Economic expansions don’t last forever. As the recovery from the Great Recession becomes one of the longest, what are the critical lessons learned during this period? What insights have investors already forgotten from the financial crisis? Looking further back in history, what other wisdom can we extract to help us plan for the future?
- Scarlet Fu – Anchor, Bloomberg Television
- Thomas Finke Chairman and CEO, Barings
- William Ford CEO, General Atlantic
- Jonathan Lavine Co-Managing Partner, Bain Capital
- Emmanuel Roman CEO, PIMCO
Please welcome your panelists for lessons from the great recovery. How to maintain investment momentum moderated by Bloomberg television anchor Scarlett FU Thank you everyone and good morning. Thank you so much for joining us as we explore the lessons from the great recovery although some would quibble at how great it’s really been and how to maintain investment momentum. We know economic expansions don’t last forever so what did we learn from this period of growth and what do we need to be mindful of as we consider the road ahead. Joining us is from my left here Steve Tennenbaum He’s founding partner and CEO of Golden Tree Asset Management. Manny Roman CEO of PIMCO which has one point seven trillion in assets under management. Jonathan Devine of Bain Capital managing partner and CEO of Bain Capital credits. To my right Bill Ford CEO of General Atlantic which is a global growth equity firm he’s invested in and helped to build companies from First Republic Bank to Priceline. And Tom Fink chairman and CEO of Barings which has 305 billion in assets under management. So let’s start and provide some context for everyone here. I want to talk about where we are in your specific market cycle. Manny Why don’t you get us started. When you look at fixed fixed income equities the economic cycle. So I think we are late in the business cycle has been an amazing recovery that everyone in this room has benefited from. So we should acknowledge this. We think that rates are drifting slightly higher they may be a bit more inflation than we all expect especially over the next six months.
Oil is higher you have a tight labor market. Nothing I’m telling you which is so surprising. We also think that equities of value to say the least. And so you have an investment opportunity which looks like the end of a bull market that everything sort of looks expensive and you need to be quite careful about how you do approach capital. And the risks some significant downside so late cycle is something we’ve heard quite a bit. Tom what’s different and where we are now versus where we’ve been in the past and previous late cycles and how do you adjust for it. I think a couple of things. Well I don’t know that we’re firmly in the late cycle maybe mid moving delay. I think it’s very hard to navigate the cycle because there’s so many growth industries through technology and disruption it’s just not your normal manufacturing or even services cycle. And so I think it makes it hard to say how late are you. Why are we in the third longest going on second longest recovery is we are living through a very different economic era of disruption and technological innovation. I think when you look at underlying markets and look at the credit markets we haven’t seen defaults rise materially. They’re really tied to sectors like retail where there’s disruption. So that’s why I think you know I’d say we’re maybe the end of the mid part of the cycle. And Jonathan we spoke earlier you were saying to answer that question is difficult because you can’t compare to what has happened in the past.
Asking where we are in the cycle ignores the fact that there are different cycles right at Bain Capital we manage a variety of assets from private equity credit venture life sciences social impact and across 9000 offices globally in our two largest businesses credit and private equity. The story is quite global in private equity. We clearly have been selling more than we’ve been buying. We sold two or three times more last year than we bought but we clearly have seen places to.
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