| Dear Reader, Good afternoon from sunny San Diego, where day 2 of the SIC 2018 is in full swing. Events began this morning with an investor’s dream duo of Steve Blumenthal and JPMorgan’s Gabriela Santos. Steve kicked-off proceedings with a discussion around valuations and why they paint a negative picture for returns going forward. Throughout history, when valuations have been as high as they are today, returns have been in the low single digits or negative over the next decade. Thus, Blumenthal said investors should now be focusing on risk management and went through specific ways to do just that. JPMorgan Asset Management’s Gabriela Santos picked up where Steve left off, talking about asset allocation. She said investors should be focused on emerging market equities, specifically Latin America. Jared Dillian and I Up next was my one-on-one discussion with Jared Dillian. Jared walked out to the Bee Gees “Staying Alive.” Why? During the recent stock market correction, Jared quipped to me that investors need to be focused on “staying alive” because we are now entering a regime change in the markets. To highlight just how important avoiding losses are, Jared read the audience a letter he received in response to a Bloomberg article he penned. In the letter, the individual investor said they had lost over $400,000 in just a few hours during the recent correction. Always the contrarian, Jared left attendees with, “You want to do the trade that gets you laughed off CNBC.” Neil Howe and John Mauldin Then our own John Mauldin sat down with top demographer Neil Howe and discussed the generational strife in the US. Baby Boomers have reaped the rewards from the secular bull market in financial assets and now own half of all the wealth in America. However, other cohorts haven’t done so well, and Neil said that means increasing inter-generational tensions going forward. Neil left the crowd by saying the number one thing he is watching today is inflation. George Friedman Geopolitical futures chairman George Friedman took the stage for the final session on the morning of day 2—and he painted a negative picture for global relations. George said the number one trend he’s focusing on today is the global export crisis, which has wide-ranging investment implications. While large exporters such as Germany and China do well when the global economy is strong, George said demand and consumption are now stagnating—which is terrible for them. For example, exports account for over 50% of Germany’s GDP. George went on to say that globalization has created a social crisis in developed countries, and that means we are likely to see continued political upheaval. The analysis into the trends shaping financial markets, the economy, and international relations by the speakers have been outstanding so far. For now, it’s time to hit the send button as Grant Williams is about to step on stage. Watch your inbox for another update from me this evening. And remember, if you want the video and audio recordings of the 20+ hours of presentations and panels taking place at the conference, you can get them with your Virtual Pass. Sincerely, Ed D'Agostino
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