It is helpful every now and again to break away from your ordinary routine, enjoy a change in scenery, mix up your daily schedule, hang with different folks. That is what I have been doing for most of the past week at Leen’s Lodge on Grande Lake Stream in Maine, at an event often called the Shadow Federal Reserve Committee, but best known as Camp Kotok.
It’s an opportunity to spend some quality time in canoes thinking deep thoughts while occasionally catching smallmouth bass and pickerel. (I am strictly a catch-and-release angler.)
Allow me to share some of the insights I gleaned at this year’s event. The event is covered by Chatham House Rules, meaning I can’t quote people specifically without permission. Here are my top 10 takeaways:
• Don’t look at one central bank, look at all central banks: Just as the home-country bias tends to have individuals overexposed to equities of their home country, so too does a similar bias cause analysts to overweight their own central bank. Nowhere is that bias more apparent than among U.S. economists for whom it seems to be all-Fed-all-the-time.
Jim Bianco of Bianco Research pointed out that looking at any single central bank paints an incomplete and indeed misleading picture of inflation, the economy and interest rates. Taking a composite of all central banks correlates strongly with where interest rates are going.
• This market has confounded almost everyone: It’s a cliche, but it’s true: This has been a tough market for just about everyone. Value investors are lagging; hedge funds are struggling; and economists, bond managers, newsletter writers and even journalists are all having difficulty explaining this market.
• People have an infinite capacity to surprise you: I have been coming to this event for more than a decade. Just when you think you know someone, they reveal a side you have not seen before.