Over the past two decades, The Milken Institute has convened global leaders to craft and carry out creative solutions to the world’s most complex problems. With over 3,500 attendees from 50 countries, the Milken Institute Global Conference (MIGC) brings together individuals with the capital, power and influence to increase global prosperity by advancing collaborative solutions, widen access to capital, create jobs and improve health.
Tectonic Advisors, CWA’s investment advisory affiliate, sent Managing Directors Paul Lyons and Brad Sanders to the elite conference this year in Beverly Hills. Over the course of the three days, Sanders said they were in the same room with some of the brightest minds in the world and walked away from the conference with a greater understanding of the economic and social trends that are shaping our lives and what the future may hold.
One of Sanders’ favorite non-investment panels every year, titled “Things That Will Blow Your Mind,” focuses on advances in technology, science and medicine. This year, Ed Boyden, Professor at MIT Media Lab and McGovern Institute, featured a project where they are rebuilding a computerized human brain in order to understand the brains functionality down to a molecular level. Their belief is that by doing so they will make huge advances in computing, as the brain is considered more powerful than the world’s most advanced computer.
Market Outlook: Stay in, but have risk management in place
“This year we came away feeling that the majority of the participants believe that almost all markets are expensive from a valuation standpoint, and that investors need to be increasingly vigilant about what kinds of risks they are taking,” Sanders said.
Bond markets and other income yielding investments were a hot topic. On a panel titled “The Hunt For Yield: Risk-Free Return or Return-Free Risk?”, the panelists discussed what large bond managers are doing to generate return, and more importantly what kinds of risks persist in the bond market after 9+ years of near zero interest rates. It was also pointed out that over 60% of active bond managers are beating their indices, which is indicative of a market that offers attractive opportunities for managers that know how to spot differentials in liquidity and risk.
Overall, the conference had a tone of moderate unease with current valuations for both equities and bonds.
“But, very few—if any—of the conference participants saw any events on the horizon that could kick off a round of risk aversion,” Sanders said. “The overarching sentiment was to continue to stay invested, but to do so with risk management in place.”