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CFA Institute Annual Conference | Day 2

Sean Barron, Portfolio Manager at Delta Trust and CFA Institute Member, attended the CFA Institute Annual Conference on May 6-9 in Chicago.  Below are his notes and comments from the day’s presenters…

Sam Zell – Equity Group Investments

Almost all of the super wealthy of this generation went left when others went right (excellent point!)

He only buys things that he can step in and run (another of Warren Buffett’s buy a business you can’t screw up).

Most of the discussion centered around emerging markets and real estate.

Going into emerging markets is trading growth for the rule of law – this makes picking your partner the #1 priority. He doesn’t enter a market to diversify currency, but to access growth.

Starts with demand – you go into a market to “fulfill” demand, not to “create” demand.

Nothing focuses a country more and creates more discipline than trying to become investment grade.

Look for places with a shortage of capital – he mentioned that China has plenty of access to capital.

Russia – uninvestable

India – Couldn’t find an honest partner, couldn’t understand the economics. Prices of everything have recently fallen 70%, so now possibly earn a decent rate of return. Need to be VERY cautious though.

Columbia – more advanced infrastructure due to drug trade, elimination of terrorist group, went from 100,000 barrels of oil per day to around a million as a result of all best oil people coming over from Venezuela. He is very pro-Columbia.

Western Europe – more social obligations, no growth, sees 20 to 30 years of decreasing growth, creates laws that do not allow the market to function (he says the U.S. does this frequently also).

Asia has less of the frivolous laws than elsewhere and that is why growth is high.

Africa – problem is scale, as most countries south of the Sahara are not large enough to be scalable.

When you invest outside the U.S. you have to document everything.

You don’t want a stock broker that has never had a loss, that means he is not taking any risk.

 

Read about the rest of Sean’s experience at the conference – Day 1 and Day 3.

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