The Downside of Honor

Honor is usually a good thing. But the triple crises in Japan have shown us that there are two sides to everything.

Japan is an honor-driven society. Your reputation for integrity and competence is extremely important. Self-respect is maintained, one anthropologist notes, by doing what is expected. Personal desires are secondary to social expectations. If someone is shamed, the only way to restore self-respect is to do what society expects.

While such an approach provides a great degree of social order, it also leads to a focus on what others say. Self-respect is dependent upon other people’s respect. This can help us understand why the information provided by Tokyo Electric during the nuclear crisis has been overly optimistic. The company is responsible for the safely of this power plant. Negative assessments hurt its reputation. In such a situation it’s not surprising that their disclosures would be incomplete.

This is important as we invest globally. Understanding local customs and cultures helps us assess the reliability of financial disclosures and other public statements. Assessing the underlying reality can be an art—you have to look for inconsistencies and at numbers that are not broadly followed.

The crisis at the Fukushima power plant is a tragedy. But we can learn from Japan’s response. Calm, focused energy is good. And transparent, full disclosure is essential. Because, ultimately, the truth is out there.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-12T10:49:59+00:00 March 18th, 2011|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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