The Independent Market Observer

What Do You Ask Ben Bernanke?

Posted by Brad McMillan, CFA®, CFP®

Find me on:

This entry was posted on Nov 10, 2015 1:13:52 PM

and tagged Commentary

Leave a comment

ben bernankeStarting tomorrow, I will be off to Commonwealth’s National Conference for the rest of the week. It will be a very busy several days, including a giving-back project, which is a Commonwealth tradition that we do at every event, leaving a place somewhat better than we found it; a birthday dinner for an advisor friend; multiple other dinners and functions; and, of course, my conversation with Ben Bernanke on Friday.

Interview prep

I’ve spent the past couple of weeks working on preparing for the interview, which included reading his book, The Courage to Act. This is a very good book, which I will review next week, and reading it has been helpful in framing parts of what I plan for our discussion. There is, however, one major problem: The book, by its nature, is backward looking. Although (at least at the moment) it is still quite current, running to the first half of this year, the primary focus is on what happened in the past decade.

This is fascinating reading—as I said, a very good book—but I don’t think time spent with a very fine economist who ran the Federal Reserve during the financial crisis is best used to exclusively go over the past. At the same time, what comes out quite clearly in the book is that the crisis provides the context for the next decade. I have, therefore, been trying to strike a balance between the crisis and the future.

Framing the discussion

What I’ve ended up with, so far, is to have different sections within the discussion:

  • The first section will cover Bernanke’s tenure as a central banker and what he did during the crisis.
  • The second section will cover his current role, as a private economist, and what he sees going forward.

I hope the first part will provide a frame for the second part and that the second part will actually address what I, as an investor, need to know.

How can investors best use the insights of economists?

At the core of the discussion, I hope to answer this question. As an economist, Bernanke did a great job of guiding the country through the crisis. By connecting how and why he acted then with the current situation, I hope to provide Commonwealth advisors attending the conference with insight about how and why the future might evolve from an economic standpoint. We can then use that insight to develop our investment theses.

At the same time, investment is not the same as economics, another point that comes out quite clearly in the book. So, I want to spend time talking about his thoughts about what that might mean for financial markets. As part of that, I’m interested to see how Bernanke handles his personal investments. At a high level, for instance, does he handle his own investments or does he have an advisor? If so, how did he pick that advisor?

Preparing for the future

In the end, what I think will provide the most value to the audience is a mix of war stories from the past and some thoughtful discussion about what those stories mean for the future—and how he himself is preparing for that future. It’s not often you get a chance to talk with someone like Dr. Bernanke, and I am looking forward to it.

  Subscribe to the Independent Market Observer

Subscribe via Email

Crash-Test Investing

Hot Topics



New Call-to-action

Conversations

Archives

see all

Subscribe


Disclosure

The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.

Member FINRASIPC

Please review our Terms of Use

Commonwealth Financial Network®