In case you aren’t up to speed on your Greek mythology, Sisyphus was a sinner condemned to an eternity of rolling a massive boulder up a hill, watching it roll back down again, and forced to roll it back up the hill.
“He was known for being the most cunning and clever villain on earth, until Hades came to claim him for the underworld,” says Gordon Fowler, president and CEO of Glenmede, an independent investment and wealth management firm with a number of offices throughout the United States, including one at 16 Chambers Street. “But what if Sisyphus could catch a break? What if he could be pardoned?” Fowler asks.
Fowler, of course, is not just speaking of the mythological character. He likens the U.S. economy to Sisyphus. Debt is the boulder, and reducing it could be the pardon we have been looking for.
Fowler will speak on “The Pardoning of Sisyphus” at this month’s Princeton Chamber of Commerce luncheon on Thursday, February 7, at 11:30 a.m. at Princeton Marriott Hotel & Conference Center, 100 College Road East, Princeton. Cost: $70. Register online at www.PrincetonChamber.org.
What is being done to solve the most pressing issues of the world’s economies, and what should we do next? Deleveraging — the process of reducing the level of debt by selling assets — is one of the most important steps, says Fowler. “The world’s largest economies have made progress in their efforts to delever, but much is left to be done. This has significant implications for economic growth, investment returns, and perhaps more importantly, risk management.”
Fowler serves not only as president and CEO of Glenmede and a director of the Glenmede Trust Company, N.A., he also serves as Glenmede’s chief investment officer. In this role, he is responsible for investment strategy, fund management, and research. With more than $20 billion of assets under management, Glenmede remains independent and exclusively focused on the business of investment and wealth management.
Fowler joined the company in 2003 following a career of more than 20 years with J.P. Morgan, where he served in several management positions, including as global head of investment management of the private bank and as head of quantitative equity management for institutional asset management.
Over the course of his career, he has been responsible for the development of numerous equity and asset allocation strategies, and has authored and co-authored several pioneering articles on private client and institutional investing.
Fowler received a B.A. in 1981 from Brown University, where he developed his own major, African Political Economies. “My parents were great about it,” he says, in reference to developing his own, rather obscure, major. “They just said ‘That sounds interesting, and you’ve always done things your own way and it has come out all right.’”
Upon graduating he found that his major did set him apart from the vast majority of people in the early 1980s who had graduated with degrees in economics and political science. “I guess I was always a rebel,” he says, noting that rebels can disguise themselves as contrarian investment advisors.
Fowler continued his studies with a more traditional master’s degree from New York University Graduate School of Business in 1985.
He serves as a board member for the Episcopal Church Pension Fund, Philadelphia Futures, the Curtis Institute of Music, and the Widows Corporation, and he has also been a member of the Investment Committee for the Princeton Theological Seminary.
Looking Beyond the Fiscal Cliff. The focus at the end of 2012 was on the fiscal cliff and the ensuing political brinksmanship, but the end result is that Congress resolved the situation and “removed a cloud” from the economic horizon that “goes a long way to fix the problems,” according to Fowler.
The resulting American Taxpayer Relief Act (ATRA) “was in line with our expectations and better than our worst fears,” he says. The bill reduced the 2013 fiscal impact from an estimated -2.3 percent to -0.6 percent of GDP “to a more bearable headwind for an economy still not running at full speed.”
However, Congress still has some issues to resolve in the next two months before the Budget Control Act’s automatic sequester and the Congressional debt ceiling discussion looms again.
While much of the news coverage of the end-of-the-year fiscal cliff drama focused on the deal’s short-term consequences, Fowler says it is also important to consider how the outcome affects the country’s deficit and debt.
At Glenmede, Fowler says, “using data from the Congressional Budget Office along with our own estimates, we see the new plan as a more measured step between the old, unsustainable policies and the precipitous austerity of the so-called fiscal cliff.”
Fowler cautions that the Congressional Budget Office’s forecast “tend to include relatively optimistic growth projections and that while these projections indicate stabilized or reduced debt, “the debt-to-GDP ratios during the projected period begin to rise again later in the period due to the rising cost of entitlements,” explains Fowler. In addition the deal keeps debt at higher levels longer, leaving little “fiscal firepower to address any future unexpected economic shocks or slowdowns.”
Global Developments. A mostly unnoticed, but very important change occurred when Vanguard reclassified South Korea from an emerging nation to a developed nation. “This decision will trigger tens of billions of transactions,” according to Fowler. South Korea is the fourth largest economy in Asia and the 13th largest in the world.
The reclassification signifies a global trend. Several other “so-called developing economies” are on the brink of moving to developed status, Fowler says. Governments in many of these nations will work toward ongoing domestic consumer growth by improving policies toward wages, living standards, education, and entrepreneurship.
In addition, the financial problems in Europe, “which have been hanging over our heads for more than a year” are beginning to improve, says Fowler. The European Central Bank has stepped in and that, along with austerity is starting to bring results.”
“Longer-term prospects for risk-taking are improving and economic growth looks more likely to be positive than negative,” says Fowler, who recommends a middle of the road strategy.
“If everything you invest in is high risk it’s like driving down the New Jersey Turnpike without brakes.” On the other hand, says Fowler, choosing only investments with very low risk also means very low growth.