Introduction: This post is the first of a series (presently of indeterminate length) based upon information obtained from the recently concluded Opal Conference of family offices held in Newport, Rhode Island. These posts will be denoted at the end of the title of each post with the word “/Opal.” At this conference, presentations were made by experts in economics and government, advisers outside and within family offices, and persons suggesting (or directly offering) a variety of investment platforms. All “Opal” posts are based upon my notes of the relevant panels and my personal reactions. The data presented has not been verified by me. Nothing in these posts constitutes investment or legal advice on the part of myself or my law firm. My firm was one of many presenting sponsors of the Opal conference. To the extent I may make reference to cannabis investment, be advised that one of my law partners chaired the panel on cannabis investment on behalf of our firm’s substantial cannabis practice group. This introduction applies to all Opal posts but will not be repeated.
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Numerous panelists discussing numerous investment topics strongly concluded that investment in United States securities or opportunities was most prudent.
This in face of expressed fears that no one can tell where the economy in the US, or in the whole world is headed. These fears came in two flavors: that the bull markets have gone on so very long and everyone knows that they are cyclical and at some point will fall either as a 10% correction or likely worse; or, there are identified fundamental signs that suggest that the markets must fall based on substantive business reasons.
Specific citation to factoids indicating we are in for an adjustment or a recession some time soon (with no specific time horizon): trade wars; reduction in world trade; strengthening dollar harming exports; Chinese economic problems (aging demographics; debt; new American policy to consider China in the long term as a competitor and not an economy to be nurtured on humanitarian and US-profit grounds); European disunity (not limited to Brexit); rise of populist governments; European debt selling at a discount (“Europe is telling us something”); the gold markets (“Gold is telling us something”); return of quantitative easing on the part of central banks; central bank purchases of gold reserves; weaknesses in “other” markets; inability of other countries to generate unicorn giant companies with giant exits.
Not a lot of discussion of geo-political risk in specifics. Not much emphasis on Brexit except as a symptom of national politicians needing to respond to local political and economic crises but being denied flexibility to do so by reason of “Brussels.” Not much discussion of US national debt as a percentage of GDP. No one mentioned robotics killing jobs or need for labor at all.
Specific citation to factoids indicating we are in excellent economic shape at least in the United States (you may note reasons directly contrary to some of the negative factoids): US technology and innovation; the American dream which will attract the best and the restless to the US over time to found innovation based on available investment capital and robust exit opportunities; the favorable US demographic future compared to other countries (a surprise item to me); lack of likelihood that tariffs will really be sustained at unacceptable levels and ability of the US to establish supply chains outside China (“Viet Nam is the next China;” less important supply chains for a service economy).
Most sobering thought, coming out of the ESG panel: an impassioned plea for companies and countries to address the nuclear weapons access situation: “If we don’t get this one right, nothing else matters.”
Who will lead the world? The US and China (not a surprise) and very negative views of India (“70% of all cigarettes sold in India are by the single stick;” “the South may be fine but the North has majority of the population and no business”).
Does seem to me that the dissing of India is a bit short-sighted. India has vast populations and land mass and an edge into the English language and an entrepreneurial educated class. It is a long life (assuming we survive the nuclear weapons issue) and it is hard to believe that India will not figure it out by planning or by accident or by dictatorship.