The 8th Annual Financial Advisor Symposium drew
1,250 attendees, more than 130 exhibitors and a host of well-received
speakers, including advisor and author Nick Murray, consultant and
wealth expert Russ Alan Prince, trainer and author Mitch Anthony and
energy analyst Charles Maxwell.
As the opening keynote speaker, Maxwell, an analyst at Weeden & Co., outlined changes in the oil business that he expects to unfold over the next decade. He predicted that non-OPEC oil production would peak in about 2010.
Although the price of oil could fall to $50 a barrel in the first half of 2006, it is likely to start rising at 7% to 10% a year shortly thereafter, he continued. "At first, that doesn't bother you, but after ten years it will," Maxwell warned. "Global competition for oil reserves will [intensify]. Look at China. It will get a lot worse."
As supplies dwindle, Maxwell said, investors are likely to divide oil producers into two groups: Those with ample reserves could warrant significantly higher price-to-earnings multiples than others, like Exxon Mobil and Chevron, which are experiencing falling production and will be forced focus to focus on low-margin refining and marketing activities in the next decade. Despite their record profits, "Exxon is in trouble now," Maxwell said.
A bond fund panel on November 3 produced an interesting exchange of views between Loomis Sayles Vice Chairman Dan Fuss and YieldQuest Advisors President Jay Chitnis. Fuss voiced fears that the U.S. federal budget deficit could rise to the $600-billion range next year, and that while the Fed might cut interest rates later next year if the economy slows, the next economic cycle could produce significantly higher rates as corporations were forced to compete for debt with the U.S. government.
Chitnis argued that the forces of globalization, with 2.5 billion seeking to work in global industries, are so powerful that this deflationary steamroller would overwhelm U.S. domestic problems. Looking two to three years out, he warned, the biggest risk for bond investors could be reinvestment risk.
Morningstar's Don Phillips conducted his All-Star panel, traditionally one of the conference's most popular general sessions, with Ron Muhlenkamp of the eponymous fund concern; George Grieg, William Blair & Co.'s international growth guru; and John Calamos of Calamos Investments. Muhlenkamp told attendees he recently screened thousands of companies to see if they met three criteria-revenue growth above 10%, returns on equity (ROE) above 14% and price-to-earnings multiple below their ROEs. He was surprised to find that many if not most of the names were in the Standard & Poor's 500 Index. "We don't predict the future, but we've made a career of buying companies that are putting up numbers that the market doesn't believe," he said.
The symposium was held November 1-4 at the Chicago Hilton & Towers. The show is sponsored annually by Financial Advisor magazine and Intershow Productions. Their next show is the 2nd Annual Financial Advisor Retirement Planning Symposium, April 27-29 at the Mandalay Bay Resort & Casino in Las Vegas.