HighTower recently held a New York City Regional roundtable that brought together finance industry thought leaders. They shared their viewpoints on the U.S. economic outlook, the U.S.-China trade war, international markets and considerations for thoughtful portfolio construction.
State of the U.S. Economy
Mike Arone, chief investment strategist at State Street Global Advisors, kicked off his discussion with State Street’s view that the U.S. economy is doing better than the headlines suggest. He pointed out that stocks, bonds and gold are all thriving in what is currently a very narrative-driven market, particularly given the U.S.-China trade dispute.
That said, Arone maintained that a potential trade agreement may not be the anticipated windfall that some people expect, and confidence remains muted. State Street’s own investor confidence score shows that confidence dropped significantly in the second half of 2018 and has remained relatively low.
Every time volatility increases, the central banks or the government interferes in some way to support asset prices, which has led to skepticism among investors, he said.
The Importance of International Companies’ Valuation
Valuation is the number one criterion advisors should consider when buying securities on behalf of clients, said Pravir Singh, director of international research at Schafer Cullen Capital Management, in a discussion on international markets.
Singh cautioned investors to be wary of international companies with high valuations, low earnings and low cash flow. Companies with positive characteristics in this regard are Nestlé and Diageo, as well as firms specializing in insurance and underwriting, said Singh. Unlike banks, which can be cumbersome in a negative rate environment, he said that property and casualty insurance also have a strong capital position and earn returns both up front and with cash.
Amid ongoing market uncertainty, Singh suggested that advisors seek out companies with very simple supply chains and the ability to raise prices to maintain margins.
Singh also discussed companies’ environmental, social and governance (ESG) practices. When evaluating ESG criteria, Singh said it’s important to identify companies with a quality “catalyst”—such as using hybrid technology in automobiles and trying to reduce plastic in favor of paper for packaging and shipping.
Growth Ideas for Advisors
The roundtable also gave the advisors in attendance time to get together in small groups to discuss their business concerns and share their best practices around growth, client generation, revenue, centers of influence strategies and relationship building.
They talked about how to make the best use of events. For example, one advisor shared a story about a cybersecurity event with an ex-FBI agent, while another recalled partnering with local high-end publications and sponsoring health and fitness events. Advisors also discussed the importance of showing appreciation to clients through gift giving, using niche subject-matter knowledge as a business tool and arranging solicitor agreements.
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