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With perfect foresight, where would you invest?

I recently blogged a lot about 10,000 year thinking, the Long Now and how it relates to financial services. If you missed it, then here’s the info:

In fact, the whole meeting of the launch of the Long Now of Finance was recorded and, if you have 40 minutes free or even 10 minutes (bearing in mind that we’re talking 10,000 years ahead, that’s not bad) then you can hear Brian Eno, Alexander Rose and Stewart Brand introducing the concepts properly through this video:

We followed this up with a discussion of the Long Now of Finance at the FSClub on 7th June.

Here’s a short write-up of what transpired from guest contributor Richard O’Rourke:

Monday evening saw another excellent Financial Services Club event with the Long Finance team.

The evening was kicked off by the panel chair, Professor Michael Mainelli, founder of Long Finance.

He provided an overview of Long Finance and summed up its raison d’etre as ‘When would we know when our financial system is working?’

Drawing attention to work he’d recently published, ‘Just Doing My Job: Intelligence versus Integrity in Financial Professionals‘, he pointed out the difficulties facing the finance professions and their institutions.

He also talked about the impact of ‘feed forward loops’ which make financial systems intrinsically unstable, complex and not suited to normal distributions.

Drawing inspiration from David Hilbert’s Meta Mathematics project of 1900 setting out a roadmap for the key mathematical challenges of the 20th century, Mainelli described the MetaCommerce part of Long Finance as an attempt to identify the impertinent challenges that need to be overcome by the global financial community.

First of the panelists to speak was historian Dr Malcolm Cooper, author of the first Long Finance Eternal Brevity paper, ‘In Search of the eternal coin’ (32 page pdf).

He made two observations of note, the first, that land has always been part of long term value. The second was that, despite the scale of their merchant empire, the Carthaginians had no coinage.

Next up was David Steven, author of the Finance Short paper, ‘Time To Stop Betting The House’ (42 page pdf).

He remarked on his surprise that despite what has arguably been the greatest financial crisis since the thirties, and the collapse of house prices in the US and elsewhere, in Britain house prices have barely paused for breath and have even started climbing again.

The question on his mind is ‘has Britain simply delayed the inevitable?’

He also highlighted his belief that the pervading dynamic in Britain’s housing market represents the single largest transfer of wealth from the young to the old in its history.

Inter-generational transfer was a point picked up on by the final panelist, Jan-Peter Onstwedder.

He pointed out how our generation is the first to turn an age old tradition on its head by attempting to consume future wealth today rather than enhance it for future generations.

He highlighted how it is becoming increasingly believed that we are bequeathing to our children a world in a worse state than we received it.

He also pointed out how a key financial tool for measuring value across time, NPV, has probably contributed to poor inter-generational decisions.

When the discussion was thrown open to the floor it revealed an audience of both pessimists and optimists.

The pessimists started by pointing out that we’re locked into the current financial paradigm and a sustainable replacement can only emerge after our present system collapses. Malthus even got a mention.

Quick to rally to the optimists cause, Z/Yen’s Ian Harris reminded us that throughout history there have been those concerned with catastrophe and collapse and each time our ingenuity has triumphed. Jared Diamond’s ‘Collapse’ was mentioned in the context of what might motivate our present society to choose success over failure.

Finally, I recently spent a day with some futurists, as mentioned.

The result of that day is that we decided to create the Long Finance Futurists Forum, with founders including:

  • Chris Yapp (SAMI Consulting)
  • Gill Ringland (SAMI Consulting)
  • Ilaria Frau-Hipps (University of Cambridge)
  • Martin Duckworth (SAMI Consulting)
  • Michael Mainelli (Z/Yen)
  • Oliver Sparrow (Challenge! Forum)

Oh yes, and me!

Our first output from this meeting is the attached document: 
Download “Where shall I invest” (Word Doc).

The idea is to look at what would have happened, post the last financial crisis of 1929, if someone had taken an investment position based upon the various geographic views of that time.

We then pose the question: with perfect foresight, where would you invest for the next century?

All in all, the Long Now and the Long Finance Futurists Forum will be an ongoing process of dialogue, discussion and debate, and will gain some traction at this year’s SIBOS I suspect.

Therefore, if you’re interested in the Long Now and a real focus upon Future Finance, let me know and will make sure you get invited to these discussions.

 

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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