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Caution—Even at a Family Wealth Conference

At the Institutional Investor Family Office Wealth Conference, Laguna Beach:

The title of this year's gathering has the august-sounding title of "Designing a course of action for affluent families in the midst of revolutionary and evolutionary global transformation," but it could be more appropriately titled "The risk-off trade and how you can protect yourself."

Mutual-fund legend Ron Baron led off the conference, arguing that stocks are cheap, bonds are expensive, and for all the gloom and doom half of the companies in the S&P 500 were started in a recession or depression.

He noted he had invested in younger companies like Fastenal , Factset , and Diamond Foods and expressed confidence that the next decade would be good for stocks.

But most other speakers have struck a more cautious tone. David Wright of Sierra Investment in The Evolution of New Investment Theory blasted Efficient Market Hypothesis, Modern Portfolio Theory and even Buy and Hold, claiming they are flawed investment concepts and that behavioral economics and "alternative strategies" like asset allocation funds, market neutral strategies, and long-short strategies offered superior returns.

Even art is not the investment it once was thought to be.

Judith Pearson from ARIS Title Insurance gave a fascinating lecture on the lack of transparency in the (unregulated) art market, offering numerous examples where buyers of art had faced problems after their purchases from liens, theft claims and other issues. In one case, Steven Spielberg had bought a Norman Rockwell painting only to face a claim from another investor several years later claiming it had been stolen. Spielberg lost control of the painting.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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