Toll Free 800.831.3587

The Exchange

Offering the latest news and leading insight.
CFA Institute Annual Conference | Day 3

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…

Bill Hambrecht – WR Hambrecht & Co

There are thousands of small and medium sized businesses that don’t have access to public markets as a result of so much money being concentrated within the top six banks – they need size to create profits. For example, the IPO of Intel was $18 million, Adobe was $6 million, and Microsoft was $30 million. Now you do not see any IPOs even close to that size. These companies typically don’t need capital, they need the liquidity.

Daniel Kahneman – Princeton University on Behavioral Finance

We have two systems that our brain processes with: system 1 is like answering 2+2, automatic; system 2 is like 24 * 17. We don’t like using system 2, so we try and use system 1 to process any time we can (mental shortcuts).

If we hear the word doctor, we are more likely to easily recognize words like nurse if they are whispered to us. This is called priming the brain.

System 1 analyzes whether something is surprising or not and likely to require more analysis.

If it fits within a framework we have established, system 1 will ignore ambiguities. For example, if you hear: “The woman approached the bank”, most people do not realize that is ambiguous (i.e. river bank).

Confidence is usually as a result of the amount of information given or whether a story makes sense and not based on the validity of the information. This can be a big problem in our field as there is plenty of information and stories can be built off weak information and lead to the telling of stories that are much more coherent than the information dictates.

People also answer questions that they weren’t asked: “Do you like Ford stock?” Is often answered as “Do you like Ford company?”

Ways to keep from making behavioral errors:

Recognize situations where you might make a mistake. Anchoring is a common tactic in negotiating. Make sure to look at the process that led to the decision.

When starting a round table discussion or debate, ask participants to write down their position before starting a debate (eliminates anchoring on first person or the person speaking most powerfully).

Also, a technique for developing a business plan that helps to legitimize dissent: Schedule an hour individual meeting with each person involved in the process and say, “Imagine we implemented the plan. It is now a year later and the plan is a failure. Write down the history of that plan.”

Robert Gordon – Twenty-First Century Securities Corporation on tax increases in 2013

There are too many specific scenarios to summarize here and I may need to model some scenarios that are specific to clients later. The bottom line is given the new medicare tax of 3.8% in 2013, even with an extention of the Bush tax cuts, it may be advantageous to take income in 2012 vs 2013. As that additional 3.8% can lead to a risk free return on investment of 10% if income is taken in 2012 vs 2013. This return would be even larger if there is no extention of the Bush tax cuts. As each situation is unique and involves different assumptions (liquidity, transaction costs, type of income received, etc), please ask us to work with your CPA to analyze your unique situation.


Read about the rest of Sean’s experience at the conference – Day 1 and Day 2.

Meet With Us

We are ready to discuss your financial needs. Scheduling a time to meet with us is simple, just click here.

©2014 Delta Trust & Bank | Privacy & Security

This blog does not necessarily reflect the opinion of Delta Trust & Bank or any subsidiaries. They are the opinion of the author.

For bank products or bank specific posts:

By operation of federal law, beginning January 1, 2013, funds deposited in a noninterest-bearing transaction account (including an Interest on Lawyer Trust Account) no longer will receive unlimited deposit insurance coverage by the Federal Deposit Insurance Corporation (FDIC). Beginning January 1, 2013, all of a depositor's accounts at an insured depository institution, including all noninterest-bearing transaction accounts, will be insured by the FDIC up to the standard maximum deposit insurance amount ($250,000), for each deposit insurance ownership category

For any posts or products related to Delta Trust Investments, Inc., Delta Trust Insurance or the trust department:

Not Insured by FDIC or any Federal Government Agency. May Lose Value. Not a Deposit of or Guaranteed by a Bank or any Bank Affiliate.

Any customer who should happen to be dissatisfied with the service provided by Delta Trust Investments, Inc., is invited to write to:

James Alger, President, Delta Trust Investments, Inc. | P.O. Box 17607 | Little Rock, AR 72222 | 501-907-2297 or 1-877-349-9333, or Email James Alger.

Delta Trust Investments Inc. is a member of FINRA* and SIPC*

*By clicking on 3rd party links you will be leaving the Delta Trust Investments Inc website.

Equal Housing Lender Member FDIC

You are leaving


You are leaving the Delta Trust Website. Do you wish to continue?

Meet With Us

We are ready to discuss your financial needs. Fill out the form below and someone will be in touch with you.

NOTE: Please do not include sensitive information such as your social security number or account number in your message.


Contact Us

We are ready to discuss your financial needs. Fill out the form below and someone will be in touch with you.

NOTE: Please do not include sensitive information such as your social security number or account number in your message.