EQUITY INVESTING: A Long Term View From The Global Perspective
Global Economy Past Decade Information Technology Interconnectivity Globalization Boom to Bust Lost Decade
Global Growth Rates
Global Growth Rates
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
It s Not Greek to Me Not Just Greece, But Geography N. Europe vs. S. Europe (PIGS) Growth in Recent Decade
Europe Foundation of European Union Sovereignty Nation-States Nazi Germany & Soviet Union People Different Identities US Civil War Germany Berlin Wall
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
Greek Bailout Stop Contagion Generation of Prosperity Compatible Identities Economic Crisis Choices to Make Series of National Calculations
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
United States Where Are We Now? Economic Superpower Financial Crisis and Economic Recession Capitalism Currency US Markets US Companies Health of the US Economy
Financial & Political Crises Integral Part of System Recessions Wildfire Punish Reckless Reward Cautious Political Crisis o When Reckless Appear to Benefit
Limited Liability - Corporations Risk Limited to Investment Adam Smith s Wealth of Nations Rules Created by Political- Legal System
Systemic Risk Political vs. Financial Protections Given to Bad Actors Enrich Selves, Not Benefit the Nation Large Financial Institutions vs. Shareholders Stakeholders & Roles
2008 Financial Crisis Management Enriched Shareholders/Taxpayers Suffer Roots in Political-Legal Definitions Not Market Problem
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
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
Where Are We Now? Emerging Markets China India Population Economics and Politics Commodities Emerging Market
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
Outlook As Recovery Gains Steam, Plenty of Opportunity Valuations Remain Tame o Fear Trade & Asset Flows Earnings Growth Robust Optimism Next 12-24 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
What Are The Implications? For Fiduciaries of a Public Pension Plan Asset Allocation Flexibility Increased Diligence Attention to Cost
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