This weekend saw the AAII’s annual conference take place at Bally’s in Las Vegas. The event was attended by a combination of 1,200 individual investors and professional advisers. The investment topics ranged from technical analysis to retirement planning. Here are some of my key takeaways from the conference:
- The potential change in policy by the Federal Reserve to increase the Federal funds rate was espoused as being a general positive change, not only the economy but for the market, as well. The general opinion is that the increase of the rate will erase or reduce a factor of uncertainty that is believed to be holding the market back. Therefore, a moderate rate increase (up to 25 basis points) would be seen as a bullish sign.
- Value stocks, in general, have had a hard run this past year. This has produced an atmosphere where many potential buying opportunities exist.
- Oil’s current weakness is seen as a systemic problem with excessive supply combined with tepid demand. Unless some expansive from of economic growth is experienced around the globe, this dynamic will not change. In addition, alternative energy is becoming more competitive and a viable alternative to oil, which will continue to damper a surge in oil’s demand. No direct calls for shorting oil, but caution was given regarding companies that are leveraged.
- A good deal of focus was given to the need to define what your investment strategy is. The best quote I took away from the topic was from Jim Farrish, “You cannot manage the market. You can only manage your money.” The take away was that you need to know what your goals and philosophy is when investing. Otherwise you will be a feather in the wind and the market is a stormy place.
- Stock screening can be utilized as a more mechanical way to select appropriate investments. This can also be a way to control individual investment behavior. It is a way in which you can strip some of the emotional calamity your mind can generate when the market goes in the opposite direction you expect.
- Ken Fisher spoke at one of the lunch sessions. One of the more interesting projections he provided based on his firm’s analysis is that the 2016 market outlook will be better than expected, if the market thinks a Republican will win the Presidential election. If a Democrat is expected to win, then the market will under perform what the consensus expectations are for 2016. The inverse will be true per part for the market in 2017.
- Everyone has a strategy for how to beat the market. Walking around the exhibit hall can make your head spin, if you don’t have a focus. If you’re going to such a conference, it’s important to have your feet on the ground and a focus. If not, talking to vendor upon vendor will leave you wanting to run in 20 different directions. Such an event is similar to a buffet; if you know what you like and how much you should eat, you’ll enjoy yourself. If you have no real plan or governance, then you’re going to be left feeling bloated and regret even going to such a place.