EQUITY INVESTING: A Long Term View From The Global Perspective

Transcription

1 EQUITY INVESTING: A Long Term View From The Global Perspective

2 Global Economy Past Decade Information Technology Interconnectivity Globalization Boom to Bust Lost Decade

3 Global Growth Rates

4 Global Growth Rates

5 Europe Where Are We Now? Financial Crisis At A New Level Bailout in Place Germans, Greeks Enraged Alike Greece Debt Crisis and German Bailout The Rubber Meets The Road

6 It s Not Greek to Me Not Just Greece, But Geography N. Europe vs. S. Europe (PIGS) Growth in Recent Decade

7 Europe Foundation of European Union Sovereignty Nation-States Nazi Germany & Soviet Union People Different Identities US Civil War Germany Berlin Wall

8 Nationality and Shared Fate Italian vs. Irishman Shared Interests, Not Fates Nation as a place of Language, Tradition Greek Crisis What Does this Mean? Foreigners

9 Greek Bailout Stop Contagion Generation of Prosperity Compatible Identities Economic Crisis Choices to Make Series of National Calculations

10 Conclusions to Draw European Union an Abstraction Clues Not Economic Foreign Policy & National Defense Retain Sovereignty vs. Centralized Nation Matters More than Region Counterbalance US Economy Regain Place in Global Economy after World Wars Without True Unification, Just a Dream

11 United States Where Are We Now? Economic Superpower Financial Crisis and Economic Recession Capitalism Currency US Markets US Companies Health of the US Economy

12 Financial & Political Crises Integral Part of System Recessions Wildfire Punish Reckless Reward Cautious Political Crisis o When Reckless Appear to Benefit

13 Limited Liability - Corporations Risk Limited to Investment Adam Smith s Wealth of Nations Rules Created by Political- Legal System

14 Systemic Risk Political vs. Financial Protections Given to Bad Actors Enrich Selves, Not Benefit the Nation Large Financial Institutions vs. Shareholders Stakeholders & Roles

15 2008 Financial Crisis Management Enriched Shareholders/Taxpayers Suffer Roots in Political-Legal Definitions Not Market Problem

16 Past Crises Can Have Financial, Not Political 1970 s Municipal Debt 1980 s Savings & Loans 1990 s Third World Debt All With Bailouts, All With Recession Difference = Political Public Expectations Limits to Excesses

17 Predictable Reaction Financial Turns Political Must Bite Back Crisis of Confidence Intent Not to Achieve, But Restore Confidence in Punishing Bad Behavior Demonstrate Control of System Created

18 Where Are We Now? Emerging Markets China India Population Economics and Politics Commodities Emerging Market

19 Problems = Opportunity For Investment Managers Our Political System Achieve Proper Balance Global not Internal Focus Further Gains vs. Developed, Forge Relations with Emerging US Companies Lean & Mean Highest Cash Ratios/Levels in History Beginning of Recovery

20 Outlook As Recovery Gains Steam, Plenty of Opportunity Valuations Remain Tame o Fear Trade & Asset Flows Earnings Growth Robust Optimism Next Months It is not the strongest of species that survives, nor the most intelligent. It is the one that is most adaptable to change that survives. -Charles Darwin

21 What Are The Implications? For Fiduciaries of a Public Pension Plan Asset Allocation Flexibility Increased Diligence Attention to Cost

22 BIONDOS ( )