Are you committing financial necrophilia?
Sometimes, it’s your fault; sometimes, it’s the responsibility of your financial adviser or your accountant. Rather than embracing new ways, a fixation on outdated financial practices can cause your finances to be stuck in the underground catacombs, rather than flourishing in the sun.
Necro: from the Greek word for dead body or corpse
Philia: from Greek, love or affection, bordering on obsession
Before the deviants got to it, the original term is akin to an obsessive desire for things past.
Ask the following questions of yourself (and, if applicable, your advisers and your business), and then check yourself before you wreck yourself.
- Do you adhere to legacy accounting systems?
Some financial professionals resist adopting modern accounting software or practices, instead clinging to outdated methods that may no longer be efficient or relevant. This could stifle innovation and lead to missed opportunities for streamlining processes. You no longer use a Nokia 3310, so maybe update your old accounting software and revise your bookkeeping processes.
- Do you rely too much on historical financial data?
Investment decision-making is often based on historical data without considering current market trends, emerging risks, or opportunities for innovation. This approach can lead to missed opportunities or poor strategic decisions. The USA used to be 50% of the world GDP, so many international investment funds are still allocated 50% to the USA (with zero to minimal investment in emerging economies such as China, India, or Africa). Buying stock in the Dutch East India Trading Company was a great idea in 1682, but in 2024, if you are looking for better-than-average returns, maybe look toward emerging economies, artificial intelligence, cryptocurrency and biotech.
- Short-Selling:
Profiting from short-selling stocks in struggling or declining industries (e.g. the GameStop short made popular in the comedy “Dumb Money”, or betting on the failure of brick and mortar retail) is a body that we would like to see buried for good. Some cannibalistic opportunists focus on the old-fashioned idea of exploiting the demise of another for their own gain, rather than supporting innovation or recovery. Short-selling is often short-sighted and bad karma. Instead of trying to make a selfish short-term profit from the failure or death of another’s dream, get in there for the long-haul and help to create new things!
- Resistance to ESG:
Some financial professionals or institutions may resist integrating ESG factors into their investment decisions, clinging to traditional financial metrics that ignore broader social and environmental impacts. This unwillingness to adapt to changing investor values and societal expectations is dangerous. Companies that do not “adjust their sails” to the new winds of societal change may crash on the rocks.
- Predatory Lending:
Engaging in or supporting predatory lending practices, particularly towards struggling individuals or communities, shows bad morals and may be bad for the bottom line. High-risk and high-interest lending means profiting from others’ financial distress. Instead of oppressing the underprivileged, aim to empower individuals and communities by fostering sustainable economic growth. You will be doing good, likely making you feel good.
- Cost Cutting vs. Innovation:
A relentless focus on cutting costs, especially through layoffs or reduced R&D spending, without considering the long-term implications for growth and innovation, can be disastrous in the long term. It can lead to a slow erosion of a company’s competitive edge. Remember that Video killed the radio star. Then streaming killed the video store. Instead of continually looking backward at the bottom line, keep focusing forward to see what’s coming next.
- Share Buybacks:
Some companies use their profits to buy back their own stock and artificially inflate stock prices rather than reinvesting in the business, empowering employees, or driving innovation. This practice can boost short-term shareholder value but may harm long-term growth. A company would be better served to diversify into new blue ocean areas, rather than buying back stock and staying in the one red ocean arena. Remember that cash is like fertiliser: if you pile it up in one area, it stinks, but if you spread it out, it helps new things to grow.
- Failure to Diversify Portfolios:
Investors (or investment advisers) who fail to diversify their portfolios and remain fixated on traditional, familiar asset classes (like old-school government bonds or blue-chip stocks) may be stuck in the past. This could lead to missed opportunities in emerging markets or digital assets. The best-performing asset class of the last 15 years has been cryptocurrency, not stocks or bonds. A small allocation of 5% to cryptocurrency has been shown to increase returns and proven actually to reduce the risk of traditional asset-class investing.
The above examples reflect a theme of being stuck in the past, resisting change, avoiding innovation, or failing to avoid outdated or exploitative financial practices. Using the term “financial necrophilia” in the workspace or on Wall Street could be a powerful critique of behaviours that undermine long-term sustainability and ethical financial management. But don’t just accuse others of stifling innovation, being stuck in a rut, or failing to adapt; lead by example. Get in there and change the world for good!
The BOS fund has underperformed Bitcoin in the last few months, due largely to Wall Street funds piling into BTC, whilst ignoring altcoins. We have faith that good alt projects such as Binance, Solana, Aethir, SUI, Litecoin and others, will have dramatic rises once they are discovered by Wall Street investors.
Honourable mentions to Arweave, up 534% and Kaspa, up 495%.
The DART fund continues to outperform Bitcoin, albeit with much higher volatility. The short-term troughs can be scary, but if you invest over the longer-term, they can eventually even out. Honourable mention to Pendle, up 484%, Stacks up 295% and Thorchain up 278%.
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As at Aug 30 2024
BOS Price AUD 67.2597955075
BOS Price USD 45.279017
As at Aug 30 2024
DART Price AUD 184.4303352397
DART Price USD 124.14157
