The Innovation Blind Spot by Ross Baird

Author:Ross Baird [Baird, Ross]
Language: eng
Format: epub
ISBN: 9781944648626
Publisher: BenBella Books, Inc.

WHAT DEPLOYING A ONE-POCKET PORTFOLIO LOOKS LIKE

If you have a 401(k), think of the “pie chart” report you get on how your investments are doing. You’ll see a certain percentage of your investments in stocks, some in bonds, some in “fixed income,” some in “alternatives,” some in “real assets” (real estate). The chart shows how all your assets are invested, but it may not tell you what your money is actually doing in the world.

Bryce believes, as I do, that the hollowing out of communities poses an existential risk to American society. He had a vision of building a one-pocket investment strategy, starting in Louisville, which could then be a model for other communities that had been gutted and needed quality jobs. The real estate part of the pie chart would be affordable housing. The fixed income investment would be small business loans in groups like Scarlet’s Bakery. The stocks would be in companies that created quality living-wage jobs in the communities. And the “alternative investments” would be in startup entrepreneurs.

To realize this vision, he worked with two investors, Ann DeRosa and Chris Knapp (who also helped Victoria Fram and me launch our investment fund at Village Capital), to design an institutional-quality portfolio whose allocations would match any endowment or pension fund in the world. The most important difference: every dollar of the portfolio, not just 5 percent, was invested with the intention of creating quality jobs in Louisville.

Investing consists of risk, return, and diversification. The smart investor looks at the risk and invests where they believe they can get a return that justifies that risk. Right now, blind spots in our markets cause us to ineffectively evaluate financial risk. The best investors over the next generation will be the ones who appropriately evaluate social and environmental risk.

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