Dear Reader

by Cheryl Smith, Ph.D., CFA, President
The first daffodils of spring just opened beside my house.  The sight of these spring flowers always engenders a spirit of newness, of freshness, and of hope after the excessively long New England winter. This year more than ever, I need that sign of hope.
For at least 50 years, as transaction and trading costs have fallen, world financial markets have become increasingly focused on the short term, and the expectations for acceptable quarterly returns have moved ever higher.  Profit’s share of national income has reached new heights.  Over the past 15 years, the determined drive for ever higher returns, aided by increased leverage, produced Long Term Capital Management, ever more esoteric asset backed securities, and a credit default swap market with only a tenuous connection to the underlying bonds.  With the hubris of unlimited faith in their elaborate mathematical models, and aided by increased financial market deregulation, Wall Street traders built up an unsustainable structure of interrelated claims and credits, and reaped gargantuan bonuses.  Ever-increasing income and executive pay fueled competitive consumption, expressed in bigger houses, bigger boats, and bigger cars.
After 18 long months of stock declines, and the slow realization of the huge systematic risks in credit markets and the financial system as a whole, the U.S. public is battered and just plain weary.  Layoffs and unemployment are increasing, consumers have retrenched, and financial and industrial businesses see little prospect for attractive investment. Fear has the upper hand over greed in the markets. 
And yet these seismic shifts in economic life are shaking up attitudes of resignation and denial, causing citizens to rethink basic assumptions. In place of a headlong drive to grab ever more while the getting is good, we now have an enforced pause, a time to reflect.  The public has begun to understand all that went wrong on Wall Street, and to reject the ideology that led to the crisis.
We now have an opportunity to create a more vibrant, just, ecologically beneficial society and economy. We have the opportunity to reframe our expectations and to redefine our measures of success. 
We can choose to patch up and repair our existing economic system, and to continue to believe in the myth of the free market. Or we can recognize that sensible and appropriate regulation creates well-functioning markets. Markets, whether for goods, for services, or for assets have always been social constructions. We can institute norms of market behavior and greater transparency, shaping markets to serve human needs rather than shaping ourselves to fit them. It is time to reconsider the paradigm of unrestrained, unregulated growth and think about a more sustainable economy – sustainable levels of growth and development, supported by less inequality in the distribution of income. It is time to shake off resignation and to become engaged in civic and economic life. 
We’ve been working for over 25 years on investing for a better world; one with more equity, a sustainable economy, and a sustainable environment, all leading to living more lightly on the planet.  Let those daffodils bloom!