Monthly Commentaries

What keeps me awake at night. – April, 2012

Some times it is sore muscles and aging joints protesting at my flailing efforts at golf and tennis. Other times it could be indigestion caused by over-eating or imbibing that extra glass of wine. But more often than not, the responsibility that accompanies stewardship of clients' financial resources brings into focus the floundering world we're passing onto our children and grandchildren. I have been particularly fortunate to serendipitously benefit from protracted periods of growth that characterized the latter half of the 20th century. By comparison, the "lost years" of the past decade combined with the slow growth projected for the next 5 years will likely constrain savings and limit opportunities. My greatest concern is that our drive for solutions lacks urgency and co-operation. Aside from the ever-present danger of conflagration precipitated by terrorism or some other geopolitical event, the social turmoil and unrest resulting from massive political and financial disenfranchisement, if unattended could fester and lead to radical upheaval.

Compared with the Arab Spring, the democracies of the Western World still have time to address these imbalances, but it clearly should not be wasted. The vast size of these divergences themselves seem to preclude unity of purpose and ultimate resolution, leaving vested interests and power politicians to haggle over interim steps that buy time without any follow-up. Central banks can only do so much - they are simply the oil for the engines of finance and commerce. Through elected representatives, the people decide where they want to go and how to get there. However, public policy has become so plainly polarized that very little is accomplished, particularly in the crucial issues of deleveraging, debt and deficit control and tax reform. Conversation and discussion have been sacrificed to ignorant and provocative sound bytes masquerading as knowledge or debate, and we culpably retreat to the solitude and non-confrontational security provided by our mobile devices.

Meanwhile, banks lazily borrow from the central bank at 0.25% and buy risk-free government bonds yielding 2% to 3%. Who needs the aggravation of lending to entrepreneurs in small and medium-sized businesses where most of the new jobs are created? No wonder employment is stalled. Eventually the twisted sheets give way to the pink-tinged sky of dawn and the enticing aroma of freshly brewed coffee. A new day brings newfound opportunity and a resolve to deftly navigate through this wall of worry back onto the path of progress. For me, this elicits a great sense of pride in being part of Toron and the culture we have embraced - an unwavering commitment to clients, an unyielding dedication to managing risk and preserving clients' capital and absolute transparency in all our dealings. Peter Sacks Founding Partner