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Keith and I were discussing the Economic Club of Washington this morning.  At a certain point we both looked at each other and said, “What is it that they do?”.  Neither of us really had an answer.  So being the useful analyst that I am, I went to this great research tool called Google and looked up its website.  I thought the Membership Guidelines were most interesting:

“Economic Club membership is limited in number and includes CEOs of local corporations, managing partners in leading law and accounting firms, executives of top consulting, technology, and research organizations, and national heads of associations and other entities in healthcare, insurance, culture and education and other businesses and professions.”

Ok, got it. It’s an old boys club of group thinkers.  But still, what is it that they do?

Further, in the Membership Guidelines some clarity on the Club is given:

“Members convene five times a year for a luncheon or dinner at which they can bring a limited number of guests at a reasonable fee.  Events are held at the city’s leading hotels.  By tradition, one dinner each year is black tie.”

That certainly provides a bit more clarity.  The old boys club of group thinkers also get dressed up and goes to nice hotels.  Well, that is something I suppose.  But still, what is it that they do? 

The About Us section gives us a little more direction for this question.  It states that the Club has two primary purposes:

“First, it offers a forum in which prominent business and government leaders can express their views on important economic issues of the day and how those issues affect the region, the Nation, and the world.  Second, and equally important, it generates and promotes a greater sense of community among business leaders, government officials, and members of the diplomatic corps.”

Roger. The fancy pants old boy group thinkers get together and pontificate in front of each other.  Ultimately, of course, what this type of activity leads to is additional behavioral economic tendencies.  The two that come to mind are herding, when individuals act together without planned direction, and status quo bias, which occurs when people tend to not change an established behavior unless the incentive to change is compelling.

So, it seems, the Economic Club of Washington, or the Club as they call, does do something.  It provides case studies in behavioral economics.  If we can recognize that early, that is not a bad thing.

The danger of course is that when someone like David Rubenstein (“Ruby”), the Co-Founder of the Carlyle Group and the President of the Economic Club of Washington, makes public statements that other individuals may invest in based on his Perceived Wisdom.  As a case in point, his recent statement on emerging markets from Davos in late January:

“Emerging markets are the most attractive places to invest and rebounding more rapidly.”

Sadly, Ruby top ticked that one.  As we wrote this morning in the Early Look:

“Per my friends at Bloomberg, "emerging market equity funds lost $1.6B in weekly withdrawals" so far this week. That's the biggest weekly outflow in 2 years.”

We now know what the Club does and we also understand their output. The Club produces contrary indicators. 

Ruby, any good asset allocation ideas that we can take the other side of?

Daryl G. Jones
Managing Director