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.