Today I attended a Wealth Management Conference hosted by one of the major family offices in New York City. Their Chief Investment Officer made a great keynote presentation, which I’ve taken notes from below.
5 Pivotal Drivers of Portfolio Returns
- U.S. Politics
- Federal Reserve
- European Politics
- Geopolitical Risk
Anecdote: Things are so controversial right now that some clients are asking for new passports.
Expectations for Completed Legislation in 2017
- Deregulation across financials, energy
- Corporate tax reform
- Partial repeal of ACA
- Infrastructure bill tied to repatriation
- Individual tax reform
- Renegotiation of trade deals
- Full repeal of Dodd-Frank
- Mexican-funded border wall
I wrote these things down as part of the presentation and feel they didn’t fit into a specific category:
- One thing the CIO said that we Do Not Want is to call China a currency manipulator. “This keeps me up at night” if Trump were to do this.
- Random quote: “Stocks are not cheap right now.”
- Their family office is overweight U.S. stocks, they assume the U.S. dollar will get stronger.
- Saudi Aramco IPO soon.
- Construction crane anecdotes as an example of construction: “We see lots of cranes, lots of construction right now in L.A. and Miami.”
- Now: Reflationary environment, GDP-improving/inflation growth = rising growth
Stuff with the Fed to worry about
- Personnel: at least 5 potential moving seats over the next 18 months in the FED. Market doesn’t like uncertainty.
- This is a tactical risk to be aware of. Volatility in the bond market in the 2nd half of 2017.
- Brexit just the warm-up
- France has presidential elections coming up
- France has a great election system: first round vote with emotions, second come back to center
- Europe: positive view of the European Union is waning
Le Pen victory in France: considerations
It is low probability, but has a very high impact. Could lead to France exit of the EU.
- Dollar strength
- Russian Influence
Why do we care? “We want to own European equities. Affordable and attractive right now. But lots of uncertainty. So now we own some Switzerland and Scandinavia-based equities.”
Discussion of VIX index
Nick’s note: I didn’t understand this and didn’t take notes on the VIX stuff.
How does one protect a portfolio against geopolitics?
- Absolute return hedge funds
- Strategic opportunities
Views for 2017 summary
- Constructive on equities, preference on US stocks
- Europe good value, but French elections
- Bonds as a key defensive part of portfolios
Questions from the audience
The audience asked some questions, here were the topics:
- Real Estate
- SRI/ESG investing
I enjoyed attending this event today on 20 March 2017. I’ve been trying to learn more about investing and “the market” this year. I sat in the front row and tried to soak up as much as possible.
I’m not publishing the name of the family office so that they will invite me back for next year’s meeting.
After the keynote speech, we heard a very interesting presentation called “An Insider’s View of Geopolitical Risk” from a former director of a government agency. Then another talk called “A World of Change: What to do now.” Send me an email if you’d like to see my notes from those.
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