Very interesting insights from the UBS Forum 2017

Yesterday Giles and Magda invited me to attend the annual UBS Forum at the beautiful Rosewood Hotel, one of those hotels in a renovated palace in the heart of London, with a resident dog.

Held in major financial cities across Europe, the UBS Forum is presented under the banner “sharper opinions – smarter decisions”, where UBS specialists and external experts provide insights on key topics. This years’ speakers and topics were:

  • Jamie Broderick, CEO, UBS Wealth Management UK; and David Rowe, Managing Director, UBS Wealth Management: “Global and UK economic outlook for 2017 and beyond”
  • Paul Donovan, Chief Global Economist, UBS Wealth Management; and Caroline Simmons, Deputy-head, Investment Office, UK, UBS Wealth Management: “where the investment opportunities lie in 2017 and beyond”
  • Paul Craven, former Goldman turned behavioral economist: “the Status Quo bias and why people default to doing nothing and/or not changing” and “the loser’s game”
  • Tim Kent-Robinson, Head of Client Investment Specialists, UBS Wealth Management: “Implementing the House View”

There was also a Panel discussion and Audience Q&A, facilitated by a “clicker” with which the audience voted on several issues. Surprisingly enough the majority of the audience was in agreement with Theresa May’s handling of Brexit, even though they said it would damage the UK’s interests. Talk about Status Quo bias!! Definitely, the UK is the land of unquestioned Status Quo.

Here are some of the most interesting takeaway points and quotes I wrote down:

  • UBS has a cool simulator: “The end game? You have just been appointed as all-commanding leader of a major country. You have control over the monetary, fiscal, and foreign policy of your country.”

  • The “Risks” (last) slide in the presentations was choke full of tiny print and was displayed for 3 seconds

  • A Mexican car exported to the USA has crossed the border over 20 times before ever reaching the end-consumer

  • The 2008 financial crisis took away credit -> Without credit income inequality rises and consumption drops -> creating a shift from “economics of aspiration” to “economics of envy” (“your neighbor buys a car, you buy a car… it does not matter if your neighbor paid cash and you took a loan”, but what if you can’t get a loan?) -> leading to resentment which leads to populism

  • Domestic investors understand local politics better, therefore reacting more calmly to political uncertainty

  • “If you give money to an American, they will spend it”

  • “China will grow 6.25% to 6.5%. Why? Because President Jinping wants that”

  • The FTSE return last year was 17%, BUT if you take out the best performing 5 days, then it was only 1%

  • “Nationalism, prejudice and discrimination leads to inefficient markets and the waste of perfectly good human capital which leads to less growth and economic damage” (SIC, but wake up: that’s how they see you)

  • The Loser’s Game is an old research paper, but completely worth reading it

  • Prospect Theory: Potential gains encourage risk aversion, potential losses encourage DOUBLE risk taking

  • An amazing Status Quo bias example is the reason behind Europe’s “two levels” of organ donations

  • An amazing example of the Decoy Effect or Anchoring Effect is The Economist subscriptions options (number 6 in this list)

  • If you think you are in control (the “driver of the elephant”), check out the Jastrow Illusion

Leave a Reply