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October 24, 2012

4th Annual South Coast Investment Advisors’ Economic Summit: Recap

The South Coast team recently completed the extremely successful 4th installment of our popular Economic Summit series on Saturday, October 13th in front of a packed crowd at the Radisson Newport Beach Hotel. Attendees were treated to an event that…

4th Annual South Coast Investment Advisors’ Economic Summit: Recap


The South Coast team recently completed the extremely successful 4th installment of our popular Economic Summit series on Saturday, October 13th in front of a packed crowd at the Radisson Newport Beach Hotel. Attendees were treated to an event that ran the gamut from a macro level overview of the economic road ahead, to the inter-workings of asset allocation decisions at some of the country’s largest and most successful university endowments, and finally through a series of micro level discussions about some of the effective tools and strategies that are creating positive investing experiences for South Coast’s current clients. The event was kicked off by David Rupert, Co-Chair of the Cornell University Real Estate Advisory Board. David outlined the dilemma facing investors of all types during the calamitous economic times that have plagued thecountry over the last decade and detailed how endowments, like those at Cornell, Harvard and Yale, responded to the trying economic situation by repositioning assets into various buckets of alternative investments. David explained that endowments focus on three principles to ensure that an endowment can maintain a stable asset base capable of making large annual distributions to their respective university each year. These three are: disciplined and diversified asset allocations, outsized allocation to equity-oriented assets, and an understanding that liquidity is overpriced and illiquidity should be embraced (*Please note that maintaining adequate liquidity in a portfolio is important to ensure flexibility throughout different economic environments – each investor should determine how much liquidity is necessary for their individual situation). He further explained that when referring to “equity oriented assets”, he was not implying that stocks are the alpha and omega of portfolio creation. He was referring to allocating capital to alternative investments that exhibit “equity-like” returns. These alternatives include Private Equity/Debt, Hedge Funds, and Real Assets – including direct ownership of real estate, energy, timber, ect. These alternative asset classes generally offer the potential to outperform a passive index, seize opportunities derived from inefficiencies in the markets for alternatives, and, because of these inefficiencies, add additional value through manager selection. At the completion of David’s glimpse inside the world of portfolio creation for endowments, the event shifted gears and transitioned the attendees from the ballroom, into the three breakout rooms for focused discussions about some of the tools that the South Coast team is successfully utilizing for their clients today. The discussions included the following topics:

  • “Institutional Management for a “Mom-and-Pop” Industry – Income and Inflation Protection in Self-Storage Real Estate”
  • “Private Equity and Debt Investing – An Institutional Asset Class Structured for Individual Investors”
  • “Gulf of Mexico Oil Development – Investing alongside the Largest Energy Companies in the World”
  • “The Endowment Approach to Real Estate and the Future for Healthcare Facilities”
  • “RTC All Over Again – Credit Market Struggles Creating Real Estate Opportunities”
  • “Portfolio Diversification and Tax Mitigation through Domestic Energy”
  • “Capitalizing on the Apartment Opportunity without the Management Headaches”
  • “The Bond Market of Tomorrow – Finding Income in an Uncertain Market”
  • “Real Estate Strategies Built to Excel in Any Environment”

Upon completion of the three sessions of breakouts, attendees were provided a tasty lunch followed by an engaging look at the economic road ahead by Greg Autry – noted author, lecturer, economist, and now executive producer of the recently released film, “Death By China”. Greg discussed the opposing paths that lie ahead given the contrasting visions that the two parties vying for power this November have for this country and its economy, taxes, and social safety net. Greg commented that the Fed’s current views of inflation are not a fair representation of what is truly taking place today. He spoke of the real inflation that is eroding our purchasing power for the most important items that each of us utilize on a daily basis – namely food and fuel. His inflationary outlook differs depending on which regime either maintains or assumes control in Washington in a few short weeks. While the paths differ on when and at which rate inflation will grip the nation, the common theme that Greg wanted attendees to walk away with was that we all must take steps to prepare our portfolios for the impact of inflation’s grip in the coming years. Upon the completion of Greg’s riveting commentary, investors were invited to sign up for the variety of small-scale, in-house workshops that the South Coast team will be hosting in the coming weeks where we promote open dialogue about the individual tools and strategies that we feel are appropriate for today’s economic environment. These small meetings allow for investors to fully educate themselves on how specific investment strategies are structured, why they may be appropriate for certain investors today, and what the outlook for the strategy may be in the future. The South Coast team strongly urges both current and potential investors to join them for these meetings to help gain a better grasp of the multitude of both traditional and alternative investment vehicles that are available today. South Coast would like to thank all of our valued speakers and investment strategists for contributing their time and wisdom to the event and look forward to yet another successful Summit in the fall of next year.

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