Every year, Larry Fink, the CEO of the $10 Trillion asset management firm BlackRock, writes a letter to his shareholders on the state of BlackRock’s investment allocation philosophy. Last year, I dissected his letter paragraph by paragraph to show you how the arbitrage of human expansion has no clue what they are doing. I am not wasting my time doing it again, as I could almost repeat my comments from last year verbatim.
In a world where, according to John Cleese, “nobody really knows what they are talking about,” being good at not knowing what you’re doing simply means you are not the last in the chain of greater fools of unsubstantiated beliefs. That is how you amass assets under management to the tune of one-third of US Gross Domestic Product (GDP).
I was reminded of this by a prominent asset manager who told me the only reason firms like BlackRock invest in sustainability is because the asset owners (pension funds and the like) tell asset managers to do so.
I was also reminded of this by a call I once got from the CalPERS board asking for my advice on their long-term asset management strategy, which fell on deaf ears after I explained they had to change their approach fundamentally. An experience that mimicked Warren Buffett’s experience with the largest pension fund in the US, when he too was asked to lend his advice.
Larry Fink is clever, in an ethereal kind of way. As ethereal as I found most asset managers to be during my five-year exploration of the asset management business. No one commits to anything out of the ordinary.
Initially, I was overwhelmed with the things I did not know about the asset management business. Soon, just like the Silicon Valley startups I had no prior knowledge of and I turned into over $100 Million businesses, the question “why?” again proved to reign supreme and raised the vail of suspicion.
I discovered from the curiosity of not knowing how ten levels of bottom-heavy diversification make it impossible to produce consistent outlier returns. Not in the least when asset management across all asset classes confounds risk with distribution, in the words of Nietzsche, leading to grave depravity of reason.
In fact, the so-called risk managers in asset management know very little about the embedded risk and built-in depravity by which they attempt to exploit and expand human intelligence and capacity. No wonder few escape the centrifuge of the S&P 500, an index of self.
Larry Fink is a coward, as inscribed in his job description. A risk management firm evaluates its allocation strategies based on risk, not based on opportunity. Meaning that it allocates based on protecting downside, not on the risky pursuit of upside that has no precedent.
Downside protection leads to the expansion and acceleration of investments that already succeed and produce returns, and an asset management’s top-to-bottom risk profile does not seek opportunities to improve humanity beyond its current purview.
It is for that reason Larry expresses not wanting to act as an environmentalist and not taking a hard stance on ESG and other financial programs that purport to help the environment. He happens to be right on, as finance programs hinging on sustainability are in blatant violation of nature’s first-principles and therefore accelerate an anthropogenic cascade rather than help humanity.
For that reason, I declared war on sustainability. Anyone uttering the word is an outright fool, let alone an evolutionary ignoramus.
The universe revolves around renewal, a completely different vector and criteria of expansion from the pretense of sustainability we currently, deafened by our misguided quest for growth for the sake of growth, exploit with the ideology of a cancer cell (Edward Abbey, 1927 – 1989).
Therefore, not taking a stance on the false positive of sustainability, peppering its nebulous “compliance” over BlackRock’s existing portfolio, and leaving the investible companies responsible for the outcome, will turn out to be Larry’s lucky break.
Seven billion people on our planet have never stood still to realize how without an overarching theory for humanity and without operating-systems of policy, capital, and innovation embedding said theory, we are collectively lost. And it shows.
Why on earth would you think the ultimate risk manager, Larry Fink, deploying one-third of our GDP, would be the one to flex his muscle and take a stance at the grandiose opportunity humanity can and must embark on? He allocates based on risk and on how fast he can spin the human centrifuge of human wants, called solipsism. He does not allocate based on the unprecedented opportunity of human needs.
I, for one, cannot leave that be.