Sunday, April 1, 2007

R.I.S.E. VII: A Collection

R.I.S.E. VII: A Collection

By: Joseph W. Norman

Before one can delve into what exactly happened at this year’s R.I.S.E. conference, it is important to discuss how the Forum operates. According to the R.I.S.E. website, their mission is as follows: “R.I.S.E. is the first forum of its kind to bring leading students, faculty and investment professionals together in an interactive learning environment to discuss a range of pertinent issues facing investment professionals.” The line-up included over 1700 participants, represented by 218 different colleges and Universities. People from all fifty states and every inhabited continent were present.

The Forum operates in a manner which is unlike most investment media and publications. Its rules of engagement prohibit speeches, power point presentations, and hand outs. Instead, it is characterized by a friendly interaction between some of the industry’s most influential figures speaking directly with the conferences participants. The Forum was moderated this year by Chairman of the Investment Strategy Committee at Deutsche Asset Management, Dr. Robert Froehlich.

“He is the mutual fund industry’s most mediagenic strategist, regularly appearing on a variety of financial television programs.” Also, “Dr. Bob,” as he is generally called, is a prolific writer; “his weekly market commentary has gained him acclaim with the brokerage community as one of the most important strategists of our day.” In addition, Dr. Bob has authored three books on investing including a #1 best seller. Investment Megatrends and Where the Money Is: How to Spot Key Trends to Make Investment Profits are both highly touted by some of the financial world’s most insightful pundits.

Books by Dr. Bob Froehlich:

Dr. Bob’s role in the Forum as Moderator put him on stage managing the featured speaker’s commentary, questions from the distinguished student panelists, and the audience. His genial character and smooth management style facilitated a lively discussion on four key subjects on Thursday, March 30, 2007: Economy, Markets, Corporate Governance, and Public Policy.

By observation, one can tap into the leadership abilities of Dr. Bob. His friendly demeanor, depth of knowledge in his subject area, and strong listening skills have no doubt propelled him to success in his field. These three attributes were modeled consistently throughout his management of the conference.

Dr. Bob Quotes:

In the first section on “Economy,” four key players were available to the over 1,700 participants; Dr. James Glassman, Senior Policy Strategist of J.P. Morgan Chase, Dr. Jan Hatzius, Chief U.S. Economist of Goldman Sachs, Dr. Myron Scholes, Chairman of Platinum Grove Asset Management and 1997 Nobel Laureate in Economics, and Dr. John Silvia, Chief Economist of Wachovia Corporation.

All four members had positive commentary on Federal Reserve Chief Ben Bernanke. In fact, when asked at the end of their session what they would advise Bernanke to do, they had no requests. Dr. Silvia stated, “You’re doing a good job,” and Dr. Hatzius said, “Keep it up.” In addition, Dr. Hatzius issued his stance on future Fed action stating that he sees a rate cut in the near future due to the slowing economy and the credit troubles in the lending space.

Dr. Scholes is the creator of the critically acclaimed Black-Scholes Model for valuing options in the form of calls and puts. All binomial option models have evolved from this original concept.

The next section was a lively one on the “Markets.” It featured speakers such as: Robert C. Doll, Vice Chairman, Global Chief Investment Officer Equity, of BlackRock, one of the world’s largest publicly traded investment management firms, Knight Kiplinger, Editor in Chief of Kiplinger’s Personal Finance, Louis Navellier, Chairman and CEO of Navellier & Associates, and Liz Ann Sonders, Chair of Investment Strategy Council at Charles Schwab & Co. Sonders can often be seen on CNBC giving market commentary while Kiplinger’s personal finance insights are essential reads for future financial success.

Key insight from this session included Sonders’ warning that market volatility is the norm and should not be feared but she said that there are still plenty of reasons to view recession as a risk here.

Liz Ann Sonders

Liz Ann Sonders Profile:

Liz Ann Sonders Company Bio:

Kiplinger moved away from market commentary and issued his bread and butter personal finance guidance. He said, “Investors should develop good habits early.” One should invest at least ten percent of earnings every year, amass savings equal to six months of income, and seek diversity in investments by owning stocks, stock mutual funds, real estate (most easily through REITs or Real Estate Investment Trusts), cash and bonds. In a quip on owning bonds being only for “widows and orphans,” he stated, “Yes, widows and orphans and people who want to sleep at night.”

Navellier stated that foreign investments are attractive due in part to the weak dollar, while Doll predicted robust earnings growth stimulated by companies with exposure outside the United States.

Kiplinger Personal Finance Website:

BlackRock Website:

Navellier’s website featuring his free unique stock rating system (under Tools/Research):

After a delicious lunch and a speech by Gary Stern, President and CEO of the Federal Reserve Bank of Minneapolis, four key business players moved to the stage to speak about “Corporate Governance.” Peter H. Coors, Chairman of Molson Coors Brewing Company, Patrick Dorsey, Director of Stock Analysis at Morningstar, Ralph Alvarez, President and Chief Operating Officer of McDonald’s Corporation, and Paul S. Atkins, Commissioner of the U.S. Securities and Exchange Commission, gave their respective perspectives on the topic.

While deliberating the importance of sound corporate governance, Peter Coors emphasized integrity as the integral piece for success. Paul Atkins said that over ninety percent of businesses do a good job with managing their corporation; unfortunately, the few percent that do not are the most publicized.

In a candid moment near the tail end of the discussion the four featured speakers spoke about what it takes to do their respective jobs.

Patrick Dorsey:

“As a manager my team has grown from three to ninety in five years. There really is a trust your gut aspect to management, in terms of hiring and firing. If something smells wrong, walk away. You don’t need to hire that person. Also, never hire for a short term position. Think long term and trust your gut. I have made my biggest mistakes in those two respects.”

Morningstar website:

Paul S. Atkins:

“Stick to your principles. My biggest mistake as a Commissioner was I moved to approve Audit Standard #2. It was way too prescriptive and detailed. Basically, I succumbed to peer-pressure. I would advise to stick to your principles because nine times out of ten, they will be right.”

Paul S. Atkins

United States Securities and Exchange Commission Website:

Paul S. Atkins bio:

Peter H. Coors:

“One of our five corporate values is integrity and we define that as the Golden Rule with a little twist. We say do unto others as you would like them to do unto you, or treat others as you would like them to treat you, even if they are jerks.”

One of his mistakes was in terms of marketing when he moved to make a negative commercial against one of his competitors. He reflects, “It was designed to poke fun, but it was a negative way to try to build our business by detracting from one of our competitors. To this day, I regret that I made that decision. It really was in conflict with my values, and things like this will happen, and you will always go through that and you will get over it, but you will remember it. It sticks with you.”

Molson Coors Brewery Website:

Ralph Alvarez:

“Higher up in an organization there are no black or white decisions. One of the biggest mistakes I know of is lack of action, because you are waiting to have all information in before you act. Sometimes it is better to act on eighty percent of the information and weigh out the risk-reward of the situation. The rest involves trusting your gut. In turn, part of leadership is being able live with those decisions.”

McDonalds Corporation Website:

Ralph Alvarez

Ralph Alvarez Bio:

It is important to note the leadership qualities these folks have discussed because they have indubitably led them to success. Mistakes happened and tough decisions had to be made, but they all persevered and have found themselves in the position of some of the United States most respected business people.

The final section of Thursday’s forum was one on “Public Policy.” It featured the likes of three movers and shakers from across the globe: Dr. Daniel Chiquiar, Research Manager of Banco de Mexico, L’Ubomir Jahnatek, CSc and Minister of the Economy for the Slovak Republic, and Gintaras Steponavicius, Deputy Speaker of Parliament for the Republic of Lithuania. They each spoke about the importance of public policy when it comes to growing an economy.

This was only day one of a multi-day event which delved even more into student education of the investment world. Friday featured break out sessions where students could interact even more with top professionals in multiple industries. Topics for these sessions included but were not limited to: Equity Analysis, Merger and Acquisitions and the Private Equity Life Cycle, Future of the Investment Management Profession, Portfolio Management: Growth and Value, Real Estate Investing, Equity Portfolio Management, Risk Management, Discounted Cash Flow Modeling, and many more.

Insight from the breakout sessions and book recommendations from the conference participants will be featured in a future article. Stay tuned!