LOM 2023 Annual Report - Report - Page 8
LOM
2021 ANNUAL REPORT
It has been 30 years since the
founding of LOM. In a sense,
starting a company is like the
birth of a child; marked by
infancy, then teenage growth,
and hopefully maturity. There
have been ups and downs since
our Company’s founding, and we
have seen many changes to the
environment in which we work.
Both changes to the financial services industry driven
by technology, and also many changes forced upon the
jurisdictions in which we operate, by the international
community. LOM has risen to all of those challenges and
will continue to do its best to rise to future ones.
For the first time, we have decided to expand the scope and
layout of our annual report. We traditionally would issue
our audited financial statements accompanied by a short
letter from myself. Going forward, we have decided to have
a broader report touching not only on our financial results,
but more importantly on what your Company stands for and
our wider purpose.
Obviously, first and foremost, our purpose is to serve our
clients in looking after and growing their wealth to the
best of our ability. We strive to do this by giving them clear
and unbiased advice, and efficient and excellent service.
Additionally, we seek to expand the Company into new
areas to meet our clients’ current and future needs.
We also have a duty to our employees, to bring out
their best performance, to nurture them and encourage
their success, and to provide an environment of work
that rewards them not just monetarily but also socially,
while providing a safe and secure work space. In small
companies like ours, staff become like family.
We have a duty to our shareholders, who provide us with
the capital with which to function. We are entrusted with
safeguarding their capital and providing a sustainable and
attractive return on that capital.
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We have a responsibility to our industry and our
jurisdictions, to see them grow through partnering with
effective and efficient regulators to see our regulatory
system recognized and given weight by the international
regulatory community, so that it may be relied upon by our
counterparties around the world.
And lastly, but very importantly, we have a responsibility to
the world in which we all live. Over the past year, we have
become more active about our beliefs in the necessity of
striving to protect the oceans. Ocean health is critical for
our planet. We need to use some of our resources to help,
in our small way, to protect the most important resource of
all, the world in which we all live.
On the matter of our financial performance last year, it was
buoyed by an extraordinary gain on securities we purchased
several years ago. We unfortunately do not anticipate a
repeat of those gains. However, we are encouraged that
operating earnings have continued to make gains, as have
our assets under management and revenues. To an extent,
some of our revenues are affected by forces beyond our
control. Financial markets have been highly volatile this
year as the world’s central banks move to tighten monetary
conditions to deal with a supply-driven shock around the
world. The dislocations caused by the tragic events in
Ukraine and the continuing covid lockdowns in China have
exacerbated these supply situations.
At the time of writing this, the world equity markets are
close to a bear market, with most indices down, or nearly
down, 20%. Global equity markets fear that central banks
will tighten too aggressively and tip the world into a global
recession, and that the current inflation shock will evolve
into a 1970’s style wage-price spiral, resulting in a decade
of stagflation; an environment in which all asset classes
perform badly.
We do not feel that we are going to experience such a
situation. Firstly, we do not believe that the central banks
of the world are going to tighten as aggressively as the
markets currently believe. The structural environment for
a wage-price spiral is not in place for most of the world’s
major economies. As an example, in the United States,
at the beginning of the 1970s, 35% of the private labour
workforce was unionized. Today that number is around 5%.
So, there is not the centralization of wage negotiation that
existed fifty years ago that enables a wage-price spiral.
That is not to say some countries will not experience wage
inflation, but we do not believe that dynamic is in place for
the U.S. economy.
