• World Economic Forum Report on the State of Long-term Investing

    The authors of a new World Economic Forum report on long-term investing, not surprisingly, see access to capital as a significant restraint on long-term investors. The global economic crisis is the primary cause of that limited access. But the crisis also may have shifted investors' attitudes, as the authors find that there is now less of an appetite for risk and possibly more of an appetite for accounting standards and accountability: Of more immediate importance to the financial markets is that many long-term investors have de-risked their portfolios in response to regulatory and accounting changes, including a move towards mark-to-market accounting and stricter capital requirements, as well as a lower institutional tolerance for risk. This shift has led many institutions to increase their buffers of liquid investments—with some institutions shunning illiquid investments altogether—and reduce the capital allocated to risky and volatile assets. The effect of this shift in asset allocations can already be seen and indicates a clear movement away from equity investments and towards liquid debt investments. In addition, the amount of assets managed by these long-term investors is under pressure due to such factors as a global shift from defined benefit pensions towards defined contribution pensions. The report concludes that there will likely be a further decline in long-term investing by life insurers and pension funds. This decline will only be partly offset by the increase in assets under management of family offices, endowments, foundations and a number of sovereign wealth funds. Absent changes in the investing environment, both external and internal to the institutions, we expect that there will be an overall reduction in the proportion of global investable assets directed towards long-term investing, with potentially significant economic implications. Max von Bismarck is Director and Head of Investors for World Economic Forum USA, and he is one of the authors of the report. Here he is introducing the report and sharing some of the key findings: Read the full report here .

  • De-mystifying Finance

    Joe Knight , co-owner of the Business Literacy Institute , and co-author of the book, Financial Intelligence (both along with Karen Berman ) is out to de-mystify finance. He travels the country to teach business owners and comapny managers the basics of finance. In his mind, the notion that finance is a specialized field is a mistake. He believes that all employees should have a sense of a company's finances, and that the more they understand, the more care they take to build a stronger business and make a stronger balance sheet. He explains his approach in this Harvard Business video: