The chairman of the Board of Trustees joined a group of panelists in the Elliott School during this month’s Alumni Weekend to discuss the future of investing and how agriculture may be the way to go.
W. Russell Ramsey was the keynote speaker for the third annual Ramsey Student Investment Fund Conference. This year’s topic was on asset allocation and agriculture. Other speakers included Susan Phillips, dean of the School of Business, Don Lindsey, chief investment officer, Matt Lindsay, alumni communications director and a group of panelists.
While acknowledging the turbulent economic crisis, the speakers were generally optimistic that investors could still make money in the market, not in cash, bonds or stocks, but in agriculture. A key is to invest intelligently, Ramsey said.
Volatility and insecurity are normal states in a financial market, Joanne Hill, head of investment strategy at ProShares ETFs and ProFunds Group said. Hill said investors need to set up better tools to survive the economic storms and that classic portfolios are no longer considered safe investments.
“Normal portfolio management works when times are steady, however, for the rest of the time we must have ongoing risk management,” Hill said. “We must use adaptive and dynamic strategies when the financial market falls.”
Isabel Bajeux-Besnainou, professor of finance at GW, encouraged hands-on approaches to financial investing. It is important to focus on behavioral finance, a dynamic approach that considers the psychology behind decision-making, Bajeux-Besnainou said.
“Market meltdowns that are meant to come every fifty years, seem to [be] coming every five,” Bajeux-Besnainou said. “It is the duty of teachers to teach portfolio management [that] is more complex that what is said in textbooks. We must close the gap between practitioners and classroom manuals.”
GW Trustee and Senior Vice President of RBC Wealth Management, Steven Ross, emphasized the importance of psychological motivation in investing. Ross explained that understanding how people think may even be more important than some textbook theories.
“Business fundamentals don’t matter. What does is peoples’ thinking that cannot be measured in dollars and cents,” Ross said.
He stressed the need to keep these factors in mind when revising portfolios. Ross believes it is important to take the correct steps now, so that when another crisis hits, not only will investors be prepared.
So what does savy investing have to do with farming?
According to panelist Tim Hornibrook of Macquerie Agricultural Funds Management in Australia, “there are big opportunities for undergraduates to invest in agriculture.”
Often, a crisis in the financial market destabilizes the agricultural industry, generating a food crisis, Hornibrook said. Financial crises can occur anywhere, anytime, Hill said and it is smart to stay ahead of the game in an industry that is linked with the global economy.
The continued urbanization and changing diets around the world will increase the demand for food and water, resulting in strong returns for agriculture investors.
Agricultural production is becoming increasingly more sufficient. Farmers are creating better ways to utilize fertilizer, such as growing corn and grass simultaneously, and having cows graze on the grass after the corn has been harvested. This eliminates the wait time for grass to grow after the corn harvest, creating profits for the farmers and investors.
Jack Greenspan, a second year MBA student, attended the conference for his asset portfolio management class and said he learned a lot from the speakers.
“It was really exciting to hear Ramsey speak, [as he is] one of the top names in the game,” Greenspan said. “It was interesting to get a take on what happened with the economy a year after the crisis began, from investment experts and GW alumni because these specialists can relay to us their hindsight and thus suggestions on how to proceed.”
