Yesterday we attended the Sohn Conference. The foundation was started in memory of Ira Sohn whom passed away from cancer years ago. The organization has contributed over 60 million to cancer research. Many of the speakers are legendary hedge fund managers. They include the likes of David Einhorn, Leon Cooperman, Jeffrey Gundlach, David Tepper and many more. It is consider one of the top investment conferences in the world.
Every year the conference brings together top ideas from stocks to general equity and fixed income views. They are smart, enthusiastic and more right than wrong. This year we noticed a difference, they are all on the same page with very little conflicting views. They all agree that interest rates will go higher, Gundlach said to be out of high yield within a couple of years. They all said the S&P should be higher next year and the Europe was also a good place to be. This complacency has made us nervous.
The markets are trading at what Granite Group believes to be fair to slightly over valued in the short term. Will they be higher next year, we believe so, but not by much. Will interest rates be higher next year, yes, but not by much. So what to do? We are looking for a catalyst to take the market one way or another, but in the meantime be patient and wait for weakness in equity markets to add to positions and strength in yields before adding to fixed income positions.
As always please feel free to call us directly with questions.