A Diversified Portfolio 

EG What impact do you think Artificial Intelligence, Cryptocurrencies and other 

innovative technologies will have on the investment world in the next 5-10 years? 
 

COC: Artificial Intelligence can be a real positive for the investment world if, and only if, the 

digital advice is programmed correctly from the start. For instance, what if the algorithm used, favours, sell the strong and invest the proceeds into the underperformers. This is a common asset allocation strategy by Nobel Prize winner Harry Markowitz, which many software programs are using. We do not believe that money can compound efficiently in this way. We favour instead, Albert Einstein, and understand that money compounds more efficiently if you let the winners run and sell the losers.

Cryptocurrencies may be just another “product” for some; O’Connor Portfolio Management does not use products. We strive to buy great individual companies for our clients, with the objective to build a solid investment portfolio that will grow over time.
 

EG: How may the transition from LIBOR in 2021 affect derivatives and the global financial 

markets, and are there ways in which investors may take advantage here?   
 

COC: If LIBOR is replaced by a new interest rate benchmark such as the Secured Overnight 

Financing Rate (SOFR), then it follows that the balance sheets of the most affected will be those that have to float new futures, swaps and loans related to the SOFR to gradually displace the same LIBOR referenced contracts. CME Group, (CME) one of the world’s largest futures and swaps exchanges launched a SOFR referencing futures contract last year. The stock outperformed through November, 2018, then sold off in December, 2018 like most U.S. stocks. What is significant, though, is that there was no January, February, March 2019 rally in CME stock. How the average investor might take advantage here, is to steer clear of banks, futures and swaps exchange stocks.
 

EG: In the movie The Big Short (2016) investors successfully bet against the housing market, 

having determined prevailing trends in advance of the Great Recession. What future macroeconomic trends do you see as opportunities for investors to capitalise on?  
 

COC: At some point the national debt will become an issue. The current path rate of spending is 

alarming and if not addressed in some meaningful fashion, the debt “bubble” will burst. It has been an issue for many years and the current consensus seems to be “It’s not a problem until it’s a problem”. US debt has been downgraded once with little consequence, but at some point the world will demand a higher rate for US debt. 
 

EG: With over 26 years experience in the financial sector, what in your opinion- characterises 

a great portfolio manager?
 

COC: A great portfolio manager understands how money compounds most efficiently and has 

a definite written plan of employing strategies which do exactly that. A great portfolio manager needs to feel the pulse of the market and be willing to do the work to change the plan as the markets change. However, in the end, it is more about compounding money strategies than market fluctuations.
 

EG: Are there any unique strategies that may be deployed to maximise profitability in an era 

of Negative Interest Rate Policy (NIRP)? 
 

COC: The expected results of negative rates were to increase spending and stimulate 

economies, but the actual result may have been to increase demand for risk assets, and in particular, assets that provide a higher level of income such as REITS, Utilities, Consumer Staples, and High Yield Bonds. Overall equity prices have not responded as intended some will argue, because banks have been hurt to a large degree and they make up a large portion of the indices. As the “experiment” continues, perhaps bonds and more likely, bond market equivalents, to appreciate.
 

EG: If you were Secretary of the Treasury acting in an advisory capacity to the  Trump 

Administration, what three core wealth generation strategies would you deploy to ensure a prosperous economy for all? 
 

COC: Clients generally benefit from pro growth strategies. Any policy that would assist 

individual investors in appreciating their capital and retaining their wealth would be something that O’Connor Portfolio Management would welcome.
 

EG: How did your rigorous financial training prepare you to succeed in the higher echelons 

of portfolio management and finance today? 
 

COC: Learning the textbook strategies for managing money are important, but understanding the 

ebbs and flows of the markets in the real world, may be more so. This is where experience becomes invaluable. Navigating different markets over the years is how a manager/financial advisor becomes seasoned and more of an asset to the client. Our combined 50 years doing just that, has made our services invaluable to our clients.
 

EG: As a multi-award winning firm that skilfully navigated the 2008 financial crisis, what is 

the secret to your success?
 

COC: A detailed, thoughtful, investment approach regarding how much money compounds,
combined with a laser focus on the success of the individual client is our recipe.   EG