Highlights and Impressions from The Big Picture Conference 2013

I’m finally getting caught up this week after a whirlwind conference-related stuff and I wanted to jot down a few thoughts about the event itself.

For starters, all of you who came and shared the day with us – you guys are amazing. I really enjoyed talking with you and learning about your businesses and lives, we’re truly fortunate to have such fascinating and engaged readers. We also had a lot of celebrity finance and media folks in attendance (Peter Boockvar, Jim Bianco, Jeff Hirsch, Louise Yamada, etc), and it was cool watching them ask questions of the speakers on stage and interact with the crowd during breaks.

The other thing I want to say is that of all the conferences I’ve attended this year – and I’ve been to, like, all of them – I genuinely believe ours was the best. I know I’m totally biased, but still, I honestly think it’s true. No other event could match the eclecticism or the insights per minute our speakers had to offer. It was simply amazing, there wasn’t a single panel of filler or moment in which anyone’s time was being wasted. Assembling a day like that was no mean feat, Barry and Marion outdid themselves this year.

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As far as the day’s events, my quick impressions below:

Barry Ritholtz gave a talk about the high cost of hedge funds and why the industry is having so much trouble delivering results these days, even with a few outliers still continuing to crush it. The statistics were shocking, the conclusions were merciless and iron-clad. When he delivers this presentation to pension fund people and other institutional investors, as he often does, it’s got to be devastating.

Michael Mauboussin discussed the results of his research for The Success Equation, maybe one of the most important books of the year. Mauboussin gave us some practical tips about determining how much luck is playing a role in our activities and how we can avoid confusing it for skill. The crowd was floored by his easygoing mastery of the subject matter, if you can read the book or catch him speaking, I highly recommend it.

My panel was supposedly “the most fun” according to the feedback we’re getting. I had three of the sharpest chief strategists in the game on stage with me (Art Hogan, Jeff Kleintop and Dan Greenhaus) and, instead of asking them for their S&P targets, we talked about the silliness of targets themselves, the positivity bias that all strategists inherently have, the career risk of being bearish and wrong and the best and worst indicators for people to follow (or ignore). This was truly a one-of-a-kind look behind the scenes of the strategist profession itself, we got lucky to have had these guys and for them to have been so forthcoming.

Jack Brennan, the chairman and former CEO of Vanguard, gave a talk about the revolutionary role ETFs are having on the industry and why financial advice has never been more important. Brennan believes that the $2 trillion in ETF assets today is just the starting point, and that someday it will be more like $10 trillion. I’m not sure if the industry is truly prepared for that. Most interestingly, Jack said that he did not believe that active management was dead – in fact, “just the opposite.” He believes, however, that “high-cost active management” is dead – or dying – and that a great way for investors to allocate is partly passive, low-cost index and partly low-cost active. There is a misunderstanding that Vanguard despises active investing, they do not. What they do despise, however, is high cost investing, and a lot of active strategies and vehicles are in that category.

Lunch was sponsored by our friends and partners at TD Ameritrade Institutional, the custodian for all of our managed assets at Ritholtz Wealth Management. TD has been great to us over the years and we were thrilled to have them representing at the conference.

After lunch, Randall Forsyth (Barron’s) interviewed maverick economist Stephanie Pomboy. She was the most bearish of all the speakers this year, her central point was that the consumer has been killing itself to keep spending while deleveraging at the same time. The couch cushions have been raided and every trick in the household spending book has been tried and exhausted. And now, running on fumes, the consumer needs wage growth and job growth to kick back in to save the day. And she just doesn’t see it happening in time, stimulus or not.

For the next panel, Michael Santoli took the stage and brought on three gentlemen (Rich Repetto, Mark Boyar and Robert Matthews) who’ve been working on or analyzing Wall Street for decades to discuss “the big shrink.”  In the aftermath of the crisis, the brokerage firms themselves have been getting smaller and fighting to figure out which businesses were healthy enough to invest in. Units and employees are being discarded, unprofitable business lines are being shuttered and the customers themselves are finding better alternatives to the traditional wirehouse service model sprouting up everywhere. The panelists discussed what’s going away forever, what’s going to come back and where the opportunities of tomorrow might be.

James O’Shaughnessy was one of the lone bulls at 2012’s TBP conference and he absolutely nailed it. This year, O’Shaughnessy returned to hammer home is thesis that this is a “generational selling opportunity” for the long bond. He also shows why global dividend stocks are a screaming buy versus their US counterparts, which are already over-owned and over-loved. Jim says you’re going to have to deal with the volatility of stocks for your returns in the coming years as the bond bear market has just begun – the last one was almost four decades long.

Finally, the guest of honor had arrived and taken the stage – the legendary Art Cashin, whose fifty years on the floor of the NYSE have afforded him the opportunity to watch the great drama of fear and greed from the front row, in every conceivable permutation. Art told some amazing stories that really get to the heart of what it means to be a trader. including some fascinating anecdotes concerning JPMorgan, Charles Tiffany, the day JFK was assassinated and trying to get a sale done while the markets were panicking about a Cuban missile launch. Barry sat in with Art for this epic fireside chat and, I gotta tell you, I’ve never seen him keep his mouth shut for so long! A few questions were fielded from the crowd after which Art announced that, “Fellas, there are some ice cubes that need to be marinated.” We laughed and laughed, all the way to the hotel rooftop bar across the street.

From there, the rest was a blur

If you missed the conference and would like to watch any of the individual sessions or the whole thing, go to Fora.TV here.

And if you didn’t make it this year, we’ll see you in 2014!

Below, some of the press coverage from the event:

Recap of the Big Picture Conference (MarketWatch)

Hedge Funds Are Victims of their Own Size, Success: Ritholtz (Barron’s)

Art Cashin Just Gave A Hilarious Wall Street History Lesson Going Back To The 1950s (Business Insider)