Jason Voss

Jason Voss, CFA, is CEO of Active Investment Management (AIM) Consulting, LLC. He is the author of multiple books, among them, The Intuitive Investor; Valuation Techniques; Lie Detection for Investment Professionals; and the cutting-edge Meditation Guide for Investment Professionals.


Values Over Institutions Every Time



Just after the election of Donald J. Trump as President of the United States I had many conversations with colleagues and friends. Regardless of people’s political persuasion, most expressed some confusion about the future direction of global politics given the unusual nature of Trump as a candidate. Was he, is he, crazy like a fox, or just crazy? How should we as investors, business people, and citizens respond to his election? In response to these conversations I developed a new framework to help me find signal within the noise.


Values or Institutions?


Regardless of your political affiliation – left, middle, right, or wherever you find yourself – we all have an interest in both values and institutions. Comparing these two things, to me, provides exactly the kind of clarity needed for evaluating inflection points in politics, in investing, and in business generally. What do I mean by comparing values and institutions?


When the going gets tough, I highly encourage an analysis that focuses on evaluating whether or not people with decision-making authority defend values or institutions? Ideally values triumph over institutions. Here’s why…


Most institutions develop organically or are developed consciously in order to enshrine shared values, ideals, or principles. Those values can be like those immortalized in the US Constitution and its amendments. Or the values crystallized can be how a business serves its customers or society. In investing, these may be the investment philosophy and how it serves end clients. If these values are perennial then people naturally want to create a mechanism, an institution, that serves these values and helps them to survive and to spread. Whatever the case, notice the sequence: values first, institutions second.


So, what I am advocating is when there is institutional crisis – such as faces democracy and capitalism currently – check to see whether people rush to defend the values, or the institution? Institutions ideally are in service to values. Therefore, if people defend the values then you can be sure that the strife is likely to be around how to reform the institution in order to better serve the values. The strife is also likely to be minimal. On the other hand, if people hurry themselves to defend the institution, rather than its values, then you know that there is a certain level of corruption in the institution. More disconcerting is when the values that are the basis of the institution are ignored, skewed, and bent in order to preserve the institution. When this happens, look out!


How can we make sense of what is happening?


Let us apply this heuristic – values or institutions – to the current state of politics, business, and investing (my core competency).




In politics, many believed and let us be honest, still believe, that Donald Trump’s election is incredibly disruptive to established global political institutions. While the underlying causes of his election are not the emphasis of this piece, my own view is that the global rise of populism is in direct response to the terrible track record of capitalism to deliver betterment for the middle class in the developed world since the early 1970s. In response to this felt erosion many people are seeking to elect candidates that in another era would stand no chance of being elected.


Are elected leaders seeking to defend values, or institutions? I believe a strong case can be made that voters seem prepared to scrap institutions to defend and restore perceived values. Whereas, I also think it is clear that elected officials seem predominately interested in defending institutions, especially their political party, in defiance of values. Consequently, I believe there is a recipe for strife in the making as politicians and voters are at cross purposes with one another.




Businesses globally find themselves in an interesting position currently. Namely, they are the undisputedly most powerful institutions on the planet. With the exception of a handful of governments, businesses operate transnationally, can deploy capital much faster than governments, and have streamlined decision-making processes.


This power has been developing since the 1960s, but only now does it seem obvious that businesses are more powerful than most governments. Whether you agree with this or not, you must agree that the increased power of business has thrust many of them into areas previously thought to be ‘externalities’ and that did not deserve the attention of business. Here I am talking about politics, social policy, and economic issues, like climate change.


What this means is that the values of business, the philosophy of doing business, is being challenged and pressed. In response to this disruption are businesses defending values or institutions? Are they adapting their values and institutions in response to these changes? The answers to these questions are especially insightful for investors. I think you will agree that businesses actively evaluating their values openly, and that are publicly considering shifting their values, and ultimately, their institutions, are ones that are more attractive investments in the long run. By contrast, organizations that are solely defending their institution are making tactical adjustments in the face of a strategic imperative to reevaluate or re-discover their core values.




Existentially speaking the biggest crisis in investing pits active investing versus passive investing. Are firms engaged in providing investments for end clients defending their values, or their institutions? Put more directly, are they defending their investment philosophy, or are they defending their assets under management? Are investment organizations recognizing the sea change in the public’s views about the proper role of business in society? Therefore, are investment organizations recognizing that their values may need to change in response to this perceived need for greater fiduciary responsibility?


I believe a check in with many different investment organizations finds them adrift in this new and deeper ocean of possibilities. Some are rapidly adapting their values and supporting the creation of new institutional arms to support values. Others are abandoning their core values to defend status quo versions of their institutions, and losing their sense of investment philosophy and purpose along the way. One quick check in to understand whether an investment organization is defending its values or the institution is to ask whether or not their emphasis is on product innovation or on service innovation. Isn’t it obvious that most investment organizations are obsessed with product innovation, and keeping up with the product-Joneses? I think this a strong indicator of placing institutions before values (customers).


My prediction is that these organizations are losing their values and that they eventually will lose their investors, too.




I believe there is an inflection point globally where some of the classic institutions of the 19th and 20th centuries are under assault. In order to survive and, even better, thrive requires that the leaders of these institutions defend their values, adapt their values, and then adapt their institutions. For those that ignore their values and defend their institutions, the clock is ticking.