2017 Annual Cedarstone Investor Conference Recap

March 12, 2017

Two weekends ago we held our third investor conference at the Westlake Village Inn. We were thrilled to have a full room of attendees this year and continue to be excited by the growth we’re experiencing here at Cedarstone. For those of you who weren’t able to attend, you can check out a quick recap of the morning's presentations below:


Our first speaker was Cedarstone Vice President Matt Davis who spoke about a driving force behind economic cycles: debt. He began by discussing productivity and the idea that over time the pie gets bigger as we experience innovation and everyone is able to enjoy more goods. He then explained how debt is pulling future spending forward into the present and then having to pay back that spending at a later date and how that activity creates cycles – both short-term and long-term debt cycles. Next, he brought together all three graphs - productivity, short-term debt cycles, and long-term debt cycles - to give us an idea of how the economy moves over time (check out this great video explanation here). He concluded by pointing out that the economy moves in cycles and while it’s difficult to determine where we are in any given cycle, the best we can do is think in probabilities and invest defensively. He likened our investing to the phalanx - an ancient Greek military formation in which soldiers marched forward into battle but cautiously and with their shields up. We want to do likewise – remain invested and marching forward in the market but cautiously and with our shields up.


The next speaker of the morning was our Director of Trading and Internal Operations, Hannah Boundy, who used a surprising number of sports references (check out this video about Rick Barry and the granny shot) to illustrate the idea that human beings misbehave – meaning they make irrational choices. Based on the research of Richard Thaler - the father of behavioral economics and the author of the book Misbehaving – her talk centered on how our irrational decision-making can affect our investing. In response, she had two suggestions: adaptation and education. There are some aspects of ourselves that are incredibly difficult to change – in particular our tolerance for risk. For those of us who have a very low tolerance for risk, one of the best things we can do is adapt our portfolio to our ability to handle risk. This allows us to stay the course during times of volatility instead of making impulsive decisions and selling out at the bottom. Secondly, when it comes to bad habits that we can change, the best approach is to educate ourselves about what the rational response should be, thereby establishing smart habits going forward.


Our final speaker was Cedarstone President Steve Coker who walked us through the Cedarstone Way. The Cedarstone approach to investing takes into account both the fundamentals of economics and the fact that humans misbehave. We believe that the best approach to investing involves a good process and that a good process is one that starts with and centers around you. As such, we begin with a personalized plan and then build a portfolio that takes into account your situation, your tolerance for risk, and basic economic fundamentals. In doing so we seek to consistently outperform over time without putting your lifestyle and future financial goals at risk.


For those of you who were unable to make it, we welcome any questions you have about our process and beliefs and we look forward to seeing you next year!



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