Prof. Stodder Prof. Gingerella Prof. Peteros
Professor Stodder
Professor Gingerella
Professor Peteros
audience
The audience participated in the lively Q&A session following the presentations.
 

On Tuesday, February 5, 2013, Rensselaer's Hartford Campus hosted a special event titled: "An Economic and Investment Outlook for 2013."

Rensselaer Professors James Stodder, Louis Gingerella, and Randall Peteros gave compelling presentations on investment strategies and portfolios for the coming year. The event was open to Rensselaer students, alumni, and the general public.

Professor Stodder discussed the economic outlook for the near and long term. He stated that the gap between the most educated and least educated is growing because of technology and computers and that while the economy is recovering, it is doing so at a very slow rate. The natural projection of unemployment in a steady state economy is 6%, and with the current U.S. unemployment rate at 8%, we have a long way to reach that state. According to Professor Stodder, "there is a long-term fiscal problem for the U.S. economy, with austerity measures difficult to maintain and the increase in federal debt held by the public, inflation is a serious concern for our economic future."

Professor Gingerella presented a model portfolio for 2013 investors. He stated that the current models are not going to be viable investment portfolios in the near future: "We are at the end of a great bond bull market, at the bottom of a thirty-year run of declining interest rates." Interest rates are at a record low, but they will be rising in the near future. As interest rates increase, bonds become risky investments. According to Professor Gingerella, bonds are too risky to be viable in an investment portfolio, and since most investment companies present a conservative portfolio that relies heavily on bonds, they have become riskier than most aggressive portfolios. He recommends a portfolio that spreads risk over multiple investments, including stocks, real estate, precious metals, commodities, collectibles, and cash.

Professor Peteros discussed investment behavior and decision making. Many investors lose money on stocks that are actually doing well in the marketplace because of bad decision making. Professor Peteros stated that the top reasons for this bad behavior include overconfidence, illusion of control, aversion to loss, and attempting to time the market. In order to avoid these common mistakes Professor Peteros gave some great tips for investors, including:

  • Recognize that investing is about the future and not the past. Focus on probabilities and not certainties.
  • Do not let short-term issues and events impact the long-term objective.
  • Avoid market timing.
  • Make investment decisions independent of the crowd. Be objective.
  • Develop a sound decision-making process that drives outcomes and minimizes identifiable mistakes.

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Updated: 2016-05-16, 15:30