Finance legends gathered to discuss a diverse set of finance and investing topics, ranging from a broad overview of the state of investing and the relative pricing of equities to the impact of innovation and the future of interest rates.
On the specific subject of the panel, innovation,, the group agreed that the long-term effect could be to decrease capital market returns to individual investors. As Matthew Bishop of The Economist explained, innovation in the new economy may increasingly pay dividends and returns to consumers in the form of lower prices rather than to the producers (and their investors through the public equity markets).
Scott Minerd of Guggenheim Partners agreed with this assessment, pointing to the example of the telecommunications bubble. While many criticized the significant investments in fiber optic cables as wasteful, consumers have benefited in the form of lower prices. In addition, Jeremy Siegel of the University of Pennsylvania's Wharton School noted that venture capitalists and early investors may benefit more significantly in the future, as less and less value is left for public investors in the secondary markets. Regardless of the distribution, Minerd argued, the relative re-pricing of inputs like fuel will drive continued innovation as long as tax rates are sufficiently low to make it profitable.
The panelists also engaged in a lengthy, passionate discussion about the state of the equity and bond markets. Siegel argued that stocks are currently the only major asset class priced at or near fair market value; real estate and bonds are overpriced. Minerd agreed; stocks, he said, are "relatively cheap" and at worst "fairly valued." He speculated that it might be due to investor memories of the bursting of the tech bubble, the fact that greater fortunes could be made in real estate in recent years and the tendency for investors to overweight historical trends.
Regardless of what one thinks in particular about the state of the equity markets, Arthur Laffer of Laffer Associates emphasized that the U.S. economy today is the best economy in his lifetime, and perhaps one of the strongest the world has ever seen. Policy clearly drives markets, and Laffer said he was optimistic that none of the four "killers of capital markets" -- higher taxes, bad monetary policy, bad regulatory policy or protectionist trade tariffs -- will interfere with the tremendous growth.
Though Minerd agreed broadly with this optimism, he expressed concern that the increasingly unequal distribution of wealth will engender unwise knee-jerk reactions that may compromise the economy′s health. In addition, he warned, it is important to take into account the potential chain reactions set off by events that occur around the world and which are too often underestimated by investors.
Global Conference 2013
Former Prime Minister Tony Blair, philanthropist Bill Gates and Strive Masiyiwa of Econet Wireless discuss advancing prosperity in Africa.
