March - April 2016

Written by Don Walter
From his column A Minute with Donminute-with-don-03-16-1

Every year, investors who own shares of famed Berkshire Hathaway look forward to the annual report by Warren Buffet, the firm’s CEO and largest shareholder. People scrutinize his comments for bits of insight into the economy and investing. Often referred to as “The Oracle of Omaha,” Buffet follows a style known as “value investing.” It involves searching for securities whose intrinsic value is greater than their market price. He has become a billionaire by following this discipline.

You can find a biblical parallel to value investing in Jesus’ comment in Matthew 13:44: The Kingdom of Heaven is like treasure hidden in a field. When a man found it, he hid it again, and then in his joy, went and sold all he had and bought that field. The intrinsic value of the field (with the hidden treasure) is much greater than its market price.

As I thought about this story, I was reminded of another passage that could be applied to investing. It’s found in Ecclesiastes 11. There we find an ancient investment guide with four proven keys to success.

The very first verse lays the foundation. The Teacher of old reminds us that if one ever hopes to see a return on any assets, (s)he must first take some risk: Ship your grain across the sea, after many days you may receive a return. This is reminiscent of the parable of the stewards and talents in Matthew 25:14-30. Failure to take action will never provide a return. So the first key is “Do Something!” Invest for your future.

Recently, we did a study on the retirement savings behavior of Nazarene clergy. No matter how the data is scrutinized, it consistently indicates that more than 60 percent of our ministers are putting nothing into their retirement accounts. That seems to be contradictory to the counsel of both the Old and New Testament.

Our second investment key follows in the next verse: Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land. This may be some of the earliest advice on asset diversification. The writer goes on to say that diversification can mitigate downturns in one area by providing returns in another. Investment experts tell us that more than 90 percent of the difference in returns among various portfolios is directly attributable to asset allocation and diversification.

For key three, verses 4 and 6 add to this wisdom by reminding us not to try to time the markets, but rather to develop a habit of consistently putting something away. Actually, verse 4 states: Whoever watches the wind will not plant; whoever looks at the clouds will not reap. In other words, there is danger in trying to find the perfect time to plant. Waiting to invest results in missing some good opportunities while looking for perfect opportunities (which only appear in hindsight).

Verse 6 gives a nod to consistency in the planting/investing process: Sow your seed in the morning, and at evening let your hands not be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well. That sounds a lot like dollar cost averaging.

So far, we’ve learned that if we want a brighter future we need to invest, diversify, and develop habits of consistency rather than opportunism. But the best advice is near the end of the chapter, which we’ll call key four. In verses 7 through 10, there is the great instruction about not wasting the opportunities of youth. The meaning is clear: don’t wait until you're old to begin to set aside money for your future.

That’s pretty good advice. Start early; invest, even though it involves risk; mitigate the risk by diversifying; and develop habits of consistent investment. Who knew words from 300 BC would provide such relevant wisdom for 21st century investors?

Of course, we can glean good ideas and direction for investing from contemporaries, but it’s good to know the ancient writings of the Bible offer wisdom that still apply to today’s world. It confirms something we remind our people every Sunday, “This is the Word of the Lord.”

Don Walter is director of Pensions and Benefits USA for the Church of the Nazarene.

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