Social Thread

SOCIAL THREAD’s competitive advantage is the application of systems thinking to the principals: place-based investing; network-based investing; and total economic return assessment. The ethical standards we apply to our client’s portfolios enhance risk management by considering less well recognized factors such as external rates of return. We have formed great strategic partnerships to assist in our technology and research. Our “best of” platform has complete transparency and the leadership to maintain and lead this company in the ever-changing wealth management industry.

We are committed to providing personalized advice to you. Our strategies can be adjusted for any investment objective from capital preservation to aggressive growth. That said, we are seeking a specific type of client.

Special Client Objectives

Our target client desires to generate a “living return”: to maximize total economic returns to the client and to “do no harm” to the client’s network, including material and non-material economic, social and environmental benefits, within prudent levels of risk and to meet the following stated investment objectives:

1. To generate income while preserving the absolute value of the portfolio^[1].
2. To grow capital in a manner consistent with the first objective.
3. To learn new or better investment strategies.
4. To have a positive impact on the world through mission based or socially responsible investment strategies including:

Core SRI Strategies

Screening

• Positive screening favors (increases investment in) “good guys”
• Negative screening filters out (disinvests of) “bad guys”
• Good and Bad are defined by the investor’s ethics

Advocacy

• Exercising your rights as a voting shareholder to influence corporate behavior
• May result in holding “bad guys” since voting is dependent on ownership

Community

• Seeks to allocate capital to “causes”
• Typically below market rates of return
• Considers place and justice issues
• Seen as a compliment to giving

Research & Development -Financial Permaculture/Economic Alternatives Strategies

Please note: these R&D items are not generally available to clients at this time. We are working on a plan to prototype this with Accredited Investors once we work through the legal requirements. A custom “place-based” portfolio of listed stocks and bonds could be built upon request.

Place-based investment

Taking the “Stocks of Local Interest” concept; we ask what costs and benefits arise as a result of investing in one’s own community. Would an investment in a local firm yield returns beyond those on the firm’s statement? Do investors have a role to play in keeping jobs from being outsourced or relocated? Considering geography such as neighborhoods, communities, cities, and regions as closed systems for accounting; we ask what the value to an investor is of: a living wage job; better schools, lower crime, or lower welfare costs one’s my own community. Can a portfolio of such securities be constructed consisting of municipal bonds, equities, and potentially even private placements?

Network-based investment

Taking the “Mutual Aid Society” concept; we ask how we can align ourselves with likeminded citizens and investors to our mutual benefit. Can the law of large numbers or the concept of tipping points be used to our advantage to obtain: group rates or economies of scale on insurance for life, health, disability, or retirement benefits. What charitable or educational resources could be endowed by a voluntary association of investors? Would it be legal or wise to organize boycotts by investors? Can a syndicate be used to capitalize alternative firms (see Corporate Hybrids below) and make them viable?

Total Economic Return Assessment

Taking the “No Free Lunch” concept; we ask what are the real costs and benefits of our investments to both the investor and his network. If we internalize the externalities would the investor still have positive net return on investment? If natural resources such as ecosystem services are undervalued by the general market, can investors obtain rights to protect the environments on which they depend? If the earth’s finite and biotic resources are depleted and impaired, what will the future be like for our children?

Corporate Hybrids

Taking the “Family Business” concept; we ask could a corporation be designed that provides the kind of dynastic legacy and inheritance enjoyed by the very wealthy to a broader group of people. Could a loyal, high performance and fair governance system be installed so as to create immortal endowments of wealth for a firm that faithfully serves its owners. Can such a firm keep groups (e.g. extended families, neighborhoods, church groups, and investment clubs) sufficiently together so as to build and transfer not only wealth, but values, traditions, and customs down through the generations?

Special Concern for Systemic Risks

The target client recognizes and acknowledges some risk must be assumed in order to achieve long-term investment objectives, and there are uncertainties and complexities associated with contemporary investment markets.

Certain specific risks pose a substantial threat to the wealth of the client. These risks are difficult, if not impossible, to manage yet none-the-less real. The Adviser will strive to monitor, anticipate and adapt to such risks, however the client acknowledges that costs, complexity and regulatory constraints limit the capacity to do so. Risks of significance to the Client in addition to conventional measures of investment risk include, but are not limited to:

1. Accounting standards which fail to price externalities;
2. Securities fraud;
3. Exponential resource consumption;
4. Deterioration of the US dollar through mounting and uncontrollable national and consumer debt and trade imbalances;
5. Continued degradation of vital ecosystems;
6. Climate change and severe weather;
7. Extended use of and economic dependency on military force worldwide; and
8. Deterioration in the rule of law and the emergence of organized crime as a dominant global economic power.

SOCIAL THREAD is not bound to a specific investment approach but one that considers how time and situation affect the odds of achieving the risk adjusted returns. In adherence to our best of strategies philosophy, we evaluate each investment opportunity on its own merits. The result is an open architecture investment model, the use of both passive and active investment managers, the incorporation of alternative investment strategies when and where appropriate, and a continuous search for ways to improve the performance and effectiveness of our investments.

Stewardship refers to enabling our clients to have a healthy relationship with their wealth, and to use their wealth to fulfill personal goals and objectives. Toward that end we incorporate the above services into our offering.

Core SRI Strategies Related Resources

  “Socially Responsible Investing: How the SRI industry has failed to respond to people who want to invest with conscience and what can be done to change it.”
Paul Hawken’s excellence criticism of SRI. A must read.

  “The Future of Socially Responsible Investment”
Coro Strandberg superbly describes two diverging paths for SRI: Main Stream and Deep Green.

For additional key studies in Socially Responsible Investing (SRI, ESG, CSR, PRI, ESRI, etc.) be sure to see www.SRIstudies.org which is a project of the Moskowitz Research Program, which is affiliated with the Center for Responsible Business at the Haas School of Business, UC Berkeley.

The US SIF: The Forum for Sustainable and Responsible Investment – Formerly the Social Investment Forum (SIF) has an archive here including their Biennial Reports: Socially Responsible Investing Trends.

We also have assembled a Socially Responsible Investing and Corporate Social Responsibility literature survey.

Financial Permaculture/Economic Alternatives Strategies Related Resources

  Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits 

By Catherine Austin Fitts, MBA

 Localist Movements in a Global Economy by David J. Hess
From nearby Troy, NY Professor Hess provides an academic review.

 Small is Beautiful by E.F. Schumacher
Was required reading in my Environmental Economics class.

 Deep Economy: The Wealth of Communities and the Durable Future by Bill McKibben
Is a recent and easy to read book.

 Going Local: Creating Self-Reliant Communities in a Global Age by Michael Shumman
Michael saw the need for this way back in 1998 (about the same time Fitts wrote the Stock Corp Design Book).

A Design Book for Solari Stock Corporations by Catherine Austin Fitts, MBA. This is the document that gave me the “aha” moment back in 2003.

E. F. Schumacher Society
Has an entire library dedicated to the matter. Much of it is online for free.

NCIF Social Performance Metrics: Increasing the Flow of Investments in Distressed Neighborhoods through Community Development Banking Institutions by Saurabh Narain and Joseph Schmidt, in Community Development Investment Review, Federal Reserve Bank of San Francisco, Vol. 5, Issue 2, 2009

Local Stock Exchanges and National Stimulus by Michael Shuman, in Community Development Investment Review, Federal Reserve Bank of San Francisco, Vol. 5, Issue 2, 2009.