Schwab hosts 2,000 financial advisors: Here are the take-aways

Some intel from the big Schwab conference in Boston last week.

Adam Hunger / Reuters
Biz Stone, co-founder of Twitter, spoke Oct. 28 at the Charles Schwab IMPACT 2010 conference in Boston, Mass. He discussed the role of social media in expanding business. Other speakers addressed emerging markets, stock opportunities, and more.

Last week's IMPACT Conference was one of the biggest yearly events for financial advisors on the calendar. Charles Schwab welcomed their independent advisors to Boston for a multi-day meet-up covering the entire spectrum of investment advisory topics. In attendance were IA's managing two thirds of a trillion bucks, so the collective conclusions coming from this meeting could certainly have an impact on the markets.

Fortunately, my pal and fellow financial advisor @ZipperTheory was in attendance. Below is a rundown of what he learned and observed, in his own words:

Hey Josh,
The down and dirty on IMPACT:

This year about 2000 advisers (all RIA's or Independent Advisors) with approximately 670B in AUM gathered in Boston to meet up and talk shop.

The meetings covered everything from how to better use technology such as LinkedIn and Twitter to grow one's business, to changes in the legal framework with the HIRE Act and most importantly, investments.

The investment rhetoric can be summed up with a few bullet points

Not many people own gold as a percentage of total AUM (assets under management). Globally we are debasing fiat currencies. In inflation-adjusted terms gold still has much room to run to new highs. Combine all of this with no central banks planning to sell and most looking to acquire and it looks like gold could have another huge run.

Finding income in a low yield world was a big topic. Here's what they suggested:
# Investing in a covered call strategy
# buying big multinationals with higher dividend yields than the 10year
# Convertibles (Calamos speakers gave this particular presentation)
# Invest in High Yield while spread is still juicy
# Buying non publicly traded REIT's that invest in CRE
# Buy EM Debt w/a shovel and keep piling it on > better demographics/balance sheets/growth prospects

Stocks are cheap:
10 year average returns are some of the lowest on record. Thus reversion to the mean equates to higher returns attractive when looked at on P/E or cash flow basis when compared to PE of 10yr UST.
# M&A should drive efficiencies and multiple expansion
# Multinationals look cheapest
# Entering into the strongest period for stocks in presidential cycle right now - most stock out-performance comes in the next 6 months

Emerging Markets Stocks:
# BUY EM STOCKS - this was a really consensus idea - no one thought it was a bad idea or had a counter argument to why you should own them
# Most people don't enough of these - should own them on a percentage of global GDP basis.
# Demographics/growth rates/no debt/emerging middle class/etc.

Muni Debt:
Views here were actually mixed. One camp said state budgets not an issue, buy them because of their yield relative to UST's or the muni/treasury ratio looked cheap. The other set of people thought this was dumb and just take your risk on corporate debt that yield infinitely more. Said states would probably need to issue more Build America Bonds at higher rates which would cause bad things to happen to the current BAB's

The big take away was that people were under-invested in equities and that advisers were looking to put money to work in EM debt and stocks, most notably in EM funds and Large Cap Value.


Thanks, Zipper!

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