Top 5 Takeaways: Schwab IMPACT Conference

November 7, 2016

Each year, Charles Schwab hosts a conference for the advisors that use its institutional platform (like Windermere).  There is a lot of valuable content shared in the form of keynote speakers, breakout education sessions, and small group conversations with others in the industry.  Below are five things Windermere took from this year’s conference

1.) Market Outlook Positive – Schwab’s market strategists are all very optimistic on the future of the markets. With earnings and economic data trending in positive directions, they see no imminent recession risk.  However, they also emphasized a theme that we do as well – it’s important to diversify by sector, not just country of domicile

2.) Fund Flows Tell a Different Story – Despite the positive outlook for equities (and their relative values vs. fixed income), there has been no net new dollars allocated to equities during the 7.5 year bull market.  Money has shifted into ETFs from Mutual Funds but on net, equity funds have declined.  Many investors are feeling as if it’s not a fair game and are choosing to stay in cash.  Time will tell if this dynamic will shift

3.) Fixed Income Outlook – Rick Reider of Blackrock and Jeffrey Gundlach of DoubleLine both expressed views of interest rates rising and an ongoing demand for yield.  Both also expressed their belief that inflation will outpace expectations in early 2017 and that either presidential candidate is likely to be pro-stimulus, resulting in further bond issuances by the government

4.) Cybersecurity – This remains a major threat to all individuals.  Best practices and case studies were shared to reveal the vulnerability we all face.  Windermere will be implementing new procedures in 2017 to further protect you and your families

5.) We’re playing soccer – Malcom Gladwell gave a keynote address in which he explained the different mindsets, using a soccer and basketball analogy.  In soccer, you are only as good as your weakest players.  It is a true team sport, one in which one or two superstars cannot carry your team – said another way, it’s a “weak link” sport.  Basketball is a “strong link” sport – you can have a few superstars control the team’s destiny.   Malcom used this weak link/strong link analogy in the context of a few different subject, including America and our current election.  His view?  While we may think we are a strong link country (with dominant and powerful companies, wealthy individuals in the 1%, large global cities, significant population), in reality , America is actually playing soccer (a weak link society).  We will only be as good as a nation as our weakest players.    

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