EIEIO...What’s Love Got to Do With It?
By: Michael Moe, CFA, Brent Peus, Owen Ritz, Catherine Merrick
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✡️ “Love Your Neighbor as Yourself.” – Leviticus 19:18
✝️ “Love Your Neighbor as Yourself. There is no commandment greater than these.” – Mark 12:31
☪️ “Not one of you truly believes until you wish for others that which you wish for yourself.” – Hadith
🕉️ “This is the sum of duty. Do not unto others that which would cause you pain if done to you.” – Mahabharata 5, 1517
The World’s on fire.
The Israeli conflict threatens to erupt into a global war. Just yesterday, Turkey’s President Recep Tayyip Erdogan said, “We are making our preparations, and we will declare Israel to the world as a war criminal.”
Half a million people have been killed or injured in the Ukrainian War. Russia, with the largest nuclear arsenal on the planet, has been getting cozy with its southern neighbor. President Xi and President Putin celebrated their “deep friendship” in Beijing ten days ago.
Though hardly a shock, it came out last week that Iran had hosted 500 Hamas terrorists last month to provide specialized combat training. Russia, China and North Korea have become active advocates for the Mullahs in Tehran.
These geopolitical powder kegs come on the heels of COVID-19, which resulted in 6.9 million deaths. The derivative effects of the pandemic – failed businesses, learning loss by students, and mental illness – have been equally devastating.
Accordingly, it would be an especially good time for us to come together as a nation to face growing challenges. Alas, Americans have never been more divided along political lines.
There are countless datapoints that illustrate the polarization. 81% of people prefer not to date somebody from the other political party. This contrasts with 23% who won’t date somebody from a different religion and 15% of people who won’t date somebody from a different race.
When it comes to the headline issues of the day, the gap between people who identify as Democrats and Republicans is Grand Canyon-esque.
Take a few more polling questions for instance.
Are you in favor of stricter gun laws?
84% of Democrats say yes vs. just 31% for Republicans.
Is global warming an existential threat?
87% of Democrats say yes vs. 35% of Republicans.
Should abortion always be legal?
59% of Democrats say yes vs. 12% of Republicans.
Is the federal government too powerful?
31% of Democrats say yes vs. 73% of Republicans.
Do you support Obamacare?
87% of Democrats say yes vs. 21% of Republicans.
Here’s a chasm that really shocked me. 52% of college students (18-24 years old) side with Israel over Hamas and 48% actually favor Hamas. Again, the poll asked respondents whether they support “Hamas,” not “Palestine”. I know this seems too outrageous to possibly be true, but this data is from a Harris poll from last week.
In an environment where we can’t even agree what day of the week it is, the one major area we have an overwhelming consensus is on school-choice and its relatives.
68% of Democrats and 82% of Republicans support school-choice. 73% of Democrats and 78% of Republicans are in favor of charter schools. 72% of Democrats and 75% of Republicans support universal Education Savings Accounts (ESA’s).
The school-choice movement has become an overnight, thirty-year success with now 20 million students in alternatives to traditional public schools – up from 4 million students in 1993. Recent data shows charter schools have outperformed traditional public schools and have been particularly successful for poor kids (38% of K-12 students are categorized as “poor”), and this is contributing to the momentum of the movement.
In the B.C. era (Before Covid) the paradox had always been that while just 36% of parents were satisfied with K-12 education in the United States, 76% were “completely satisfied” with their own child’s education. This begged the question: What parent would send their child to a school they thought was awful?
In March 2020, when 1.6 billion students were thrown into the deep end of the online learning pool and told to sink or swim. Some sank to the bottom, some crawled to the edge of the pool and said they never were going back in, but most flailed around a bit and ultimately got the hang of it. The online genie was never going back in the bottle again.
The shift to online, at-home schooling put many parents in the virtual classroom alongside their children for the first time. Witnessing Zoom lessons firsthand, parents were shocked by the realities of what was being taught (or not taught) at their children’s schools. When the masks came on, the mask came off.
We all remember when Virginia Governor Candidate Terry Mcauliffe proclaimed in his debate “I don’t think parents should be telling schools what they should teach.”
Oops…..Virginia parents rallied behind Glenn Youngkin who went on to win the race for Governor, despite Joe Biden winning the Commonwealth by 10 points the year before.
When retired Four-Star Admiral Bill McRaven, the Commander of the SEAL team that killed Osama Bin Laden, was asked the greatest security threat facing the United States, he answered “our poor K-12 education system.”
A.D. (After Disease), parents across the country agree, saying “enough is enough” and taking actions into their own hands.
The United Nations put out the Sustainable Development Goals as a call to action to all countries to promote prosperity while protecting the planet. Goals such as eliminating poverty and hunger, increasing access to clean water, and promoting gender equality were amongst the 17 goals cited as key for the future of society. But what’s most notable is that education is embedded in each and every goal.
Providing quality education for all people so we can thrive is an audacious goal, many would say unrealistic. Given the complexity of education, most experts would say there is no “silver bullet”.
Education is often like a game of “whack-o-mole”…you solve one issue and two more pop up.
However, I believe there is a simple, powerful solution that could achieve our goal of providing quality education for all, while also strategically addressing many other systemic issues. That solution is love.
If we truly love our neighbor as ourselves, and care as deeply about providing quality education for all children as we do for our own, we can changed the world for the better.
What’s love got to do with it? Everything.
Stocks continued to fall with the S&P 500 and NASDAQ now each having dropped 10% from highs. For the week, the Dow dropped 2.1%, the S&P fell 2.5%, and NASDAQ was off 2.6%.
Results from the MEGA tech stocks were overall pretty decent with both Microsoft and Alphabet reporting the third quarter in a row of accelerating revenues. In Microsoft's case, its AI strategy has boosted its cloud business, but Alphabet is still struggling for its AI strategy to kick in. Amazon had good ad revenues with everything else being not so hot, but despite that, earnings tripled. META, the company formerly known as Facebook, got back in the game with revenues increasing 23%.
Interestingly, as the Sam Bankman-Fried trial is going on and as most of the cynics wrote off Crypto as a hype bubble burst, Bitcoin is quietly up 108% YTD.
Given the various things to worry about, it's not surprising that stocks have been volatile and consumer sentiment is punk. As optimists and students of Markets and their history, it's usually good to be playing offense when others are on defense. Selectivity is the key with our focus on high quality and high growth at reasonable prices.
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Need to Know
WATCH: All-in Podcast E151
GSV’s Four I’s of Investor Sentiment
GSV tracks four primary indicators of investor sentiment: inflows and outflows of mutual funds and ETFs, IPO activity, interest rates, and inflation. Here’s how these four signals performed last week:
#1: Inflows and Outflows for Mutual Funds & ETFs
#2: IPO Market
Source: Renaissance Capital
#3: Interest Rates
Source: The Kobeissi Letter
Source: Edward Jones
Charts of the Week
Chuckles of the Week
Entrepreneurship: 1,090 – average days of runway between Series B to Series C US venture rounds (Carta)
Innovation: 138% – Argentina’s annual inflation in September (Barron’s)
Education: 79% – percent of Black Americans who support school vouchers (WPDE)
Impact: 40% – power increase of the average solar panel over the past decade (Science Is Strategic)
Opportunity: 16 million – American families with wealth exceeding $1 million, up from 9.8 million families in 2019 (WSJ)
Connecting the Dots & EIEIO…
Old MacDonald had a farm, EIEIO. New MacDonald has a Startup…. EIEIO: Entrepreneurship, Innovation, Education, Impact and Opportunity. Accordingly, we focus on these key areas of the future.
One of the core goals of GSV is to connect the dots around EIEIO and provide perspective on where things are going and why. If you like this, please forward to your friends. Onward!
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