Oil has no answer for renewable energy, just as whale oil had no answer for kerosene.

bantam inc jack duval multi-family office environmental risk - image of burned houses

Apocalypse Numerous. Photo Credit: ABC News.

This blog post continues my series on environmental risks and how to make portfolios environmentally resilient.  You can find my previous posts here. The Environment as the Ultimate Rhizomatic Risk® Most investors, no matter how sophisticated, have portfolios that are shot through with environmental risk.  What's worse, environmental risks frequently

make what were thought to be uncorrelated assets, correlated. I call this phenomenon Rhizomatic Risk® because the assets are connected in an unseen way, the same way the root system of a rhizome is connected underground.  You can read more about Rhizomatic Risk® here. The California Fires Besides the devastation…

When contemplating the sale of a family business, it is critical to take one's time. By doing so, the family will not be the servant of the sale, the sale will be the servant of the family.

bantam inc jack duval multi-family office MFO New York selling a family business - plato imiage

Close up of Plato (on the left) and Aristotle from Raphael's "School of Athens".

This is the first of a series of blog posts on family businesses. Preparing for the Sale of a Family Business When contemplating the potential sale of a family business, there is often a rush to focus on valuation, transaction details, and deal structure.  While these elements are important, they 

are secondary, or even tertiary. What should come first is thinking through the "why and what" and the consequences of a potential sale.  I have discussed this in the estate planning context here. Starting with the “why” and taking the time to think through all the implications is absolutely critical…

The ratings agencies can, and will, act in capricious ways.

bantam inc jack duval municipal bonds aig earning miss - logo

Be careful what you wish for.

Just a quick update on two events from yesterday that relate to some of my writing on risk management: S&P downgraded $2.27 billion of outstanding Build Illinois Bonds from AA- to BBB, and; AIG reported a $0.34/share loss when the consensus estimate was for a $0.06/share gain. Build Illinois Bond Downgrade

The State of Illinois is in dire financial straights, with a BBB- credit rating.  It has issued over $2 billion in Build Illinois Bonds, which carve out sales tax revenues, and had been rated AA-.  Under S&P's new rating criteria, which caps the ratings of priority-lien tax revenue debt,…

Escrowed to maturity municipal bonds can be thought of as "tax-exempt" U.S. government bonds.

bantam inc jack duval de-risking municipal bond portfolios - new york certificate

New York State municipal bond certificate.

As I’ve written about here and here, environmental, pension, and healthcare costs are posing increasing risks to municipal bonds and their issuers.  Most investors, and their advisors, are unaware of these risks. Ways to De-Risk a Municipal Bond Portfolio Investors would be well served to de-risk their municipal bond holdings before these

risks manifest themselves in a systemic manner.  Some techniques to reduce risks include: Diversification: Buying Insured Bonds; Buying Escrowed to Maturity (“ETM”) Bonds. I’ll unpack each of these methods below. De-Risking with Municipal Bond Portfolio Diversification Since I’ve covered this in detail here, I won’t spend a lot…

There are very clear paths of transmission from natural disasters to economic disasters.

bantam inc jack duval climate change risk - san francisco earthquake and fire of 1906

San Francisco after the earthquake and fire of 1906.

Although there are many examples of how environmental shocks have affected local communities, there are fewer examples of how these shocks are transmitted to the macro economy. One of the clearest examples of an environmental shock leading to profound global instability is from the 1906 San Francisco earthquake.

Chart One: Timeline of the San Francisco Earthquake and Subsequent Financial Panic[1]   On April 18, 1906, San Francisco was hit with an 8.3 magnitude earthquake.  While the earthquake caused many buildings to collapse, it was the subsequent fires that did the most damage.  By the time the fires had burned out,…