Each year, the National Coffee Association Annual Convention presents a full program, filled with dynamic speakers and sessions covering an array of topics from coffee data trends, to logistics, to coffee and health, and so much more. Among those sessions is one that is so well received that it returns year after year and continues to be a highly anticipated keynote session at the NCA Annual Convention: the economic outlook with Scott Clemons, Chief Investment Strategist at Brown Brothers Harriman & Co.
Michelle Dunaway, Sales Executive at Mercon Specialty and NCA Next Gen Council member, spoke with Scott to learn more about his background and career and to give you a sneak peek at what is to come in his session at #NCA2022. (Scott will be presenting his session, “2022 Vision: The New Normal,” on Wednesday, March 9, from 10:10 – 11:00am EST at the National Coffee Association Virtual Convention.)
Upon graduating from Princeton in 1990 with a Bachelor of Arts degree in Classics – a rather unusual degree for Wall Street – Scott joined Brown Brothers Harriman & Co. [BBH], where he still works today, 32 years later, and now holds the position of Chief Investment Strategist.
Early on in his career, Scott earned the CFA (Chartered Financial Analyst) designation, to not only learn the skills and practical applications of financial analysis, but to also demonstrate his dedication in investing to both his clients and his firm, BBH.
Scott credits much of his professional success with skills learned on the job. He began his career with BBH in London in the early 1990s as an Analyst & Portfolio Manager. This was an exciting time for European economics; the European rate mechanism had come into play – a precursor of the Euro – and the world saw the fall of the Soviet Union and the iron curtain which led to the introduction of the market-based economy in Eastern Europe.
After five years of working in Europe and traveling all over the world asking questions, he came to a fork in the road: to commit to life in London or to return to the United States. In the late 1990s, Scott made the United States his permanent home, and he switched his attention to domestic markets in the role of Portfolio Manager, U.S. Equities for BBH. Come 2005, Scott took advantage of an opportunity to be on the client-facing side of the business, transitioning to the role of Relationship Manager for the NY office location of BBH.
Along the way, Scott has always been curious about how things work, what motivates and drives decisions, why something is the way it is, and what such things can tell us about the past and the future.
Today, Scott holds the position of Chief Investment Strategist. In his own words, Scott described his role as, “the guy that gets to look around at everything going on in the world and try to make sense of it.” So, what does this mean for his clients? Scott explained that the clients of BBH are running businesses, so they appreciate the guidance and advice on everything they need to know that will benefit their operations.
Scott does not think of himself as an economist – economics is not his academic background – but rather as a curious guy who likes to know how things work, who takes the time to read, analyze, study, and then synthesize information so that he can convey the explanation to an audience allowing them too to make better sense of the world economy.
Question: What is the secret to success in investing… and to life in general?
Scott: “Read voraciously.
There is a rationale for this: success is a question of pattern recognition. For example, if you are a professional athlete, you can recognize the play in front of you. You think, “I’ve been here before and know exactly what to do.” The challenge is how to develop good pattern recognition. Experience is gained a day at a time, but there is an out to that; you can get more than one day’s experience at a time by borrowing from the experiences of others. That, is how reading comes into play.
[Author’s note: Scott reads The Financial Times, The Economist, The Wall Street Journal, and The New York Times.]
In order to develop a differentiated insight, you need to read very broadly. Markets are just the intersection of human emotion. Markets, the economy, and businesses are a collision of human emotions – fear, greed, anxiety, lust, excitement, aversion, regret – and these all these get measured by the S&P 500, through GDP, or through corporate profitability terms. At the end of the day, it comes down to understanding people.”
The single best analyst of human emotion was William Shakespeare. Some of the best investors Scott has ever worked with play with uncertainty and doubt; the single best explication of the psychology of doubt is Hamlet – the whole play is about the perils of indecision.
On the other side of the equation, some of the best investors Scott has ever worked with have such courage in their convictions; it’s the opposite extreme. Once again, the single best psychological analysis on the perils of certainty is William Shakespeare’s King Lear.
The challenge is to identify the psychological extremes in our own thinking and to react to that. In short, what makes you a better investor is anything and everything, because it all adds to your ability as a thinker to identify patterns more readily and more originally.
Question: Are there any opportunities that those of us in coffee should be looking for?
Scott: “They way in which consumer behavior has shifted during the pandemic is fascinating. What is the role of coffee outside of the home? Are coffee shops a delivery mechanism for caffeine? Do coffee shops need a mobile app to serve more quickly? Or are coffee shops a gathering place for entrepreneurs and solo workers to come and sit for a long period of time?”
Sneak peek! What can we expect at Scott’s upcoming lecture, “2022 Vision: The New Normal,” during the NCA Virtual Convention?
Scott shared that there are four big transitions underway that will dominate conversation in the United States and in the global economy:
- A transition in economic leadership away from government spending and emergency support
- Inflation/deflation – inflation is a price we pay for monetary support
- Interest rates – history has taught us that the “why” the Fed is raising rates is important. If the Fed is raising interest rates in response to more confidence in economic activity, then markets and businesses see this as necessary for the economy to continue to flourish. If, on the other hand, the markets decides that the Fed has lost their grasp on inflation and they are scrambling to catch up, this can be disruptive. Which narrative wins out?
- A surge in productivity – the silver lining as we are doing more with less
Throughout the course of the conversation, Scott mentioned how Brown Brothers Harriman & Co. is renovating their NY office and adding in an upscale coffer bar. As exciting at this already sounds for all of us coffee lovers, Scott made a noteworthy comment. He explained that in the past, they [BBH] have thought of coffee as a caffeine delivery mechanism, but now they have changed their thinking; they recognize that coffee is what brings people together, so now they see coffee as a connector.
Although we will not be sharing coffee with each other in person at NCA this year, don’t miss out on these connections! Be sure to register for #NCA2022 and check out Scott’s session, “2022 Vision: The New Normal,” on Wednesday, March 9, from 10:10 – 11:00am EST at the National Coffee Association Virtual Convention.