NEW YORK — Knowing his audience consisted of ophthalmologists who are evaluating if private equity is right for them, trader and TV personality Guy Adami shared his philosophy for business and thoughts on current market forces.
Adami shared the lessons he learned: “Trust your instincts, and don’t be scared to take a risk.”
“We are all born with great instincts, and the only time we get in trouble in life is when we don’t listen to them,” he said.
“And I am imploring all you guys and gals to do these things. Most of you, I think, you probably already made up your mind. You know what you want to do. You just need someone to push you over the edge,” he said, acknowledging that the audience members who were attending the Open Your Eyes to Private Equity 2019 meeting here more than likely did their homework and have consulted advisers on whether private equity is the right decision for them.
“The foundation now with the economy and the market is on shaky ground, and I think you have to think about that when you are making your decisions,” Adami said, turning to market forces that may affect the private equity decision.
“In the 1980s, [Federal Reserve Chair] Alan Greenspan decided we no longer need the recession portion of the business cycle,” Adami said, noting that Greenspan did so by managing inflation. “He was able to do exactly that ... but [the] downturns which would been bad became infinitely worse,” noting what was well-intentioned in the short term could have disastrous results as recession is a natural part of a business cycle.
As a result, “the world has now been dominated by central bankers and are right in the middle of the conversation,” he said. And, this domination has resulted in “a couple of months ago, 30% of sovereign bonds in the world had negative yields.”
“I am not an economist. I am not smart enough to be an economist. I am not humorless enough to be an economist, but that doesn’t sound very healthy.”
When Federal Reserve Chair Jerome Powell began serving, he said he was “going to do what was right for the country” and “talked about raising rates and normalizing the balance sheet,” Adami said.
In fall 2018, the U.S. equity market went down about 20% in approximately a month and a half.
“[Powell] blinked,” he said. “Now, we are getting back to the accommodative stance again; the balance sheet, which was whittling away, is now growing. ... There is a level of unsustainability with this. We are playing with Mother Nature.”
Adami said corporate America is “lazy” as a result because “money is free.”
Connecting these market forces further to the audience, Adami said, “Money is out there, and you are all trying to make decisions on what is the right move for me and you say to yourself the stock market is doing well and maybe this cycle will last for a long time, and I hope that it does.”
“The U.S. equity market, in my opinion, is driven by consumer confidence,” he said, noting that “73% of the U.S. economy is driven by the consumer. Consumers feel good when they have a job ... but, in my opinion, the one metric everyone looks at regardless if you have a dollar in the market is the equity market. Stock market goes up ... people spend money, and the economy continues to churn” and people get scared when the market goes down in a meaningful way, Adami said, noting the example of the market fall in October and November 2018.
“Consumer spending stopped on a dime,” he said. “It works until it doesn’t work.”
Adami also discussed the unprecedented bond market volatility, which he said is a warning sign and “nobody is really paying attention.”
An audience member asked during the question and answer period if ophthalmology is recession proof. Adami answered, “The short answer is yes. And I think you guys and gals do amazing work. ... You people are giving people a gift. ... When you give people their sight, you give them independence and their dignity. That is tremendous.” – by Joan-Marie Stiglich, ELS
Adami G. Keynote address. Presented at: Open Your Eyes to Private Equity 2019 meeting; Nov. 14, 2019; New York.
Disclosure: Adami reports no relevant financial disclosures.