Richard Bernstein '80 Meets With Economics Students

Rich Bernstein '80 addresses Hamilton economics classes.
Rich Bernstein '80 addresses Hamilton economics classes.
Charter Trustee Richard Bernstein '80 returned to the Hill on March 5 to address Chris Georges's macro theory and Erol Balkan's international finance classes on the current global economic climate, and offer a few tips for members of the Class of 2010 who are about to enter the work force. Bernstein, who is currently teaching classes at New York University, is CEO of Richard Bernstein Capital Management LLC. He was formerly Merrill Lynch's chief investment strategist.

Bernstein began by giving the students some advice as to how to approach the current job market. He urged them to take whatever jobs are currently available, even if they are not their ideal position, because it is impossible to predict where this decision will take them in the future. Bernstein then discussed his own path to success, and told students how a series of fortuitous yet unpredictable events allowed him to enter a sector of finance that he wasn't interested in upon graduation, but one in which he was able to thrive.

Bernstein then discussed current global economic events, in particular the recent default on debt occurring in Greece, how this affects the euro/dollar exchange rate, and what measures the United States should take when implementing its "exit strategy." Regarding the U.S. solution to its recent economic malaise, Bernstein believes the Fed is going to focus on removing the emergency measures that they implemented during the financial crisis, as well as begin tightening monetary policy.

One thing that Bernstein stressed was that in the future, in order for the United States to avoid falling into another recession, structural changes need to be made to the economy. Currently, consumption in the United States totals nearly two thirds of GDP. One reason for this may be the lack of incentive for citizens to save and businesses to invest. He believes that if the government were to impose an investment tax credit for businesses, or induce private savings, the nation as a whole would be better served in times of economic turmoil.

Finally, Bernstein polled the students on which of four asset classes the participants would invest in. The four assets were Chinese assets, U.S. small businesses, gold, and treasury bonds. The majority of the audience originally chose Chinese assets, until Bernstein told them that "returns on investment are highest where capital is scarce," and recently, small U.S, companies have faced difficulty raising funds. He believes that this asset class will prove to have the highest growth over an intermediate timeline, and suggested that if one was going to invest in one of these assets today, that small businesses are the best prospect.
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