Stocks and The City

In 476 AD, Germanic and Slavic barbarians, after centuries of incursions, deposed the Roman Empire, setting in place the foundation of modern Europe. In 1989, after a decade of aggressive buyouts, junk bond raiders – the “Barbarians at the Gate” immortalized in the beloved book – took down RJR Nabisco. It cemented the role of private equity in modern American capital markets. And in the year 2021, over seventy years into the feminist struggle spurred by Simone de Beauvoir in her 1949 manifesto, “The Second Sex”, barbarians are invading politics and finance: at last, the women are coming.

“What you can’t see, you can’t be” said activist Marian Wright Edelman. But a bastion of masculine power has now fallen in the political world. In the four years ensuing January 20, 2021, Americans will finally see a woman as Vice President. They will see a woman as Treasury secretary, a position held by men since its creation in 1789. They will see a record number of women (26%) serving in the 117th Congress. If history is any indication, forerunners embolden the many. More women will come.

October 2020 saw another glass-ceiling assault, equally shattering if less reported by the media, this one in the financial realm. David Swensen, CIO of Yale, mandated that the seventy firms managing the university’s $31 billion portfolio increase diversity in their investment teams.

“Success will be measured by hiring, training, mentoring, and retaining women and minorities for positions on the investment teams at Yale and in your firm,” he wrote.

Mr. Swensen is, simply put, the most influential and forward-thinking US money allocator. Two decades ago, his remarkable call to include alternative assets in portfolio selection transformed the investing landscape. Virtually all endowments adopted the Yale Model, aka the Swensen Approach, driving an explosive growth in private equity and hedge fund assets. The Swensen Approach 2.0 will undoubtedly motivate many institutional investors. This is nothing less than a storming of the white male castle that is the industry of investing. Today, women-owned mutual funds, hedge funds and private equity represent less than 6% of the total, according to a Knight Foundation study. But the entire endowment business is potentially at play. More women will be recruited and promoted.

On December 1st 2020, Nasdaq, arguably the most dynamic stock market in the world, filed an arresting proposal with the SEC that would require Nasdaq-listed companies to have “at least two diverse directors”, including a minority and a woman. The plan is a full-frontal attack on old boys’ corporate boards. More women will be elected.

These battles are but the precursors of the goddess of all long wars and hard-fought victories: not Athena nor Nike, but demography. A July 2020 McKinsey survey predicts that, by 2030, women will come to control a large swath of the baby boomers’ $30 trillion in financial assets. Why? Because women live five years longer and heterosexual women marry men two years older, on average. Young affluent women are increasingly financially savvy, and the number of female breadwinners is growing. Consequently, the survey continues, the potential wealth transfer from men to women approaches $11 trillion. Women are coming to control a loot the size of the annual US GDP.

Let the capture of women’s rightful share of power and capital usher in a modern version of female success in American society. Away with the requisite that their proudest achievement should consist of being a wife or a mother; that their chief concern lie with the family; that their defining character be warmth and selflessness. Destroyed, the unattainable myth that they must or can do it all. Eradicated, the absurd opinion that feminism is extremism. And killed, at last, the smothering mandate to be likeable. Barbarians indeed! Modern women will be free to pursue self-interest and self-fulfillment, proudly and openly.

In the words of Samantha Jones, “I love you, but I love me more.”