Experts Discuss Investing in a Volatile
Environment at the University of Virginia Investing Conference
11/19/2013 - University of Virginia Darden School Foundation
CHARLOTTESVILLE, Virginia — The chair at Oaktree gave
investors attending the sixth annual University of Virginia
Investing Conference yesterday a powerful but simple lesson in
“We should be moderate. We should not be volatile. We should be
reasonable,” said Howard Marks, chair of Oaktree Capital Management,
who is the author of The Most Important Thing: Uncommon Sense for
the Thoughtful Investor.
“No asset is so high in quality it can’t be
overpriced and no asset is so low in quality it can’t be
underpriced.” That leaves smart investors with potential, he said.
In fact, he says, the stock market swings like a pendulum, “always
in the direction of one extreme. It’s fear versus greed and optimism
It’s celebrating the positive or complaining about
the negative. … All we really need to know about this business is
that extremes are normal.”
Marks advises investors to “buy when there is little confidence and
sell when there is too much confidence. Risk is when there’s too
much confidence in the price of an asset,” he added.
Despite the stock market’s substantial gains this year, the mood of
investors — especially retail investors — seems extraordinarily
muted, perhaps in reaction to the overhang of a sluggish economy.
Marks explained the mystery this way: “I think that people are not
thinking bullish, but they are acting bullish. If they’re acting
bullish, it doesn’t matter why.”
The conference — which began Thursday, 14 November, at the
University of Virginia Darden School of Business and concluded
Friday, 15 November — brings in industry authorities from around the
world who help investors find the best strategies to deliver
positive returns while tempering risk.
Investors and Darden students
heard from a string of experts on emerging markets, energy, the U.S.
economy and technology. The Darden Center for Asset Management
hosted the event.
Technology stocks are riding high, but is the sector dancing on a
bubble? Shelby Bonnie, moderator of the tech panel; Henry Ellenbogen,
portfolio manager for T. Rowe Price; Scott Ferber, CEO of Videology;
and Ned Hooper, a partner in Centerview Capital, don’t think so.
Hooper said, “It’s fundamentally hard to find growth in the
marketplace right now. Investors are seeing growth in tech, and the
market is paying high multiples for that growth.”
But in the wild world of tech, change can happen in months instead
of years: “The consumer is one click away from going with another
startup,” said Ellenbogen. “The only thing to know about technology
is that changes happen fast.”
Good tech stocks to buy?
Google, even at this entry point, and Netflix, the three experts
Kyle Bass, moderator of the energy panel; Jody LaNasa, managing
partner with Serengeti Asset Management; Wil Vanloh, president and
CEO of Quantum Energy Partners; and Michael Watzky, managing partner
of BP Capital Energy Advisors, touted the new developments in oil
and natural gas in the United States and the resulting investment
New drilling technologies such as horizontal drilling
and fracking are opening up large new sources of oil and natural gas
in the U.S., which has increased its oil production by an astounding
50 percent in the past five years.
Some analysts believe the country
can be oil self-sufficient by 2020.
The country is also shifting
slowly to natural gas as a substitute for diesel and coal.
LaNasa urged investors to explore companies involved in building the
infrastructure that will be necessary to transport all that oil and
natural gas for both use and export.
Two good ones?
He touts Williams Co., which is building a gas pipeline in the
northeast U.S. where huge pockets of gas have been found, and Kinder
Morgan, one of the largest energy infrastructure companies in the
The conference also looked outside the U.S. Joyce Chang, head of
emerging markets for JP Morgan Securities, says emerging markets “is
no longer a dirty word.” In fact, emerging markets “account for 50
percent of the contribution to global growth.”
About the Darden School of Business
The University of Virginia Darden School of Business is one of the
world's leading business schools, offering MBA, Ph.D. and Executive
The unique Darden experience combines the case
study method, top-ranked faculty whose research advances global
managerial practice and business education, and a tight-knit
learning environment to develop responsible and complete leaders who
are ready to make an impact.
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