Can Europe improve its resilience by understanding US investors?

In changing times, we need to succeed in forging our path through the ambiguity of complex and changing systems. Europe can learn two things from investors in the US. And then, do its magic.?

Learning # 1 - Good investors communicate a long-term view?

The investment industry works on simple principles: understand trends, invest based on risk and return objectives, diversify, and wait. That's it.?

In the long term, we are all dead. Thus, we should care most about trends and events expected during our lifetime (as it affects our pension funds, for example).

In the last 15 years, a change of the world order was one of the certainties of disruption in our lives. It would happen very slowly, and then, suddenly.?This war is part of that change. Think-thanks had long foreseen shifts in geopolitics.?

Macro investors, who invest based on global economic patterns, discussed it publicly for years and advised investment strategies accordingly. Ray Dalio (Bridgewater Associates) has recently published a book on the topic (summary here).?

Cathie Wood (Ark Invest) is another excellent example of an investor who has graciously educated her audience with long term thinking and changing world dynamics.?

Geopolitics will continue to be a significant risk, with critical related events unravelling during our lifespan. European politicians and citizens can prepare for it, just like investors do. Of course, interests and strategies will differ, but they can apply the same principle of preparing for future events.?

Learning # 2 - US education system fosters the interchange of thought across different areas of knowledge

The best of the American education system is not Stanford or Harvard. It's the particular opportunity to learn what excites one's curiosity while studying.?

The system allows for "majors" and "minors" areas of specialization that can be related or not. Thus, there is more exchange between different institutions and flexibility of learning routes.?

Take Boston, for example. The city hosts an incredible amount of academic institutions in different areas. A business student from Boston College can select a course every semester related to engineering at MIT or public policy and international affairs at the Harvard Kennedy School.?

This possibility improves the ability of students to become system thinkers. It exposes one to different mindsets and logic (systems) of knowledge, fostering collaboration between various areas and sectors in the academic realm - and later in professional environments and society.?

Consider Reid Hoffman (LinkedIn, Greylock Partners) or Michael Moritz (Sequoia Partners). These investors manage funds to create global companies, investing in various areas. They communicate their worldview and its complexity, often taking bets in changing the status quo. For example, they have written extensively about different world regions, why it matters and how their portfolio companies should deal with it.?

Of course, investors in Europe are equally brilliant, but they don't usually delve publicly into macroeconomic trends or global affairs. They leave it to our diplomats in Brussels.?

Professionals in Europe typically stick to core knowledge areas, usually acquired through a technical bachelor course and a more general specialization (or vice-versa) in the same major. Minors are not popular in Europe, often not available.?

The academic and professional environments are still very siloed in Europe. And you see fewer professionals excelling in one area of knowledge and being comfortable publicly discussing or trying to improve others.?

In a more complex and fast-paced society, the ability to circulate quickly in different areas of understanding is critical. The capability to date and mix the best of hard and soft sciences is an excellent innovation strength and resilience armour.?

Europe is an incredible region

The European Union is a fantastic feat. It's the most innovative political and economic club ever. Twenty-seven countries gave up part of their sovereignty to resolve different matters collectively.?

In 2012, it won the Nobel Peace Prize "for over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe". The last weeks have shaken this notion tremendously.?

I don't know what the future holds with certainty, but it's not hard to infer that Europe will struggle in the future despite being great at unifying.?

Ironically, despite being a complex system, Europe forgot to double down on its most significant strengths to cope with convoluted periods: history, diversity, and collaboration. Focusing on these traits only within its borders and main allies has sometimes lost touch with world reality.?

What can Europe do? Two things.?

# 1 - Think ahead publicly and globally

Europe needs a long term view and honesty about all the significant risks ahead. Think-thanks and long-term investors can provide initial thoughts for guidance. These can be disseminated and discussed publicly in mainstream channels. They have long existed in specialized media outlets outside Europe. It's time the discussion happens internally and in the public sphere.?

If European citizens are increasingly aware of risks and implications, they can choose to do something about it.?

# 2 - Enhance education

Europe has fostered study exchanges between countries, but the world has changed. Dialogue between areas of knowledge within a country and its different ways of thinking has become equally critical.?

Europeans should be creative together without the intellectual silos that persist. Political, economic and social actors need to cooperate more.?The education system (formal, alternative or civil society projects) can enable it. It will take time, but it will be worth it.?

The time is right because, due to Covid-19, the educational community is already transforming and receptive to additional change.?

It sounds idealistic, while pragmatic? It is. If these two words should increasingly define Europe in the next decade, perhaps our great-grandchildren will thank us for preserving the most exotic and peaceful club it ever existed.?