Craig Dismuke, the chief economic strategist of Vining Sparks IBG LP, opened his keynote address at The Daily News’ “Money and Markets” seminar Thursday, June 6, with a story that brought some insight into the wisdom that people – often erroneously – ascribe to experts in various fields, including economists.
A group of Indians, the story goes, ask their new chief who had not learned the ways of his ancestors what the coming winter would be like. The new chief tells them to collect firewood – then he calls the National Weather Service.
He asks whether the winter will be bad, and he’s told it will be. So the chief tells his people to gather even more firewood. He later calls the National Weather Service back and asks if it’s absolutely sure the winter will be bad.
“Of course,” is the reply he gets. The chief goes back to his people – gather even more firewood, he tells them. Just to triple-check, he goes back to the National Weather Service one more time.
It’s definitely going to be bad, the National Weather Service tells the chief. How do we know it will be a cold one?
“Because the Indians are gathering firewood like crazy.”
Along those same lines, one of the panel members at the seminar – J. Michael Gibbs, a senior vice president and co-head of the equity advisory group with Raymond James – encouraged the crowd to follow what’s essentially the Warren Buffett style of investing. Avoid the sensationalism and pack mentality of the crowd and invest in companies, rather than dipping in and out of assets based on the news cycle.
The seminar was presented by The Daily News and sponsored by Dixon Hughes Goodman LLP and Waddell & Associates Inc. Dismuke was tapped as the keynote in part because of his long list of credentials.
At Vining Sparks, which is a leading broker-dealer serving institutional investors, Dismuke advises portfolio managers that range from large foreign banks to small domestic financial institutions, and his work also includes studying economic trends and fixed income sector performance. He’s a frequent speaker at industry conferences, and he publishes daily, weekly and monthly articles for Vining Sparks in addition to other publications.
One of Dismuke’s key points at The Daily News seminar was that the economy hasn’t been as weak as it seems. The country hasn’t had a negative quarter of growth in awhile, and not counting pullbacks in state, local and federal government spending, the private economy is doing well.
Consumers are continuing to shed debt, he went on. Further out on the horizon, some concerning elements include whether housing is strong enough to withstand the Federal Reserve bringing an end to its effort to keep a lid on interest rates. Also, Dismuke said the federal government has made some modest progress in cutting the nation’s debt, and because of that the government likely has no stomach to continue right now.
The panel members – including attorney David Mendelson and David Waddell, president of Waddell & Associates – were unanimous in their concern over the continued incremental implementation of the Affordable Care Act.
A member of the crowd asked if the health care legislation was a potential spoiler for the economy, and Dismuke replied, simply, “Yes.”
Referring to the act’s employer size thresholds, Waddell demonstrated his concern by adding, “If I had 50 employees, I’d have 49.”
Mendelson said the same goes for him.