Below, we welcome the much-appreciated and insightful commentary of our first guest blogger, John Montgomery.
[John Montgomery is a career Financial Advisor, formerly Director of Research, Julia M Walsh & Sons; President, Foxhall Investment Management; Chief Equity Strategist Gibraltar Advisors; and Founder, Montgomery Brothers. John is the past President of the Washington Society of Investment Analysts. John graduated from Georgetown University (BA, Economics) New York University (MBA, Finance), has served on the Adjunct Faculty at Georgetown University for 20 years and currently serves on the Faculty of Mount St. Mary’s College.]
John Mauldin Conference—The Running of the Bears
When I was a kid, I always wanted to go to the Festival of San Fermin, better known as the Running of the Bulls in Pamplona. I never made it. For the past several years, I have attended John Mauldin’s Strategic Investment Conference (SIC), also known as the Running of the Bears—this year held in San Diego.
Since I had missed last year’s Conference, I was unsure of what to expect. A slight amount of optimism had crept into the Conference which was held two years ago in Dallas. But, several years ago, the regular lead-off speaker, David Rosenberg of Gluskin Sheff, was met with boos and catcalls when he voiced a modest degree of bullishness.
If it was bearishness that I went to San Diego to experience, I was not to be disappointed.
Wednesday and Thursday were a near non-stop cornucopia of negativism. Valuations are stretched, inflation and interest rates are heading higher, monetary policy is turning restrictive, the economic expansion is getting long in the tooth, the yield curve is flattening and geopolitical risks just continue to grow.
While even the most bearish admitted that there was no recession in sight, virtually all of the speakers felt that it was time to “de-risk” portfolios (whatever that means), a time to raise cash, consider adding to alternatives and to buy gold and, maybe even that electronic equivalent of gold, Bitcoin.
Heck, there was even a session on investing in cannabis, complete with virtually every stupid joke one could make about investing in marijuana.
Forecasting—Markets and Weather, the Broken Science?
Since I was heading back to Washington DC after the SIC was over, I was also keeping an eye on the weather forecast for my weekend trip home. Forecasters were calling for another nor’easter hitting the middle Atlantic over the weekend, with possible gale force winds, freezing temperatures and up to 10″ of snow.
On Friday (3/9) morning, which was the last day of the Conference, the unemployment data for February was announced and the Dow Jones Industrials rallied almost 450 points. I arrived back in DC to near 50-degree weather with sunny skies and nary a flake, if you don’t include the politicians, in sight.
It all went to prove the old adage that God only put weathermen on the face of the earth to make stock market forecasters look good.
The Experts Speak
The speakers at the Conference were “A” listers, including such names as, SIC host, John Mauldin, Dave Rosenberg, Louis Gave, Niall Furguson, Jeff Gundlach, Mark Yusko and Lacy Hunt. Subjects ranged from geopolitics, to demographics, to economics and interest rates, to health-care and biotech break-troughs.
Perhaps the most impactful presentation discussions were on Bitcoin and, especially Blockchain. Several highly successful and influential investors are reordering their operations to emphasize these two highly controversial areas.
My future blogs will cover various “takeaways” from the conference which I plan to write after reviewing dozens of pages of notes and hundreds of slides, graphs and charts.
But for now, if I had to draw some sort of conclusion from this Conference, it would be that risk is high and caution is warranted, at least as voiced by the vast majority of the presenters.
My real conclusion? The majority is bearish and more often than not, the majority is wrong.
What do you think?