Postcards: This Never Works

Paying the hostage-takers is not exactly a winning strategy... but pay close attention to this movement - and profit off its stupidity ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: This Never Works]( Paying the hostage-takers is not exactly a winning strategy... but pay close attention to this movement - and profit off its stupidity [Garrett {NAME}]( May 4   [READ IN APP](   Dear Fellow Expat: Picture, if you will, the longships of the Norse seafarers. There they go, carving through the waves like avenging spirits, leaving plunder and terror in their wake. Your period – before the Norman Conquest of England. The High Middle Ages. In those years, settlements along the British Isles had a difficult choice. They could fight and protect their homes or risk the destruction of the Viking raids. There was one other choice. It was paying tribute to ensure temporary relief against the raids. From the 8th century to the mid-11th century, kings would pay the Vikings money to avoid invasion. This was called paying the Dane-Gold. The phrase originates from a poem by Rudyard Kipling, "Dane-Geld," which describes the practice of [paying protection money to Viking raiders]( to prevent them from attacking. It implies that giving in to demands only encourages further extortion and does not solve the underlying problem. Concessions to the ruthless carry consequences. Imagine a wolf scenting blood and throwing the finest meat cut in the butcher’s mart to keep him away. The wolf will return. So, too, did Viking raiders need to be paid? It was a brutal cycle that lasted centuries, and each payment to the would-be invaders only whet their appetites for more. The kings chose expediency and safety over preserving their dignity. At the end of his historical poem, Kipling preaches resilience in the face of adversity, noting, " Once you have paid him the Dane-geld, you never get rid of the Dane." They always return…And now… everywhere we look, Americans are paying the Dane-geld. Dane-Geld on Campus [I’ve seen two of my favorite writers]( use this metaphor, citing the Kipling poem recently when discussing Northwestern University’s decision to cave to protestor demands on campus. A few concessions in the “compromise” [clearly violate the Constitutio]( and the Dane-geld payment will only incentivize more unrest later from a handful of professional protestors masquerading as university professors. [The school calls it a compromise]( but it’s more or less extortion by any other name. I attended Northwestern, and this was one of the least surprising decisions the school’s leadership has made in my 24-year relationship with the school. There has been no shortage of outrageous demands from specific groups during my time there (my favorite came [after a fake hate crime]( happened on campus). Every time, the school pays the Dane-Geld and concedes. It’s easy to point fingers at Northwestern’s leadership, but this practice is hardly limited to the University system. We’ve witnessed the U.S. government pay the Dane-Geld to the Taliban, to Iran (over its nuclear weapons program), and, of course, hefty ransom payments for Americans who are kidnapped abroad. Do we think that these problems will go away? Ransom payments in cybersecurity… invite more cybersecurity attacks… Appeasements on land and regions… invite greater encroachment. [As Ed Morrisey writes]( “One can also put this in economic terms. Once you've set the incentives for mob rule, you've created disincentives for any other strategy. And that means that you've just incentivized violence on a rapidly escalating scale for interest groups to seize control of policy, not to mention reinstate lex talionis over the rule of law.”  [My alma mater has eroded its principles.]( I don’t object to Freedom of speech, assembly, or the right to protest. The beauty of the First Amendment is that people will tell you who they are. And when they do tell you who they are… believe them. But also, in the process, you’ll learn a lot about what people don’t say… or won’t do. Its leadership showed a lack of backbone. Its leadership wants to fit in, and its reputation will take a harder hit. And, as I’ve long said, the passage that defines me most is found in the pages of A Portrait of an Artist of a Young Man. "I will tell you what I will do, and I will not do. I will not serve that in which I no longer believe whether it call itself my home, my fatherland, or my church: and I will try to express myself in some mode of life or art as freely as I can and as wholly as I can, using for my defense the only arms I allow myself to use--silence, exile, and cunning." Best of luck, Northwestern. I no longer believe. Of course, you don’t need my money anyway. How We Address This as Investors Northwestern has also allowed a group of students and administrators to make strategic recommendations on divesting from its financial balance sheet. The “Divest” movement at NU has previously targeted Israel, gun manufacturers, and fossil fuels. But it’s not like an untaxed endowment worth $14.1 billion will run out of investment ideas, right? Well, that depends on how quickly the debate about the portfolio itself devolves. What isn’t offensive? Will they divest from Chinese stocks over its debt imperialism? Will they reduce their exposure to Qatar (where there’s a foreign campus)? Will they force divesting from Gap Stores (GPS) because the clothes are uncomfortable, and the revolution needs cozier pants? And if Israel is divested from, isn’t America next? Eventually, protestors will want the school to stop buying U.S. Treasury bonds that finance war spending… And the arguments will never end. This almost feels like the end of the movie PCU, where grievances student groups get into a heated argument over who is more oppressed and who should be allowed to get in line for a party first (that movie was a satire in 1994 and is a documentary in 2024.) Who deserves the investment more? Who is the bigger victim? What categorizes sustainable investment in the minds of competing progressive groups? I’d wager it will all end up financing a single asexual bakery come 2037 because no one can agree on where the money should go, and everyone is offended. This is what happens when the university chooses temporary safety over its principles. Doing what’s right isn’t always popular. Establishing order is complex. There are winners and losers in everything. But no one wins except for hostage-takers when the officials leading can’t show any backbone and prefer to pay the Dane-geld. It could get even more difficult for the schools over their investments. Not only will all these demands cost money, but the brewing divest movement is the other shoe to drop. A Reminder: Divesting Doesn’t Work We’ll see if these protestors succeed in turning Northwestern and other top-tier schools into coloring book factories. But no matter what, the divesting mission doesn’t work. The world of capital is too large. Now that the investors are gone, the boardrooms don’t change. All it becomes is a shiny symbolic victory that does… what exactly? Forcing colleges to divest from Alphabet (GOOGL) and Amazon (AMZN) (over Israeli ties) is about as stupid as it gets. But the Divest movement isn’t one based on economics or logic. It’s one based on feelings. In fact, most pensions and endowments don’t buy single companies but the broader indices via exchange-traded funds (ETFs). So, if they have a passive stake in the Nasdaq 100, who knows how many companies the protestors will denounce? So, the lesson today is this. If you hear that several universities are divesting from Exxon, Alphabet, Amazon, or any of these other top-performing S&P 500 stocks with rock-solid capital efficiency and strong management… let them. A report by the University of Chicago found that divesting from fossil fuels could result in a 12.9% reduction in the endowment's value over 20 years. Let their loss become your gain. Divesting doesn’t affect stock prices. It actually creates other problems for the schools, like opportunity costs, questions about fiduciary duty, and a lack of board engagement. Most of the stocks they own are usually great companies… so feel free to take the stock off their hands. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()