We'll see if there needs to be a part two.First let me say I did not attend many sessions, maybe a couple each day and I was not here in time on Sunday to go to the couple of workshops they had that day.
It seemed clear to me (so of course this is just my perception) that the content of the conference was tailored around input received from financial advisors (it was FA Magazine who put it on in conjunction with IndexUniverse) from last year's conference and maybe throughout the year too.
That said most of what I heard was at a lower level of dialogue than I expected, again if this is where advisors are collectively and what the general audience is looking for then that is what the folks running the conference need to provide. On one hand I find it shocking and disappointing that advisors would not be a little more up to speed. On the other hand I cannot imagine how one person could possibly do everything that needs to be done. At our firm we divvy everything up. This allows me to, for example, have heard of Bank Turanalem when it comes up in conversation with a client.
That unresolved snobbishness aside a reader asked how the panel on sector investing that I participated in went. We had a good mix; Joe who builds model portfolios at a regional brokerage firm that uses ETFs, Dan an ETF marketing guy from StateStreet (they have done all sorts of research and he had amazing recall of the info), Phil the moderator works in the rocket science department at an investment bank and one slack-jawed yokel from Arizona.
A large part of the session was Joe and I giving opinions of various things with Dan whipping out some stats that either refuted or supported what was being said. When I spoke I looked at the audience and everyone seemed attentive which I took as a positive.
I talked about all the things I have been talking about on the blog since I started writing. I build portfolios at the sector level, overweighting and underweighting each one based on how markets usually work combined with what I think is going on now to make a forward looking analysis.
I talked about certain sectors being easier to add foreign, like energy, financials and telecom. I also mentioned that some company called EG Shares has filed for emerging market sector funds and went off on a tangent about not knowing who they are or whether their funds will ever list but why I think sector funds in the EM space would play an important role in portfolio construction. One funny thing, after the session was over one of my maybe three blogging friends, Richard Kang, comes up and tells me he is EG Shares and yes they are a real company. That was all he could say but it was a very funny thing.
Also after the session as I was talking to Richard and several people from the audience came up to ask a followup question and the questions were all intelligent questions compared to what some of the content seemed to be targeting.
One thing that I can say confidently is that like you, that adivsors do want to take in more information and bits of process to try to navigate the market more effectively for their clients. That does not have to mean "beat the market." The job of a financial advisor is to give clients their best chance of having enough money when they need it while trying to make the ride between here and there a smooth as possible. That does not mean that every advisor will be able to do that or that the ride will always be smooth but that is the goal.
On a personal note Joellyn and I had a fun time seeing Palm Beach on Monday and then going down to South Beach on Tuesday. The story yesterday about my having played Babe Ruth baseball with one of the industry honchos was just a mind blower.
13 comments:
"On one hand I find it shocking and disappointing that advisors would not be a little more up to speed." It is comments like this, stories about the pilot (guy who ran a financial firm) faking his own death, and Madoff that show why people need to educate themselves on investing.
Again I ask, how do you know you are not getting one of these guys when you first establish a relationship? The philosophy sounds fine, recent track record seems fine, no problems with SEC etc., but then things blow up.
How is this goal met? "The job of a financial advisor is to give clients their best chance of having enough money when they need it while trying to make the ride between here and there a smooth as possible"
Furthermore, if your time horizon is 50+ years, but the financial advisor is looking at retiring in say 25 years, who's going to continue with the investing philosophy in phase II? To me, that is when elderly people are vulnerable and can be taken advantage of.
Looking forward to your comments regarding yesterday's WSJ Swenson article.
i would say there needs to be an element of faith in your own ability to make the decision. ask the questions, how are they answered, do you like the answers?
if the guy has help at the office great, what exactly does he do with his time? if he has no help, how does he do it all, maybe he has a small number of clients. To be clear it can be done because plenty of people do it. I am saying I don't know how they do it. I only wear one hat and it takes me 70-80 hours a week to do my part. Most other people do not spend that much time. Clearly at some point in there is diminishing returns on the time i do spend but it is what i enjoy doing.
I will go back to life being a series of decisions. You either trust your own ability to make the big decisions or you don't but that is what it will ulitmatley boil down to.
Roger, I think your knowledge and practice using etfs probably exceeds most advisors' and that's why you find the conference to be relatively low level. Even as an individual investor, I find almost nothing new of interest in the etf world. The industry is starting to feel more mature, almost like mutual funds.
I learned a ton from you about evaluating etfs and their use in building a portfolio, but now I find articles on Seeking Alpha (for example) to be nothing more than bloggers speculating about this or that sector. I skip nearly all of them.
Sure, double long/short is newish, actively managed etfs are coming up, 401ks need etfs, etc. Maybe all that's huge for investors less involved in the market, but I doubt it is for you or your readers. Do you see any real game changers on the horizon?
Thanks for being ahead of the curve and sharing your insights with us.
How does one track the interest rates that have an effect on those ETF's and CEF's that are sensitive to such?
So far this morning as a group, they're taking it on the chin.
I caught about 10 minutes of Cramer last night on his opinons of ETF short,double short funds which he was very negative. He said, "don't use them".
Roger: Up until now, I was kind of envious that all these ETF experts are in Florida at this conference, and i am not. I was previously going to ask you if this conference would have been appropriate for self-directing ETF investors who have a moderate amount of knowlege and experience. I looked at the conference schedule and some of the topics looked interesting. If not, could you recommend other conferences during the year that might be good choices. As a follower of your blog as well as some of the other speakers and moderators, I appreciate the opportunity to meet you, and after all everybody loves a boondoggle occassionally!
"Bank Turanalem"...didn't he play second base for the Dodgers, back in the day? ;-)
No, he played third in Roger's Mickey Mantle league back in the day. :O
No one can be expert in everything, or even very good if it comes to that, but when it comes to a family's fortune (no matter how hoary the cliché) you don't put all the eggs in one basket and you don't trust everything to a single financial advisor or firm; strategic diversification isn't just an asset allocation theory, it is survival tactic, a state of mind.
OT: In the photo that's a nicely turned out 1955 Buick Special parked in front of the Hotel; ISTR Broderick Crawford drove that model in the old Highway Patrol TV series.
Roger- I believe you slightly dismissed the p/e concept advocated by Mish during your video last saturday. The following is an excerpt posted today by Roubini whom advocates that the best case scenario for the S&P500 bottom this year is 720 and that we are more likely to decline to the 500-600 range...
"I have been predicting for a while that the most recent bear market sucker’s rally would lose its steam and – like the previous bear market rallies in the last 18 months – US and global equities prices would head again towards new lows.
Let me now explain why…
As my work and the one of our research team at RGE Monitor predicts (we will publish later this week our 2009 Global Economic Outlook, a 75 page research piece for our clients and we recently published our US outlook) this will be the worst US recession in the last 50 years and the worst synchronized global recession in decades.
For a few weeks since late November equity markets ignored the onslaught of much worse than expected macro news (and all the new were really worse than awful) and had a nice 25% bear market sucker’s rally. But the drumbeat of terrible – and worse than expected - macro news and earnings news and financial news has finally taken a toll on the delusional market belief that the worst was over for financial markets and for equity markets and that the US and global economy would recover in the second half of 2009. So equity prices have already reversed more than half of their most recent bear market rally as the lousy macro news have finally shocked in the last week the wishful thinkers.
Indeed, the retail sales figures published today confirmed a shopped-out, saving-less and debt-burdened US consumer is now faltering as job losses, income losses, fall in home wealth, fall in equity wealth, high and rising debt and debt servicing ratios and a severe credit crunch take a severe toll on the ability of consumers to spend. And reduction in spending and deleveraging of the US consumer will take years to rebuild the savings rate of a household sector now hit by a severe shock to its net worth (as equity and home values fall while debts have been rising) and shocked in its ability to generate income as job losses mount and the unemployment rate surges.
Our research at RGE Monitor suggests that the US and global recession will continue at least all the way until Q4 of 2009 (a nasty 24 months U-shaped recession) and that the recovery in 2010-11 will be very weak with growth in the 1% range that is well below a potential of 2.75%. And we cannot rule out that a more severe L-shaped stag-deflation (as in Japan in the 1990s) will take hold. Indeed, as I argued recently:
While the odds of a systemic financial meltdown have been reduced by the actions of the Group of Seven and other economies, severe vulnerabilities remain.
The credit crunch will persist and spread beyond mortgages. Deleveraging will continue, as thousands of hedge funds -- many of which will go bust -- and other leveraged players are forced to sell assets into illiquid and distressed markets, thus causing price declines and driving more insolvent financial institutions out of business. Credit losses will mount as the recession deepens. And a few emerging-market economies will certainly enter a full-blown financial crisis.
So 2009 will be a painful year of global recession and further financial stresses, losses and bankruptcies. Currently, the probability of an L-shaped, stag-deflation is now rising to a third, while the probability of a severe U-shaped recession is two-thirds. Only aggressive, coordinated and effective policy actions by advanced and emerging-market countries can ensure that the global economy starts to recover -- however slowly --in 2010, rather than entering a more protracted period of economic stagnation.
So while our benchmark scenarios sees a severe U-shaped global recession with very weak growth recovery in 2010 we cannot exclude the possibility of a worse outcome, i.e. an L-shaped recession that – in our view – has at least a one third probability. So the worst is ahead of us rather than behind us for the real economy and for financial markets. With my forecast of 2009 earnings per share for S&P500 firms being in the 50 to 60 dollars range and with P/E ratio likely to be in the 10 to 12 range given a severe global recession the S&P500 could bottom – at some point in 2009 – at best at a level of 720 and, in a worse scenario, as low as 500 or 600. So, the worst is indeed still ahead of us."
The comments about picking a top notch, honest financial manager/advisor made me think.....how about this guy....
He lives deep in the woods, far away from any major center of commerce, on a dirt road, guarded by dogs, in a wood cabin heated by an ancient kerosene furnace....
He spends a lot of time each year exploring and hiking hidden areas of the Grand Canyon suitable for making a quick getaway and hiding if necessary.....
Has a major sports addiction....
Name will be furnished on request for those who may need it.
Can you tell a book by its cover??
:)
EXACTLY.
How do you know? You don't, and never really will. That is why it is so very important to be an educated investors with realistic expectations.
Pick me! Pick me! I've got my own plane and I'm thinking about flying to someplace warm, like Orlando.
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