Industry conferences can be hit or miss, but Morningstar’s annual US investment conference last week has a very good batting average. High level speakers are usually candid, informative and newsworthy. 

This year’s conference in Chicago didn’t disappoint. Former US Treasury secretary Larry Summers was nothing if not forthright, and top investment executives from A-list firms including Charles Schwab, BlackRock and Pimco pulled no punches.

Advisors also received out-of-the-box insights from a famed NYU professor, young social media ‘finluencers’ and an expert on aging and longevity from Stanford University. If you weren’t able to attend, here are some excerpted highlights:

Aswath Damodaran, professor of finance, Stern School of Business, New York University
Federal Reserve Board – “There’s no more unhealthy [investment] conversation than one that starts with ‘The Fed…’”

“The Fed does not set rates. The Fed is a follower, not a leader.”

ESG – “A constrained optimal can never beat an unconstrained optimal. It’s mathematically impossible.”

While ESG’s aspiration to promote change for the better is laudable, Damodaran argued that by focusing only on public companies, ESG paradoxically gives private companies more leeway to indulge in bad behavior.

The most effective way to make companies act more responsibly is by “laws and regulation.”

Crypto – 'Cryptocurrencies’ have “no core value…and behave more like a very risky stock and not a collectible.” 

Crypto is priced only “on what other people are paying. It was designed by the paranoid for the paranoid.”

Liz Ann Sonders, chief investment strategist, Charles Schwab & Co
Recession – The US is experiencing “a rolling recession. Most of the recession dominoes have already fallen.”

A recession this year will “not be like 2008 in any way, shape or form.” Banking and housing sectors are much more resilient.

Investing – “Fundamentals are reconnecting to pricing.”

Daniel Ivascyn, group chief investment officer, PIMCO
Investment favorites – Agency mortgage backed securities; private credit market.

Debt ceiling default – “Highly unlikely.”

Has Pimco’s Income Fund grown too large? – “No.”

Steven Romick, portfolio manager, FPA Funds 
Investment analysis – “Consider what can go wrong.”

“How much free cash flow will the company generate in the next 10 years?”

“There is no bright line between value and growth investing.”

Response to Larry Summers’ stock market warning – Asked about Summers cautioning equity investors to be “careful” because markets haven’t priced in the impact of recession, Romick replied: “I would push back and say what is his target date for investing? If you’re looking at the next five years, I would say it’s OK to hold stocks and accept the volatility.” 

Social media ‘finluencers’ Tori Dunlap, founder, Her First $100k and Humphry Yang, Personal Finance host and producer on TikTok and YouTube
Gen Z and investing – Dunlap: Younger investors “equate investing with gambling.”

How to engage young investors – Yang: “Look at the most viewed financial topics on Instagram and YouTube.” 

Dunlap: “Avoid jargon” and “Contextualize information that’s important to them.”

Social media advice – Dunlap: “TikTok is not just about dancing. There’s a big shift going on. TikTok and YouTube are not just social media. Young people are using these sites as a search engine.”

Rick Rieder, CIO of Global Fixed Income, BlackRock
Investing philosophy – “Make a little bit of money many times.”

Investing strategies – “Let profits run; cut your downside.”

Use “put spreads to manage risk, call options for upside convexity protection.”  

Fixed income environment – “As good as it gets.” 

Artificial intelligence – “Mind blowing where it can go.”

AI has potential to combine “quantitative and fundamental research.”

Laura Carstensen, professor of psychology and founding director, Stanford University Center on Longevity
Why financial plans need to account for longevity – “Mortality risk for older people is down and fundamental health is up.”

“The majority of babies alive today will live to be 100 years old.” 

Best predicator of longevity and functional health – Education.

Advice to prolong fundamental health – Exercise, social connectivity.