Every year, companies such as Bloomberg has conferences to look into the crystal ball and what do you see? They invite interesting people and most of the time you will hear common sense, once in a while a gem to take. At the conference in New York, some of which you can see on You Tube, the head of the New York bureau for Bloomberg interviewed Jonathon Gray who is the CEO and President of Blackstone. Blackstone is a large dominiant institutional firm dealing with private equity, hedge funds, real estate and alternative investments, if you wish you can buy shares in it.

The great thing about an institutional firm is they will have cash coming in to their firm that needs to be reinvested, in the case of Blackstone they keep $100 million looking for opportunities. This is one of the firms when the markets go down, they can buy great companies at lower prices. In the video, Mr. Gray talked about doing so.

He sees the equity market in the US, as they will be continuing pressure on the multiple or the PE Ratio a company trades at. In a growth company, one expects higher multiples, in a slower growth company lower multiples. This is when it is great to receive a dividend until the market decides the profitable company should be at a higher multiple and the stock goes up.

Mr. Gray sees a robust economy and does not see the excess of previous downturns when commercial real estate was being overbuilt and then high vacancies caused companies to default on their bank loans which hurt banks. In the housing market normally 1.6 million homes are built on a national basis, this year the number is looking towards 1.25 million or no overbuilidng in residential real estate. Although in residential real estate, carefully check local markets. As the economy is shifting, Blackstone has purchased more warehousing units as opposed to retail malls.

In terms of private equity, it is always important to be selective, but it is also very important to understand how growth comes about. Does a company intervene to a new market or ride the tailwinds to a new market. If you look in the sky and watch birds fly and glide on tailwinds, it is easier to fly on tailwinds. Do your homework to find out the easy tailwinds.

Blackstone does business in Europe and one of the good things about Europe is they have lower growth and the expectation of lower growth which means there prices are not as high. The prices are priced for slow but steady growth.

Blackstone purchased a company called GSO which is now one of the largest credit orientated alternative asset management. They like floating rates because they expect interest rates to rise, but not too much.

Linking to dividend paying stocks, when you listen to the big players although they have more zeros to write in the cheque, the same rules apply. It is always good to have cash to take advantage of opportunities. You need to be selective, it is good to take you time when making a decision, with an institutional company such as Blackstone deals are pitched on one or two days a week. The rest of the time is looking, doing homework and being ready to capitalize on opportunities.

There are more questions than answers, till the next time – to raising questions.