Beacon Pointe Annual Investment Forum 'Addressing Risk from All Angles: Volatility and Cybersecurity'

Beacon Pointe hosts its 8th consecutive investment forum at its headquarters in Newport Beach, CA – this year, in 2019, focusing on risk from all angles, specifically volatility and cybersecurity.  Below are themes and takeaways from Beacon Pointe’s featured speakers.

“2019 Investment Themes and Catalysts”

Michael Dow, CPA, CFA, Beacon Pointe Chief Investment Officer, discussed how macroeconomic analysis is a key component of the firm’s investment process and leads to identifying various investment themes and catalysts.  He defined a theme as something that is persistent and likely to have an impact on asset prices and the capital markets over longer periods of time, while catalysts can be described as having an impact on capital markets in the next quarter or two.  Mr. Dow then proceeded to explain how analyzing these themes and identifying catalysts helps to assess potential risks and opportunities.

Current Themes:

  • Global Monetary Policy Transition: After the Great Financial Crisis, the stock market rose as the Fed increased its balance sheet by buying securities, also known as Quantitative Easing (QE). This has been one of the most powerful drivers of asset class returns over the past 10 years. Global monetary policy has been transitioning from very accommodative to less accommodative, which has implications for stocks.
  • Policy Uncertainty: Monetary policy, trade policy with China, and the government shutdown have created uncertainty for investors. Political risk is rising as tensions increase between the President and Democrats in Congress.
  • Capital Market Volatility: Recent market volatility has been higher than in the past and the outlook is more uncertain as the Fed reduces its balance sheet (Quantitative Tightening). If the stock market declines, the Fed is likely to stop its balance sheet run-off.
  • U.S. and Global Growth Outlook: While fourth quarter GDP data is not yet available, the U.S. economy is expected to have grown at a healthy 3% in 2018. Economic growth may slow from here as the effects of the federal stimulus fade, but that does not mean that a recession is imminent. A synchronized global economic slowdown is expected in 2019 and U.S. growth may slow to 2% by year-end. Inflation remains subdued and near the Fed’s target.

Potential Catalysts:

  • China Trade Tensions: An increase in China trade tensions – or an outright slowdown in China – would negatively affect investor sentiment. There is a good chance that some form of a trade deal will be reached, although it is unlikely to be a comprehensive deal that propels stocks significantly higher.
  • Mistake by the Federal Reserve: Ideally, Fed policy will lead to a “soft landing” for the U.S. economy, however too much tightening may cause a recession, while not enough tightening will cause higher inflation. The Fed has indicated they will raise interest rates twice in 2019, yet the market is currently expecting that no rate increases will actually occur.  Beacon Pointe believes that one rate hike is likely during 2019.
  • Corporate Earnings Growth: Earnings per share (EPS) growth rates were solid in 2017 and 2018, but a slowdown in the pace of growth is expected in 2019. EPS growth comparisons will get tougher later in the year which means corporate earnings are less likely to be a positive catalyst.
  • Global Economic Growth: Global growth is slowing in major developed economies such as Germany and Japan, and recession probabilities in these countries have increased. Overall emerging market economies are doing better than developed, led by India, but we note increasing evidence of a slowdown in China. Global growth will most likely be a negative catalyst considering that many developed economies have limited monetary or fiscal tools to fight a recession should it occur.
  • Brexit: A significant negative catalyst is the possibility of a “no-deal” Brexit, whereby the UK leaves the European Union without establishing new agreements related to cross-border trade in goods and labor market mobility. We believe that increasing uncertainty will dampen activity in the short run, but that in the intermediate term it is increasingly likely that a more market-friendly solution will be negotiated, perhaps including a new referendum that may produce a less economically harmful result or even a reversal of the original Brexit vote.

Investment Implications:

  • Global Equity Valuations: U.S. stocks are now trading close to the historical average P/E of 16x and are viewed as “fair value.” Developed international stocks look inexpensive but uncertainty in Europe’s economy remains high. Emerging markets were “cheap” at year-end but recovered quickly after the December sell-off and the valuation discount has since narrowed.  However, there is a wide dispersion in valuations across emerging market countries and each country needs to be evaluated individually.
  • Global Fixed Income Yields: S. high yield, emerging market corporates, and emerging market sovereign bonds offer the highest yields. Higher quality core bonds and municipal bonds offer lower yields but have less risk.  Some markets actually have negative yields for certain maturities, such as in Japan and Germany. Over the past two years, yields are much higher in the U.S. for short-term Treasury notes as the Fed has increased rates, and for corporate bonds as recession probabilities have increased. The increase in emerging market debt yields is interesting considering that recession probabilities are lower in emerging market countries.
  • Commodities and Inflation: Commodities tend to track global economic activity and copper is a good leading indicator of global growth. Prices of metals and agricultural commodities have softened recently, in part due to subdued demand from China. Consumer price inflation has generally remained contained in recent months in advanced economies but has inched up in the United States, where above-trend growth continues. Among emerging market economies, inflationary pressures are easing with the drop in oil prices.

To view a copy of the presentation presented by Beacon Pointe Chief Investment Officer, Michael Dow, CPA, CFA, please click here.


“Personal Security from All Angles”

Gary Rossi, Vice President of Global Security & Investigations at Fidelity Investments and former FBI Agent, presented on the topic of Cyber Fraud and how we can protect our financial data and assets.  Cybercriminals are becoming increasingly skilled and sophisticated at using technology to steal money.  While most people recognize that online fraud, or cybercrime, is a potential threat, few know how or why they may be at risk.  Fortunately, there are some practical things we can do to make ourselves a harder target against these online adversaries.

Cybercriminals attempt to gain access to financial accounts in several ways, but the first step is trying to get the user name and password to your account. To do this, they target the devices we use and attempt to add malicious software, or malware.  Once the malware is on the device, it will capture the username and password that was used to login to the account.  How does the malware get on your device in the first place? Oftentimes, it is through a phishing email that appears to be from a trusted source and gets you to click on a link or open an attachment that installs the malware.  Another method is by compromising websites and getting you to click on advertisements that are infected with malware.

Increasingly, criminals will go after specific victims by identifying a worthwhile target.  “Whaling” is a highly personalized form of phishing that targets high-net-worth individuals by sending emails that appear to be from a friend, financial institution, or any organization that you are involved with. The email will contain very specific information about you or your family which may have been obtained from social media, obituaries, corporate biographies, charity donor lists, and other sources.  They may also have access to sensitive information that was obtained through data breaches, including dates of birth and social security numbers.

Mr. Rossi suggested taking the following steps to make yourself a difficult target and to help protect your wealth:

  • Use two-factor authentication whenever possible for extra protection on logins and sensitive transactions. This protects your identity by getting a one-time security code via text or automated call to verify it is you.
  • Consider a security freeze at all three credit bureaus – Equifax, TransUnion, and Experian. This will help keep unwanted new accounts from being opened in your name.  You can unfreeze your credit as needed to open legitimate accounts.
  • Consider using a dedicated device for financial transactions and accounts you really care about. This device should not be used for email or surfing the web which will keep the device free from malware.
  • Use strong passwords, do not use the same password for multiple financial relationships, and change passwords frequently.
  • Always access accounts via a secure network. The convenience of public Wi-Fi is more than offset by the exposure of your login credentials to potential thieves that hijack the network.
  • Be wary of unsolicited emails, especially those with a link to a website or those which include attachments.
  • Install industry-standard systems and software, keep them up to date, and use antivirus software.

In addition to the discussion on Cyber Fraud, Mr. Rossi provided some recommendations for the following key areas of personal security:

  • Managing Your Digital Footprint:
    • Online personal information can increase your “surface area” for attack. Protect yourself from unwanted attention and know what is online about you and your family. Consider how much of your private information is actually public on sites such as LinkedIn, Facebook, Twitter, Instagram, ancestry/genealogy sites, corporate websites, affiliations with boards and charities, and public property records.
    • Help protect yourself by limiting disclosure of unnecessary details, enable security features on social media sites, and ensure family consistency in limiting online information.
    • When traveling, don’t broadcast travel plans on social media and be aware of posting photos tagged with locations.
  • Safety and Security Around Your Home:
    • Consider hiring a professional consultant to conduct an “all hazards” risk assessment on your home.
    • It is important to have some level of emergency preparedness. Do you and your family know what to do in an emergency? Do you have supplies in the event of a crisis?
    • Organize personal files and properly store or shred them when they are no longer needed.
  • Vetting Household Help and People with Access:
    • While it is uncomfortable to think anyone with access to your home would abuse that trust, it is worth investing the effort to properly screen individuals with access.
    • Ask individuals with access to consent to a background check. Additionally, online searches can help you conduct basic research and may highlight obvious issues.
  • Travel Security Concerns:
    • Be sure to research your destination and be aware of common risks and security issues. For international travel, the U.S. State Department website provides up-to-date country information and travel advice.
    • Know where to go in the event of a medical problem and consider purchasing travel medical insurance.
  • Elderly Exploitation:
    • Unfortunately, one of the fastest growing areas of fraud is the financial exploitation of our senior population. While the elderly may be targeted by criminals, more often than not, it is caretakers and extended family that take advantage of them. The best way to protect against this is to select a trusted person to have transparency into the elderly person’s financial accounts and monitor activity on a regular basis. Set up automatic alerts with financial institutions that trigger when significant transactions are requested.

To view a copy of Mr. Rossi’s presentation slides from the event, please click here.  For additional cybersecurity resources, click here.



Beacon Pointe stands behind the importance of safeguarding personal information from potential threats and feels a strong duty to protect our clients as best as we possibly can.

Beacon Pointe focuses on three fundamental cybersecurity areas:

  • People: We train our employees on compliance and incorporate best practices into their daily work flows.
  • Processes: We continuously refine and update our policies and procedures to take into account the latest cybersecurity developments and guidance on best practices issued by the Securities & Exchange Commission (SEC). Our policies and procedures include, but are not limited to the following:
    • Non-Public Information: it is company policy to call our clients to verify their non-public information.
    • Financial Data: We verify and confirm who has authorized access to your financial data and accounts.
    • Client Portal: We regularly upgrade our software to facilitate encrypted data through our client portal.
  • Technology: We research and implement technologies that enhance security across our technology platforms.

To our clients that were able to attend in person, thank you for joining us for Beacon Pointe’s 8th Annual Investment Forum.  For those that were unable to attend, we hope the information gathered from our event is enlightening and applicable to your everyday lives.  From all of us at Beacon Pointe, thank you for putting your trust in us as your dedicated financial advisors.


Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.

© Beacon Pointe Advisors. All Rights Reserved.


You are now leaving the website of Beacon Pointe Advisors and will be entering the website for Institutional Intelligent Portfolios®, an automated investment management service made available to you exclusively through Beacon Pointe Advisors. Beacon Pointe Advisors is independent of and not owned by, affiliated with, or sponsored or supervised by Schwab. Schwab has no responsibility for the content of Beacon Pointe Advisors' website. This link to the Institutional Intelligent Portfolios website should not be considered to be either a recommendation by SPT, Schwab, or any of their affiliates, or a solicitation of any offer to purchase or sell any security.

Privacy Preferences
When you visit our website, it may store information through your browser from specific services, usually in form of cookies. Here you can change your privacy preferences. Please note that blocking some types of cookies may impact your experience on our website and the services we offer.