Report From Leen’s Lodge

David R. Kotok
Chairman and Chief Investment Officer
Report From Leen’s Lodge
August 9, 2010


Forty-one men and women gathered at Leen’s Lodge this year. The largest gathering in the annual event’s history attracted invitees from as far away as Buenos Aires, Vancouver, Dallas, Newport Beach, Helsinki, and the Persian Gulf.

As a group, our firms collectively supervise several trillion in assets, employ thousands in the financial services industry around the world, reach millions of readers with newsletters and blogs, and participate at various levels in policymaking. One-fourth of our group has had or is presently engaged in some experience with a central bank or a government agency.

The annual gathering is conducted under the Chatham House Rule. No one is directly quoted without his or her permission. The collective impressions of the group may be described in public forums.

Of the 26 participants in the Friday night survey, four expected at least one European country to default or reschedule in the next year. Greece and Portugal were deemed the most at risk.

Interest rates on Fed Funds one year from now were variously estimated in a range of zero to 2.75%. The big outlier numbers skewed the statistics. The mean was 0.66% and the median was 0.35%. This group expects the Fed’s “extended period” to last at least another year.

They forecast that housing prices will continue to fall, that the stock market will be in a trading range between 1400 high and 850 low, with a median S&P 500 Index of 1250 one year from now. They call for the unemployment rate to remain high – the median was 9.1% for June 2011. The mean was 9.4%, and that gives the skew as being on the bleaker side. 60% believe the House of Representatives will hold a Republican majority next year; only four think the political change will allow Republicans to win the US Senate.

Conversation buzzed constantly at Leen’s Lodge. The debate was intense, friendly, and substantive. In addition, the fellowship and goodwill of the group reached new heights.

We invited the family that we helped last year to join us for lunch. They had been burned out of their house and were destitute. Our group raised some funds for them to get a new start. We encountered their problems because they are related to one of our fishing guides.

This year we raised money to help a former guide who is now on dialysis and fighting cancer. He has had to mortgage his house, has lost his truck, and supplements his small Social Security income by carving canoe paddles. We invited him and his wife of 50 years to join us for dinner. During the last 20 years, 11 in the room had fished with him in these pristine waters of northern Maine. A few tears and some very warm hearts accompanied the checks we gave him.

Leen’s Lodge is a very special place and this annual assemblage is an extraordinary group. We come because we want to be together, share ideas, and renew caring friendships. We do that with or without the media. Nearly all the participants have had their share of public exposure on TV, radio, print, or the web. Here, they can be themselves and go “off duty” in safety.

Fishing was gret. The food was the usual superb camp fare, and all the excellent wines have been consumed. Warm and fuzzy glows hovered about the participants as flights departed and returns to offices and businesses and clients ensued.

But next year at Leen’s, the loons again will beckon, the smallmouth bass will stir, and the world will assuredly provide ample topics for another assemblage interested in furthering the global discussion.

It was a terrific weekend.


David R. Kotok, Chairman & Chief Investment Officer, Cumberland Advisors,

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