disadvantage.

So it is Club Deals that need to be fought at least as much as High Frequency Trading.

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Friday, March 28, 2014

A beautiful philosophy of life

As some of my readers know, I was recently asked to Chair the Relational Thinking Network (see and related sites) and, in pursuance of one of my duties (to spread the word about the Network), I invited a small group of friends and acquaintances who don't know the Network, to have an initial discussion of its philosophy and policies.

Today, I received the following message from one of the participants:

"I see this life as a wonderful present to each of us. I like this world as it is and I feel no need to change it."

Does that not seem like a beautiful philosophy of life?

But there are some kinds of beauty which are dry.

And his response seems to me remarkably like the response of the rich young aristocrat to the invitation of Jesus the Lord, as described by Matthew in his biography of Jesus, chapter 19.

Here is what I actually wrote to my acquaintance who participated in the discussion:

Dear XXX

My father died when I was 8, so we went from an upper middle-class lifestyle to being literally on the streets.

I was able to go through school and college only because a few people wanted to change my situation and made scholarships available for me.

I studied for my first university exam by candlelight because we had no electricity at home.

If a kind stranger from Edinburgh (I found out many years later) had not created a special scholarship for me, I might never have passed my university exams. If I would be alive at all, I would certainly be living in a slum in Delhi.

Life is indeed a gift, but only those people can really enjoy it who have money and health.

Oh yes, health - were it not for people who gave their life to discovering medicines because they wanted to change things, we would be living much shorter and more physically painful lives.

If everyone took your point of view, there would be no reduction in ignorance or misery in the world.

As it is, we who have the gifts of health and money have responsibilities; and if we decline our responsibilities, we reduce our humanity.

The invitation of the Network is an invitation to discovering the living beauty and joy that comes from seeing change and indeed transformation not only in the world as a whole but also in the lives of individuals and in our own relationships.

Kind regards

Prabhu Sphere: Related Content