An undergrad econ major, Cameron Dawson got hooked on markets early, taking a class on securities and portfolio analysis in Business School which set her down the path of market study. She broke into the business as an industrials analyst on the buy-side, time that gave her an opportunity to develop an appreciation for how the macro landscape intersects with the micro business fundamentals within a cyclical universe of stocks.
In this context, we review the period from 2014 to 2016, a time of ebullience within the energy sector and a fracking supply boom. For Cameron, there are important lessons to be had in observing the speed with which this optimism gave way to a protracted downcycle by late 2014. And, in sharp contrast, when the sector appeared un-investable in early 2016, the stocks would turn, discounting the improving fundamentals that would only be visible by late 2016. Here, she sees lessons with how forward looking the market can be, noting that if you weren’t there early, you missed it.
We talk about her role as Chief Investment Officer at NewEdge Wealth, a firm delivering wealth management solutions to high-net worth investors, and I ask Cameron to reflect on how client needs are different now in a 5+% short rate. Noting that, all else equal, higher rates argue for rebalancing away from equities, she highlights the importance of taxes, especially for investors with low basis stock. We also talk about stock/bond correlation and the implications for portfolio construction. Here, Cameron suggests there is room for bonds to play a stabilizing role should the stock market run into trouble, especially in a disinflationary/flagging growth scenario.
Lastly, we review some of her recent work on reading the tea leaves of market prices. She notes the recent underperformance of high beta names versus the rest of the market as an early warning sign of flagging risk appetite. I hope you enjoy this episode of the Alpha Exchange my conversation with Cameron Dawson.