miércoles, 25 de mayo de 2016

miércoles, mayo 25, 2016

Barron's Cover

Byron Wien: What’s Ahead for the Markets

At 83, the investing legend and Blackstone strategist is still trotting the globe. What’s next for stocks, bonds, and the economy.

By Andrew Bary


At 83, Blackstone Group strategist Byron Wien continues to engage investor audiences around the world with his views on the economy and markets, as well as life lessons forged from a hard-luck upbringing in Chicago and more than 50 years on Wall Street.

After a broken hip suffered on a tennis court kept him largely confined to New York last year, Wien is back in his groove, traveling regularly to meet with leading global investors, central bankers, and government officials.

He uses opinions and information gleaned from those encounters to write a lively and insightful monthly investment-strategy essay and to offer his views at what probably will be 100 investor meetings this year, mostly with Blackstone’s (ticker: BX) institutional clients, wealthy individuals, and financial advisors. Few on Wall Street network and travel as extensively as Wien does. His monthly strategy essay has an e-mail distribution list of 17,000, and total readership is probably much more than that.

Blackstone is one of the leading private-equity and real estate investors, with more than $340 billion under management. It also runs funds focused on high-yield investments.

“Byron is an 83-year-old man chronologically, but in temperament, he is 45,” says Jim Tisch, CEO of Loews, who has known Wien for more than 20 years. “His passion is the markets and the world around him, and that comes shining through anytime you talk to him. He’s well connected and well informed and is always looking to gain new insights.”

In the past few months, Wien has been offering a bearish view on the U.S. stock market, which he thinks may have a down year in 2016—and “investors will be lucky to get a 5% to 7% annual return” in the coming years. He also believes that the global economy will grow at just 2% this year, below early-year official forecasts of more than 3%. He’s cautiously optimistic on China and worried about Japan. The U.S. economy will be hard-pressed to expand at more than a 2% annual rate, he says. “I don’t think that’s satisfactory to many Americans who want higher growth and the benefits that come with that,” he told Barron’s during a recent visit to Blackstone’s Manhattan office.

A great raconteur, Wien wins over his audiences with his financial forecasts, observations on recent travels, and one of his most popular creations, his list of “Life Lessons.” He came up with that idea three years ago at a conference in Vail, Colo., when he was asked by the host to scrap his usual financial talk and offer a more personal presentation. Initially annoyed at having to shift gears, Wien quickly came up with 12 ideas, which he has since expanded to 20.

Among them: Network intensely, read all the time, travel extensively, and never retire. And unlike many wealthy Wall Streeters, his approach to philanthropy is “to try to relieve pain rather than spread joy. Music, theater, and art museums have many affluent supporters, give the best parties, and can add to your social luster in the community. They don’t need you. Social service, hospital, and educational institutions can make the world a better place and help the disadvantaged make their way toward the American dream.”

Reflecting his philosophy, Wien has endowed two professorships at Harvard University, his alma mater, as well as made gifts supporting Harvard’s financial aid, including a scholarship for orphans. Wien, who was orphaned at 14, excelled in high school and got a lucky break when a Harvard admissions representative came to his Chicago school and asked the guidance counselor to recommend a single student for an interview with an admissions dean.

“The guidance counselor called me in and said, ‘Wien—they called you by your last name then—you’re our pick. Go downtown and don’t make a fool of yourself.’ That changed my life,” Wien says.




At that time, he notes, “Harvard was looking for smart kids from public schools to offset the prep-school kids that were the base of the student body. That was Harvard’s idea of diversity in 1950.”

At a meeting a month ago with financial advisors and their clients at New York’s 21 Club, Wien was in good form. He spoke to the group of about 100 for an hour without notes, outlining his views on the markets and the economy, and offering some insights from a just-completed trip to Asia, where he had a series of meetings in Singapore, Shanghai, Beijing, Hong Kong, and Tokyo. After a florid introduction in which the host likened him to such greats as Jim Thorpe, Vince Lombardi, Michael Jordan, and even Socrates, Wien said, “I sure wish my first wife could have heard that.”

At the 21 Club meeting, he went through his life lessons, emphasizing some career advice: “Don’t try to be better than your competitors; try to be different.” He also said that while many focus on the importance of diet and exercise, he feels that sufficient sleep is underappreciated.
“Sleep is the fuel of performance.”

WIEN’S OFFICIAL JOB TITLE at Blackstone is vice chairman of multi-asset investing, but his real role is as a strategist, advisor, and brand ambassador. He rarely mentions Blackstone products in his presentations. “My job is to advise the firm and its clients on economic, investment, political, and social issues,” he says.

Reflecting his clout and charm, Wien orchestrates a series of lunches each summer in the Hamptons that bring together leading investors and other notables to discuss the markets, the economy, and the world. Participants have included Carl Icahn, Bill Ackman, Wilbur Ross, George Soros, David Koch, and Tisch. Wien then writes about those meetings in a strategy essay, usually without mentioning names.

He acknowledges that the consensus view of the smart money can be wrong, as it was this past summer regarding the now likely Republican presidential nominee Donald Trump: “They thought he wouldn’t last until Thanksgiving.”

Wien’s fans include Peter Thiel, the billionaire PayPal Holdings (PYPL) co-founder and new-economy investor, and Facebook (FB) Chief Operating Officer Sheryl Sandberg. She particularly likes Wien’s life lesson about reading. He advises readers to have a “point of view before you start a book or article and see if what you think is confirmed or refuted by the author.”



And, says Henry McVey, who worked with Wien as a strategist at Morgan Stanley for several years and now is head of global macro and asset allocation at KKR (KKR), the private-equity firm, “Byron possesses two traits that distinguish him from others: humor and curiosity. He uses both effectively to engage clients, business leaders, and government officials. He has an ability to simplify the complex, which is a testament to his intellect.”

Wien’s monthly essays are meant to inform and provoke. His latest piece—“China’s Slowing, So What?”—came after his April trip to Asia. Wien wrote that he has been “projecting (guessing) that Chinese economic growth is running at 4.5%, below official forecasts of close to 7%, and arguing with clients and analysts if I am too high or low.” That debate, he wrote, is missing the key point: “If growth in China were closer to 5% than 7%, is that so bad? China will still be able to create 10 million or more jobs annually. The U.S., Japan, or Europe would be thrilled to grow at that rate.”

Wien is also upbeat on the Chinese consumer, drawing in part on Blackstone’s in-house experts. The firm’s real estate chief Jon Gray told him, “Our malls in China had annual sales increases of 18% a few years ago and then that went down to 12%, and now it’s 8%—but 8% is pretty good.”

THE CHINA PIECE included an observation from former Secretary of State Henry Kissinger, with whom Wien had recently dined. Kissinger told Wien that the goal of China’s leader, Xi Jinping, was “to eliminate corruption that resulted in wealth creation, not the corruption that facilitated the ease of doing business,” such as getting delivery of construction materials at opportune rather than government-mandated times. It’s those kind of observations gleaned from influential people that help distinguish his work.

The Japanese mood, however, is downcast amid disappointment with Prime Minister Shinzo Abe’s failed program to stimulate growth. “In conversations with investors there,” Wien wrote, “I got the feeling that many had lost hope that stronger growth and opportunities for wealth creation were ahead.”

Wien is probably best known for his annual list of “10 Surprises” that he has published at the start of each year since 1986; the forecasts involve financial, business, and political events that he thinks have a better-than-50% chance of occurring in the ensuing 12 months, while the consensus puts the odds at 33% or less. The 10 Surprises began after he started work as Morgan Stanley’s chief U.S. investment strategist in 1985. He was looking to showcase his sometimes maverick views and to distinguish himself from a crowd of prominent strategists, including Leon Cooperman, who then worked at Goldman Sachs.

“Morgan Stanley formed a tribunal to review the idea, and they initially turned it down,” he recalls. “They said, ‘Byron, you could get all 10 wrong and you would embarrass the firm and humiliate yourself. Frankly, we don’t give a damn about your humiliation, but we don’t want the firm to be embarrassed.’ ” Under pressure from Wien, the firm relented, and the 10 Surprises became so popular that Morgan Stanley took a service mark on the phrase, which it now licenses to Wien each year for $1.



So far, Wien is looking prescient with his 2016 surprises, with his cautious take on U.S. stocks, the global economy, and the dollar, as well as a benign interest-rate outlook. On politics, his prediction of an election victory by Hillary Clinton and Democratic control of the Senate looks good now, but he forecast the wrong Republican insurgent to win the nomination: Ted Cruz.

With the possibility now of a Trump presidency, he says, “I’m hopeful that the checks and balances in the American political system will restrain Trump from implementing some of his more extreme ideas.”

WIEN MADE HIS REPUTATION during his 20-year stint at Morgan Stanley, where his elegantly written essays gained a wide and influential following. Indeed, he liked the prospect of the Morgan Stanley perch so much that he gave up a successful job in money management and took a pay cut.

After several jobs early in his career, including advertising (which he hated), he was fortunate to get a job as a securities analyst and later a money manager on Wall Street in the 1960s, when entering that clubby world was tough without money, blood ties, or other connections. He joined Blackstone in 2009 after four years as a strategist at Pequot Capital, a New York investment firm.

Wien loves his current job and the platform, influence, and recognition it gives him at an age when few are still active in the investment field. “They are going to have to carry me out of here in a box,” he told Barron’s. “The job is very demanding, and at Blackstone they don’t make adjustments for age. I’m already the oldest person here by more than a decade. As long as I feel physically that I can do it, I will. I don’t feel a whole lot different than I did 20 years ago.” The firm’s second-oldest employee is Wien’s boss, Blackstone’s 69-year-old co-founder, CEO, and chairman, Steve Schwarzman, who calls Wien an “indefatigable worker and provocative thinker.”

Wien does it all with no staff, save for an assistant. He likes it that way. “When I get in front of people, they know it’s the real me,” he says. “It isn’t somebody feeding me material.” His arrangement at Blackstone is similar to what it was at Morgan Stanley. “I can write whatever I want, and they can fire me whenever they want. I have total intellectual freedom here. Blackstone’s strategy is to hire good people and give them a lot of freedom to do their jobs.”

Wien almost never takes as much as a full-week vacation because he likes to participate in the firm’s Monday morning meeting that involves participants from Blackstone offices around the world.

Wien probably will be on the road for two months this year. He plans a trip to Europe next month and the Middle East in September. He always travels commercial, because he likes interaction with people and views private jets as an extravagance. When speaking before audiences of wealthy individuals, he has fielded questions about how to avoid overindulging their children. He warns them about flying their kids in private jets: “It changes them, and not for the better.”

While he lives well, with an apartment on Park Avenue and a summer house in East Hampton, he’s thrifty in some respects, reflecting his Depression-era upbringing. He invariably takes home a doggie bag from lunch, even from Manhattan’s famed Four Seasons restaurant, a Blackstone haunt. And he’s more liberal politically than some of his friends and cares about U.S. economic competitiveness and income inequality. “The world has changed since 1980 due to globalization and technology,” he says. “As a result, the top 20% has improved their standard of living, the middle 60% has held their own, and the bottom 20% has lost ground. Income inequality has been exacerbated since the recession ended.”

He has some regrets, including not having children. He does have a close relationship with his godchildren. And he shares many common interests—reading, theater, sailing—with his second wife, Anita Volz Wien, to whom he has been married for 37 years. She’s chairman of the Observatory Group, an economic and political advisory firm.

Wien loves living in New York and wouldn’t think of moving to Florida or another low-tax state, although he won’t criticize investment managers and other superrich people who have made the move. “I might have a different attitude if I made a few billion dollars a year,” he says. “I’ve made enough money; the taxes don’t hurt. It’s a privilege to live in New York. Besides the theater and culture, there are so many interesting people. That’s what life is about, exchanging ideas with interesting people.”

“Kissinger is a hero of mine because he is still well connected and relevant at 93,” Wien wrote recently. He hopes to follow Kissinger’s lead and be active and influential for at least another decade.

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