Kermitted Asset Management: herd mentality

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“Was that you the one I saw in the Saturday Headingly Test crowd against the Kiwis, dressed like, ahem, a generic cartoon frog?” I posed the question to the chairman of the petty investment firm Kermitted Asset Management when we met last week. “Don’t be stupid,” he replied. “The days of doing my own marketing stunts are long gone – and anyway, I now have graduate trainees for it.

“No, I was doing something far more age appropriate this weekend – hanging out at Glastonbury.” “Of course you were,” I nodded. “Paul McCartney, Diana Ross and a spot of Greta Thunberg to help ease expenses?” “Plus Kendrick Lamar, Billy Eilish and paying my own expenses with great pleasure,” the president replied.

“While I admire her energy, you know I find it hard to accept Greta’s rather pessimistic view of the impending apocalypse – and I imagine she feels the same about my belief as a shrewd asset allocation by the wonderful world of investing is our best hope for a happier ending.So rather than listen to his words, I retreated to my modest accommodation in the Tenthouse Suite to reflect on the importance real language in ESG.

“Helped by a purchase from one of the Festival’s independent sellers?” I laughed. “I know we’ve touched on this before,” the president said, ignoring me. “But how on earth can we tackle the biggest problems in the world, if we can’t even find a common way to discuss them? It’s as if we need a “reverse Babel” – an explosion from above that makes us speak the same language rather than creating several different ones. »

“If your solution to all of this is divine intervention, I’m afraid Thunberg’s thesis has become much more likely,” I sighed. “I admit that prospect made me languish in my glamp-site – at least until I directed Jack White made a surprise appearance on the park stage,” the president replied. “But then I had a little revelation.” “Was it in the woods?” I asked. “The Spinney? Green fields?”

“The TISA Big Picture Conference,” said the president. “Specifically, the roundtable on transitioning to a sustainable future, where young Rob Gardner from SJP started talking about the idea of ​​carbon sequestration – not artificial ways to remove carbon from the atmosphere. but to take advantage of Mother Nature. In a good way, I mean – not like we have done for the past two centuries.

“Take the example of elephants: as they move through the forest and search for food, they reduce the density of smaller trees and plants, which leads to an increase in the proportion of taller trees, which causes more carbon to be stored in the forest – and that’s before we get to the more obvious benefits of fertilizers. Anyway, can’t you see? A common language has been staring us in the face from the start – and it’s a language we all speak fluently!”

“You may need to spell it,” I asked him. “MONEY,” the president said helpfully. “According to a nice little IMF report, The secret work of elephants, as of the end of 2020, one can use the average market price of one metric ton of carbon dioxide to arrive at a total present value of the carbon sequestration services of African forest elephants. Using the 2019 figure of $25 per ton, that’s over $150 billion in total, or $1.75 million per head.

“And, given that poachers could expect to make around $40,000 from an elephant’s ivory, doesn’t environmental economics alone suggest that we should be doing much more to combat the trade in elephants? ivory – if not pay poachers to stay home? The same goes for little Greta’s compatriots and other whaling nations, given that the carbon capture services of a single great whale are worth, not millions, but billions of dollars.

“I mean, if the wonderful world of investing can’t resolve its communication divides by putting a monetary value on everything, then what hope is there for the world? Except maybe waiting for the discovery of a real Babel fish from Hitchhiker’s Guide to the Galaxy – although we will likely have driven it to extinction before we find out what it can do.

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