Today is the first day of our coverage of the Morningstar Investment Conference, a trade-only conference for investment professionals. I’ve just returned from the opening session of the day, the Ultimate Stock Pickers Panel. The panel was moderated by Justin Fuller from Morningstar and included Peter Langerman of Mutual Shares, Charles Pohl of Dodge & Cox, and Bob Torray of Torray Fund.
I found the most impressive panel member to be Mr. Torray, who said early in the session, “The older I get the further ahead I look.” Mr. Torray clearly favors a long-term approach, and the more he spoke, the more I agreed with him. He said they strive to pay no attention to macroeconomics (total bottom-up approach), pay interest to free cash flow, like companies that have low capital and labor needs, and stay away from companies with 15-25% growth rates because they tend to be overpopular and overvalued. Overall, his fund seeks a steady approach with limited downside risk.
Later in the discussion, the topic of the current market environment came up. Mr. Fuller asked what the panelists thought of the market and where they expect it to go in the near future. Mr. Torray again provided some very Graham-like comments. According to him, the market today is another result of the high overvaluation of the late 1990s and compared to other boom markets in American history, it appears we may be in the middle of a 20-year stagnate growth situation. Mr. Torray believes that a large amount of money has flowed out of US pensions and other funds into emerging markets and private equity. He also believes that returns on alternative investments (hedge funds) will be very disappointing. Finally, Mr. Torray said that the public needs to get a new view (away from speculation) and return to fundamental based investing – the markets today can be compared to gambling operations.
Stay tuned for more from this exciting event!