Dear Valued Clients and Friends,
Abraham Lincoln said in his annual message to Congress in December of 1862 that America was “the last best hope on earth.” The speech was delivered a month before the Emancipation Proclamation. The exact line was that “we shall nobly save or meanly lose the last best hope on earth.” He was presupposing (correctly) that the American experiment was a litmus test for the rest of the world. He framed it as a binary question – would our actions preserve (on one hand) or forfeit (on the other). It remains one of his greatest and most historically impactful speeches.
As we head into the 250th anniversary of our nation’s birth next week, with next weekend the official “Independence Day” celebration marking this special “semiquincentennial” moment, I am confident you all will have ample access to a variety of musings and reflections on the American experiment. I am confident many will be worthwhile and will capture the essence of why Lincoln believed America to be the “last best hope on earth.” I am a patriot and a fervent defender of the American experiment, and yet the Dividend Cafe has a particular focus on markets and investing that may not make it the best place for a more typical treatise on America’s independence. However, in reflecting on Lincoln’s sentiment about the last, best hope, and further reflecting on the very thing our attention is called to here in the Dividend Cafe (markets), it occurs to me that there is a timely and crucial point to make about a market economy that belongs in these very pages.
From oil prices to tech stocks to post-IPO action, there has been lots of action in this week’s markets. But today’s Dividend Cafe really does explore one of the most basic and foundational realities we could ever discuss. In a time of increasing demonization of market forces, where what were once extreme views are being mainstreamed in opposition to a free enterprise system, it is time for investors to consider this glorious truth: When it comes to an optimistic and hopeful view of the future, markets may very well be our last, best hope.
Let’s jump into the Dividend Cafe … where it will all make sense very shortly.
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Easier Said Than Done
I used the Dividend Cafe the first Friday of June to replay the commencement speech I had given a few days earlier at Pacifica Christian High School of Orange County. I freely admit it was a diversion from our normal focus and topics here in the Dividend Cafe, but the intent was to reclaim a message of hope and optimism about the future as a mechanism for having a good life. I won’t rehash it all here, but I wanted those high school graduates to hear that there is not a fatalistic determination working against them, no matter what difficulties life has presented (or will present). I emphatically believe that our mentality and behavior today affect our interpretation of the past and the reality of our future. I can’t think of a message I want for people entering adulthood more than one that dismisses embedded negativity and cynicism about the future, and instead embraces a worldview of hope, agency, self-determination, gratitude, and positivity.
I understood that sharing that message in the Dividend Cafe risked alienating our readers, listeners, and viewers who want me to stay focused on markets and the economy. I want to suggest that today’s topic bridges these two things in a very important way. It is one thing for me to chastise adults who have succumbed to a mentality of pessimism, and it is another thing for me to plead with young people not yet disillusioned by some of life’s challenges to stay hopeful. But today I want to point something out for those of you who are investors, who are engaged in markets, who are here for the marketplace messaging the Dividend Cafe has to offer … Markets are inherently forward-looking declarations of optimism and hope. And in a time where our media, our politics, and so much of our cultural activity are seemingly nihilistic in their assumptions about the future, it is markets that serve as a beacon of hope. If one is looking for some glimmer where
What I am Absolutely Not Saying
I am afraid of being misunderstood, but I also think the solution to that is to be so clear that there is no room for misunderstanding. Here is one way to interpret my claim that markets are a “last best hope.”
“The stock market keeps going up and that can only mean that better days are ahead so as long as the stock market is going higher we should all be optimistic and excited about the future.”
Okay. So let’s dispense with that absurdity as soon as we can. I am not referring to “markets” as synonymous with “the stock market.” I do not believe that the stock market going higher means everything is rosy. And by the way, I do not believe the stock market’s decline means everything is awful. I don’t really think my message has anything to do with the “stock market,” per se.
I am referring to the very nature of market transactions – of business investment – of entrepreneurial endeavor. I am claiming that BUSINESS, foolishly demonized as it often is, is the most fertile embodiment of forward-looking HOPE that we have. And reframing our understanding of business in this way is of paramount importance.
The Antidote Right in Front of Us
When we describe a society that has embraced victimhood, leaned into despair, and increasingly told its young adults how painful and difficult things are going to be for them, we are talking about something very disturbing psychologically, socially, emotionally, politically, and more. But there is a sphere in modern life where such projection has no place. There is a silo where its mere existence speaks to an entirely different mentality. There is a venue where optimism and hope are not just allowed, but presupposed and required. There is a place where the incentive structure is categorically altered from this dysfunctional default setting of hopeless negativity.
That sphere, solo, venue, and place is what we call entrepreneurialism. It is what we call the marketplace. It is embedded in the euphemism known as “business.” And I have no qualms at all saying, it is also called “Wall Street.” Yes, that’s right, not just because I have devoted my professional life to capital markets, but because in my soul I believe that capital is a tool used towards the created blessing of productive endeavor. I will unabashedly defend Wall Street, properly defined as a figure of speech for our financial markets. This entrepreneurial cycle may very well be the last best hope we have in a world feasting on futile negativity.
A Matter of Incentives
Incentives matter. Those of us who seek to humanize economics focus on the reality of human nature and how humans act in the context of incentives (and disincentives). But when we talk about the negativity we all face in today’s society, I ask you – what is the incentive structure of the political class? Do you ever get the impression that activists, media outlets, pundits, and influencers desperately want the “other side” to be in power? Because they do. Opposition sells. Opposition animates. Angst and grievance drive media communications. One of the reasons we notice the sports celebrations we do (such as the world champion New York Knicks!!) is because they are such a rarity and an exception to all media coverage. The next step, the key takeaway, the heart of anything in a political campaign, a media slogan, a social media tantrum – must always be the negative. A significant portion of our societal structures, institutions, and conventions are incentivized to advance the polarization, the fear, the cynicism, the negativity.
And yet, despite all of our covetousness, envy, hostility, angst, and class divide against the entrepreneurial class, you know who is incentivized to promote a better tomorrow? And a better way of saying this – not just PROMOTE – but genuinely believe in, and help to create – a better tomorrow? Investors. Entrepreneurs. Creators. Innovators. Producers. We are not talking about selling snake oil – we are not talking about a pump & dump scheme or some sort of Pollyannish pipe dream devoid of reality. No, we are talking about “skin in the game” belief – the kind of belief only one with capital investment on the line, with blood, sweat, and tears poured in, can actually have. Demonize those engaged in capital formation all you want, but you know who believes in a better tomorrow more than anyone? Someone who puts money into a better tomorrow.
Forward-looking Positivity
The voice of entrepreneurship is, fundamentally, a voice about the future. It is the process of having an idea, of fine-tuning that idea and improving it, of raising and deploying capital that is at risk in pursuit of this idea, of working tirelessly in executing on that idea – sacrificially so – and when the idea succeeds, having turned an idea into a solution that meets human needs and wants. What part of this process can exist without hope? What part of this mentality and exercise can possibly be rooted in negativity and despair? The inherent psychology of business is positive. The actual essence of business is forward-looking. The whole framework of capital markets is rooted in the belief that good things happen for risk-takers if they find a way to meet human needs and wants.
How to Pour Rain on This Parade
If one were looking to keep this message from taking hold – to diffuse or dilute the hope and optimism in market activity – they have a strategy they could employ that has proven quite effective … Dehumanize markets as much as possible. Talk about formulas and theorems as much as you can. Never tell a story when you can instead display a confusing chart. Talk about GDP a lot, but never explain what makes up the sum of parts of gross output. Make econometrics a real vocabulary that overwhelms the humanity of business.
We must not take that bait. The net effect of impersonalizing and dehumanizing market activity has been to subversively remove the hope and optimism of markets from our thinking. Reducing our economic vision to a vocabulary of formulas and ratios is reductionist and truncated, and it distorts the entire energy and metaphysical reality from one of hope and optimism into one of stunted, dormant, boring, dullness. It is not mere semantics. A business investment is not merely capital at risk, not merely part of a company’s capital structure, not merely an attempt to capture a return on investment. It is also a belief that by risking X, one will get something back more valuable than X. That outcome may come back to an investor in the form of yield – the internal rate of return that is a coupon on a debt investment or growth on an equity investment. But even that can only come when a human need or want is met – when some good or service finds favor. And because it is a competitive marketplace, this can only happen with talent, with savvy, with effort, with all the unique attributes of humanity made in the image of God … And it can generally only happen with investment in labor, with capitalizing human beings for their endeavor, all the while monetary capital takes on the risk of seeing this vision come to fruition. In this whole saga, there are relationships of exchange, but there are human bonds that transcend that. There are hopes and dreams, but there are also failures and disappointments. Why in the world would one be content to talk about the business of business merely in formulaic terms?
I believe in an economy that is generating robust gross output. I believe in the data points we all want to see – high productivity, high employment, high wages, growing metrics of prosperity and success. But all of these things merely follow and measure the real facts on the ground – human beings endeavoring to create, grow, innovate, and produce.
Call it What You Want
Capital is a tool to create things. That’s all it is, though that is kind of a lot. Capital works hand in hand with other tools to facilitate desired outcomes. It requires risk, and when the risk goes the wrong way, it teaches us lessons we can learn from.
Business. Investment. Markets. Entrepreneurialism. These are not buzzwords. They are tools, venues, and concepts that serve as superior means of generating hope and opportunity. They have become counter-cultural in some ways, which is dumbfounding to me.
And in these things we need not be wary, cautious, defensive, apprehensive, cautionary, mealy-mouthed, or soft-footed. Our society desperately needs to engage a message of hope and optimism – a belief in a better tomorrow. As investors, we participate in a venue where the very ordering and structuring is geared towards just that. Practically speaking, there is nothing more optimistic and hopeful than the activities and investments that seek a better outcome for human beings in the future. When we promote free enterprise, we are promoting the last best hope for the future. And we may very well be promoting the last people left who actually believe in such a thing.
Conclusion
Investors will understandably view their portfolios as tools to facilitate outcomes around financial goals. From capital appreciation to sustainable streams of income, we instrumentalize our understanding of our portfolios because we are programmed to do so. The busyness of life and the anxiety of the whole thing allow us to view our portfolios as those transactional things that bring our financial objectives to fruition. Fair enough.
But I believe that they do far, far more, too. From the business laying out capital to take a risk, to the investor joining that business in the risk, to the visionary creating a new product or service that may (or may not) enhance our quality of life, we have something in markets that we need more of … A belief in tomorrow that has real skin in the game attached to it. It is my earnest desire for you to understand your portfolio in this capacity. As a tool towards the achievement of your financial goals? Absolutely. But as something much more than that, too? You bet. Beyond all the numbers, charts, P/E ratios, yields, and returns, there is something else going on. And that “something” is so exciting, animating, and fascinating, I can’t help but be excited for the future.
Chart of the Week
Quote of the Week
“Do not be content with what you already are, if you want to become what you are not yet. If you’ve grown pleased with yourself, there you shall remain.”
~ St. Augustine
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We will complete the first half of the year on Tuesday of next week, and I will use next week’s Dividend Cafe to really unpack what the first half of 2026 has produced. A mid-year check-in is always a good idea, but this year it will be more interesting than you think. Enjoy your weekends, get ready to celebrate America’s birth, and hold fast to the last, best hope on earth. God Bless America, and God Bless our capital markets that possess such inherent hope for the future.
We’ll see you next week in the Dividend Cafe!
With regards,
David L. Bahnsen
Chief Investment Officer, Managing Partner
The Bahnsen Group
thebahnsengroup.com
This week’s Dividend Cafe features research from S&P, Baird, Barclays, Goldman Sachs, and the IRN research platform of FactSet
