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Financial Leadership

Humility

By Financial Leadership, Humility No Comments

At Scholars of Finance, we have six core values that are at the center of what we teach: Integrity, Compassion, Humility, Curiosity, Impact, and Courage. Each month, our members vote on the “Value of the Month”, which helps focus our discussions on topics pertinent to that value.

Humility was our value for May and we spent a lot of time thinking and talking about it as a community, so I wanted to share some thoughts on this value as we enter the summer. Here are our epithet and principles for Humility:

Humility

Know thyself

  • Serve a purpose greater than yourself
  • Cultivate gratitude for what you have 
  • Recognize both your strengths and limitations
  • Ask for and share honest feedback regularly

In today’s society, “Humility” is often synonymous with “Modesty”. According to Merriam-Webster’s dictionary, Humility is “the state of being humble.” Both it and humble have their origin in the Latin word “humilis”, meaning “low.” The definition of “humble”, in the dictionary, is “not proud or haughty: not arrogant or assertive”. Many people think it means having a “low” opinion of oneself – that it is the opposite of “arrogance”.

The Scholars of Finance view of humility, however, which we have been taught by our mentors and leading thinkers, philosophers, and spiritual teachers, actually places humility at the center of a spectrum between modesty and arrogance. It’s not thinking too highly or too lowly of oneself. That said, we believe humility can be summed up in two practical ways: 

  1. Accurate self-appraisal; and 
  2. Overcoming our ego. 

David Brooks captures both points beautifully in his book The Road to Character, when he writes, “Humility is accurate self-awareness from a distance. It is moving over the course of one’s life from the adolescent’s close up view of yourself, in which you fill the whole canvas, to a landscape view in which you see from a wider perspective, your strengths and weakness, your connection and dependencies, and the role you play in a larger story”. We view humility as overcoming our ego so we know the truth about ourselves holistically. I’ll unpack this using our epithet and principles.

Know thyself

In order to know ourselves, we need to see ourselves clearly. Our egos can be fragile, and fragile self-perception often gets in our way in life. 

When we read David Brooks’ writing, we see a few ways in which it is difficult for us to know ourselves. It is difficult to face our strengths and our weaknesses. We hear people say they are “self-made”, having difficulty acknowledging how everyone in their lives leading up to that point played some role in who they are now. Often, when we see “the role we play in a larger story” it can throw some of us into an existential crisis, facing how infinitesimal our lives may be in the grand scheme of things – in a world of eight billion people and in thousands of years of recorded history. 

The principles of Humility outline four critical components of a “system” that helps us to know ourselves, empowering us to overcome all of these potential obstacles. 

Serve a purpose greater than yourself 

To diminish the ego, we need to work against self-centered tendencies. The primary way we can do this is by focusing on serving a purpose greater than ourselves so our daily life is not “all about me”. Doing so keeps us focused on the bigger picture, so we don’t become self-obsessed or begin to think we are the center of the universe. When we focus on ourselves too much it can feed our egos. Conversely, a focus on others reinforces altruism and selflessness. It is the antidote in (and through) action. 

Cultivate gratitude for what you have

Greed, as we often discuss, is one of the largest risks to our character that we face in the finance industry, and the cause of many of the problems in the system we have seen throughout history. We do not believe “Greed is good”. Greed is thinking “I need more” or “I don’t have enough”, when we have more than we actually require. On the contrary, Gratitude is feeling, thinking, and/or knowing “I am content with what I have” or “I have enough”. Gratitude empowers us to experience contentment – this repels fear and anxiety, which can often be self-centric. Gratitude is our day-to-day shield against a relentless pursuit for more.

Recognize both your strengths and your limitations

Our ego – our sense of identity – often needs to protect itself, so we run from the less convenient realities about who we are. However, being open to even the hard truths about ourselves keeps us attuned to reality. Embracing these hard truths stops us from falling into a fragile-ego-protection trap, where we are blind to our own limitations. By recognizing both our strengths and limitations, it keeps us in the center of the spectrum we opened this post with and allows us to have an accurate sense of self. It ensures that we don’t become too modest or arrogant either. We have a full and balanced view of ourselves. 

Ask for and share honest feedback regularly

Lastly, we can only see a part of the picture of ourselves. Because we are an interdependent social species, how others perceive us is also important. While our self-esteem should be intrinsically sourced, others can and will often see strengths and limitations, realities about ourselves, that we won’t see on our own. They help us see blind spots and tell us how our behavior impacts others. By asking for and sharing feedback, it creates an environment where others will help us to stay in touch so our egos don’t blind us to difficult truths.

Conclusion

At Scholars of Finance, we need to take a wider perspective because of the impact investments have on the world. There are several truths about ourselves we need to remain constantly aware of. 

  • If we achieve our goal of instilling stewardship and integrity in the finance leaders of tomorrow, we will be managing billions of dollars one day and have great influence. We need to take this very seriously. 
  • We are in a culture and society that venerates wealth – in a system that has perpetuated increasingly divergent socio-economic disparity – and we can easily be influenced by our environment. 
  • Focusing on our own needs is healthy inasmuch as it equips us to be our best, but too much self-centric focus can stop us from seeing the bigger picture.
  • In Wall Street, greed can easily creep in, slowly, gradually over time, almost imperceptibly, and can undermine our better intentions and desire to help others. 
  • Our success in finance can get to our heads, our egos can get inflated as our sense of self swings toward arrogance, making us more prone to selfish behavior, greed, and ethical lapses.

Preparing for those risks is at the core of our mission at SOF and Humility is a value that requires a lifetime of constant cultivation. We never “arrive”, we only constantly improve (sometimes face setbacks), and continue to develop humility. It’s a plant that needs to be watered regularly to grow and thrive. So, our community encourages you to test the four principles. 

As we begin to enter the summer season and many of you begin new internships, or for the investors reading, you prepare to close deals, go back to the office, and continue to advance your careers, we invite you to join us in thinking about how you are exemplifying humility in your life and work. 

  • Revisit your mission and values – are they bigger than yourself? Do you have them written down and does your greater purpose resonate and feel real and personal?
  • Express daily gratitude, whether it be alone, with friends, or even asking others what they’re grateful for; list 5 things you’re grateful for today.
  • Take an inventory of your strengths and your weaknesses, perhaps with 15 minutes of journaling time this week.
  • Ask 10 people in your life for 360 feedback. Find out what your mentors, family, friends, and other peers think about you holistically. 

Doing these things will help you play to your strengths and manage your weaknesses, will strengthen your relationships, and will help you to do more good and make a greater impact on people. And in the spirit of humility, these practices will help us know ourselves so that we can overcome ourselves and be true stewards. 

As we venture into June and our value of the month is “Curiosity”, I would love to hear what you learn. Feel free to reach out and share your thoughts or questions. At SOF our greater purpose is to inspire character and integrity in the finance leaders of tomorrow. We’ve made progress but still have so much to learn. We would be grateful for your honest feedback.

Impact and Decision-Making: Analyzing the Economic Impact of the American Rescue Plan Act of 2021

By Financial Leadership, Humility, Impact No Comments

As an active member of Scholars of Finance, I have learned about the importance of having core values in decision-making and everyday life. One of our core values at Scholars of Finance and our Value of the Month for February was Impact. As the COVID-19 pandemic drags on, Congress recently passed a $1.9 trillion stimulus known as the American Rescue Plan Act of 2021. President Biden signed the bill on March 11th and it acts as another COVID-related stimulus that will impact the lives of American citizens and influence our economic trajectory.

On the surface, a bill intended to help others during a time of need sounds like it would receive bipartisan support after a year-long crisis. However, for the American Rescue Plan Act of 2021, that is not the case.

Primary Provisions

The American Rescue Plan Act of 2021 aims to address many issues ranging from unemployment, small business assistance, vaccine rollout, education, and a range of others including:

  • $1,400 direct payments for individuals making up to $75,000/year and couples making up to $150,000/year (being phased out at $80,000/year and $160,000/year)
  • An extension of $300/week in unemployment benefits up until September 6th
  • Household relief of up to $3,600 per child for families with children
  • $350B in state and local aid
  • $15B to assist small businesses through the Emergency Injury Disaster Loan Program
  • $125B in aid to K-12 schools to reopen
  • Tens of billions in funding for a nationwide COVID-19 vaccination program
  • And many more

However, the bill sparked debate in Congress over the enacted shortcuts and its $1.9 trillion price tag.

Political Opposition

The road to legislation for the American Rescue Plan Act of 2021 was far from smooth. The bill faced opposition from Republicans and some Democrats citing their disapproval of Democrats’ use of the budget reconciliation process bypassing the Senate filibuster to pass the bill and its expensive nature. Senate Minority Leader Mitch McConnell (R-Ky.) has stated that the proposed stimulus is “wildly expensive” and “largely unrelated to the problem”. Jared Golden, a House Democrat from Maine, voted against the bill, defending his vote stating, “I won’t support trillions more in funding that is poorly targeted or in many cases not necessary at this moment in time”. The high cost of the bill has been the main issue Democrats faced in getting it passed, however, the bill received a lot of support from the Democratic party.

Democratic Support

Despite Republican opposition, most Democratic leaders voiced their support for the bill. Senator Bernie Sanders (I-Vt.) has described the bill as “The most significant piece of legislation to benefit working families in the modern history of this country.” House Speaker Nancy Pelosi (D-Ca.) also stated that the bill “Goes a very long way to crushing the virus and solving our economic crisis.” Democrats who supported the bill cited its significance after a year-long crisis and as a preventative measure for the future.

Next Steps

On March 6th, the Senate passed its version of the bill – which did not include the initial $15/hr minimum wage proposal after it was struck down by the Senate Parliamentarian – in a party-line vote. Democrats then successfully passed the bill in the House with another primarily party-line vote on March 10th, and President Biden signed the bill into law on Thursday, March 11th. With the current round of unemployment benefits from December’s stimulus running out in the next couple of weeks, President Biden aims to “Get checks out the door starting this month to the Americans that so desperately need the help” in what will be the third round of stimulus checks since the pandemic started. 

The Effects on the Economy and Markets

With the economy still recovering from the COVID-19 pandemic that caused an economic shutdown about a year ago, the purpose of a stimulus such as this one is to accelerate economic and GDP growth to get the economy back on track. In addition to the stimulus bill, Chairman of the Fed, Jerome Powell, stated that the Central Bank does not plan to raise interest rates (currently at a record low 0.25%) any time soon. However, the proposed stimulus coupled with a relaxed monetary policy from the Fed has raised some concern about inflation and its spillover effects into the bond and stock market. 

One voice of concern comes from Former Treasury Secretary Lawrence Summers. Summers recently stated in an Op-Ed article that “The proposed Biden stimulus is three times as large as the projected shortfall. Relative to the size of the gap being addressed, it is six times as large”. His article raises a cautionary warning of inflation which has been reflected in the rising yields of treasury bonds in recent weeks and a decline in tech stocks. However, Nobel Laureate, Paul Krugman, responded by stating that the recession caused by the COVID-19 pandemic should be considered “A natural disaster than a normal recession,” and that any fiscal stimulus should be viewed as necessary “Disaster relief”. Krugman additionally argues that concerns over inflation are exaggerated, as stimulus checks are likely to be saved and not immediately spent, therefore providing consumers with stability and expanding their capabilities for future spending. 

On Wednesday, March 10th, the Dow Jones Index reached new highs breaking 32,000 showing signs of delight at the bill’s passage in the House, and continued to reach record-highs on Thursday. However, the effects of the stimulus on the economy will not be immediately observable. In the coming months, economists will be on the lookout for several indicators such as unemployment, treasury yields, inflation, vaccine rollout, and many others. Monitoring these trends will influence whether or not the Fed will have to take action and raise interest rates earlier than anticipated if inflation gets out of control.

Conclusion

Is a $1.9 trillion bill a necessary relief needed to provide citizens and the economy with the support they need, or should the inflationary concerns take precedence? As we have seen, it is up for debate. 

Nonetheless, as a member of Scholars of Finance, I know that my decisions impact those around me. Although they may not be as large-scale as those of politicians and financial leaders, having a values-based approach has undoubtedly helped guide my decision-making. Learning how to implement the values of Integrity, Compassion, Humility, Curiosity, and Courage into my decision-making has enabled me to achieve another core value — Impact. For politicians deciding on the American Rescue Plan Act of 2021, reflecting on their values and their responsibilities as public servants to citizens hopefully helped guide them in their decisions and best serve the country. By upholding the values of Curiosity and Compassion, politicians can seek to understand society’s needs and act accordingly. With Humility, they will be able to reflect upon the responsibilities they accepted and their role to serve on behalf of the greater good of all people. Through Courage and Integrity, they can build trust through honesty and speak up for what is right. Altogether, enabling them to have a positive Impact on the people they serve. As the world and society continue to evolve, I urge everyone to reflect on the impact they have had, wish to make, and the legacy they want to leave behind.

 

“I believe I have a personal responsibility to make a positive impact on society.”

— Dr. Anthony Fauci

 

Sources: 

 

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