Bearishness/Alternative Investments Major Themes of NAPFA Conference (RYMFX, LSC, HSGFX, GATEX)

I attended the 2009 NAPFA conference last week in Orlando, Florida and below is a quick synopsis of the main themes of the week.

The first area of discussion was an overall 'bearish' forecast for the US Economy and the US equity markets. Economist John Mauldin was the one of the keynote speakers and had a decidedly bleak view of the future. Long lasting high unemployment, rampant government spending, and limited organic growth in the economy, will in his view, cause weak market returns for quite a while. Mauldin also stated there is more pain to absorb. Currently we are simply delaying it, but eventually we will need to 'work through it'.

This same overall view was shared by the majority of advisors and presenters.

Another important theme was the strong trend toward exposure in alternative and non-correlated investments. Some funds of this nature include hedged equity fund like Hussman Strategic Growth (HSGFX), Managed futures like Rydex Managed Futures (RYMFX), Elements S&P CTI ETN (NYSE: LSC), and covered call strategies like Gateway (GATEX).

It is becoming more mainstream to have up to 20-25% of a portfolio in these type assets. These types of investments were among only a handful that proved somewhat immune from the crash of 2008. It is unclear however as they become more popular if they will continue to be good diversifiers.

Overall it was a subdued conference with seemingly few bulls in attendance and almost everyone skeptical of the rally thus far. Of course some advisors have been skeptical for the past 2,000 points on the DOW.