In the coming weeks, we will release a special edition of the GSAM Perspectives, featuring synthesized takeaways and key investment themes drawn from the 2017 GSAM Symposium. In the interim, the following select session highlights have been curated from this year’s event.

The entrepreneur, former New York mayor and longstanding climate change activist discusses top priorities for philanthropic intervention, job creation and the shifting political landscape.

• One of the great inflection points has just taken place. Advertising has shifted from the print business to the internet, and the media is increasingly focused on attracting clicks and eyeballs. There’s less time for analysis and more opportunity for sensationalism, and social media has created a forum for unfiltered and unverified content.
• Education and retraining are paramount. The US education system is facing greater challenges and young people need more vocational training. The even more immediate challenge is finding ways to help people whose jobs are automated out of existence, so adults need to be retrained. The spoils of the technology revolution are going to those with a better education – the rich-poor divide maps to the education divide.
• The solution to job creation is more global trade. If technology is going to reduce jobs, we need to foster more global business. Abandoning the Trans-Pacific Partnership raises the possibility that more trade will now be negotiated with China, which is poised to be the next world power. America should be concerned that its economy may fall behind.
• Our approach to investing in philanthropy is about serving overlooked areas. Public health, education, the environment and the arts are all important targets for funding. Obesity is an increasing concern, threatening to take more lives than smoking. The US is the only major country where life expectancy is starting to go down. 

In this session, Ellen Stofan discussed the impact of space exploration on Earth, the progress we have made towards finding extraterrestrial life and the actions we must take to prepare for environmental change.

• NASA is a vital source of information about our planet. From land, air and space, NASA monitors Earth’s vital signs all over the globe and provides unique knowledge to policy makers, government agencies and other key stakeholders. This information enables them to make more informed decisions on critical issues occurring all around the world.
• NASA’s research produces a number of social benefits. The organization’s studies help societies improve their environmental prediction abilities and enhance their levels of natural hazard and climate change preparedness.
• Space exploration is an investment in our economy. Through ventures such as research on the International Space Station and the Mars Exploration Program, NASA is a major driver of technological advancement and innovation.

The energy sector faces a range of disruptive forces, from domestic policy uncertainty coupled with geopolitical instability, to increased competition between US producers and OPEC. The panel discusses opportunities in the energy market and the implications of shifting supply and demand trends.

• The supply environment has changed dramatically over the past couple of years. Producers undershot their growth forecasts over the past decade, but since 2014 the miracle of shale and recovery in OPEC countries has brought supply back into surplus. This is the backdrop for the current battle between US shale and low-cost OPEC producers.
• Opportunistic capital and shale producer resiliency have changed OPEC’s strategy. OPEC may have looked to drive US shale producers to bankruptcy, but shale producers have been resilient, helped by a flood of value-seeking capital and increased efficiency. OPEC’s new strategy appears more focused on increasing price volatility and reducing shale producers’ ability to hedge future production at attractive prices.
• Have we seen peak demand? The clarity around supply contrasts with a lack of metrics on demand. Competition from clean technology is part of the equation, but electric vehicles globally account for only a tiny fraction of total vehicle sales. Consumption in the developing world is arguably a bigger determinant of demand. According to the panel, despite concerns about China slowing, its auto sales, including SUVs, are eclipsing US sales. India’s oil demand is where China’s was in 2002, and is on track to grow at a similar pace to that of China when it joined the WTO in 2002.

The tools of our modern existence are getting faster, cheaper and smaller at an exponential rate—but what does that mean for the future? In this session, Joi Ito discussed why innovation has been pushed away from large institutions to the edges, and what opportunities and risks this brings for society and investors.

• Technology and the internet have lowered the cost of innovation, pushing innovation to the edges. In the 1990s, Ito built an internet service provider in his bathroom for virtually zero cost. Such permissionless innovation is made possible by the low costs of collaboration and development. The old order is reversed: where previously capital providers held the power, now products are developed before they become involved. And so innovation is moved out of large traditional companies with access to capital and towards smaller innovators working almost for free.
• Hardware, biology and financial services could undergo a similar transformation. The movement to open hardware is making traditional factories become obsolete. The trends in genetics are similar: it now costs only $1000 to sequence a human genome, and genes can be printed out and used in experiments outside of traditional laboratory environments. In finance, cryptocurrencies and peer-to-peer lending can actually increase transparency and reduce risk, especially when compared to traditional derivative or lending contracts that have so many layers of obscurity.
• Ito acknowledges the risks from this, and thinks education is the solution to potential negative societal impacts. Authorities realize that their non-collaborative attitude to the internet pushed hacking underground. To avoid repeating this phenomenon with innovators, we need to start engaging with them as children. Previously, companies picked what degrees they wanted to hire, and schools taught to those requirements. Instead we need to educate for disruptors: rewarding the ability to question authority and allowing children with passion and the internet to go learn organically. 

Geopolitical risks are more prevalent than ever, presenting challenges for national security officials and international diplomacy on a range of fronts. The intelligence experts in this session discussed the most pressing threats confronting world leaders today, and possible strategies to address future risks.

• North Korea is possibly the most acute geopolitical risk at the moment. The timing of the latest missile launch was significant, coming just before President Trump’s meeting with Chinese President Xi. North Korea is flaunting a major advance in weapons technology, which may increase its ability to threaten the region and beyond. These latest actions may increase pressure on the US to build a coalition and negotiate a response with China.
• Security and trade issues are high on the agenda for the US and China. President Xi could take a hardline stance on these issues to send a political message ahead of the 19^th Congress, or may prefer to take a longer-term view. China may have scored an advantage with the US withdrawal from the Trans-Pacific Partnership. President Trump appears to favor bilateral agreements, but the outcomes are hard to predict. US foreign policy is in flux with the new Administration, given major departures in the State Department and National Security Council.

ESG and Impact investing is reaching an inflection point, not as a philanthropic experiment, but rather as an extension of traditional, rigorous investing with an additional focus on positive impact in the world. Panelists discussed key opportunities and challenges in ESG and Impact investing, and shared insights on practicalities around implementation.

• ESG and Impact Investing is at an inflection point in being incorporated into holistic investment strategies. All our panelists recognized that there is far more to ESG and impact investing than just negative screening of investments. Jordan described his approach of incorporating 12 ESG themes into investments to identify opportunities. Integrating such a comprehensive ESG approach is a difficult problem that requires commitment from all levels of an organization. Importantly, ESG and Impact investing is about a total process, not just about an end point.
• ESG and Impact Investing is about making better investment decisions. As Klassen said “we are not willing to sacrifice returns for this.” Recent studies have shown positive links between financial returns and ESG impact. The move away from merely screening out ‘sin stocks’ allows investors to expand their opportunities, using more qualitative data on ESG and Impact investing to make better investment decisions. A good investment is one where financial metrics and ESG and Impact metrics are aligned. The common theme is to seek value.
• There is no one-size-fits-all approach to ESG and Impact investing. Our panelists emphasized the range of approaches to incorporating ESG and Impact considerations into their processes. Some use separate investment committees (IC), others look to incorporate their social and responsibility committees into their ICs. Some use enhanced index funds, others look to track qualitative metrics across investments on an annual basis. One core theme was a desire for better data and transparency to help assess organizations’ and investments’ merits consistently.

What qualities of mind make a super forecaster? And why are amateurs often more successful than professionals? Dan Gardner explains, drawing on the experience of John Maynard Keynes and dragonflies.

• Intellectual curiosity. John Maynard Keynes was a famous economist, but his success in investing is less well-known. Keynes’s thinking was not dominated by one Big Idea or a rigid methodology. He was the opposite of a technocrat: a profoundly curious and inquisitive man, seeking out new perspectives and ways of thinking even if they contradicted his own views.
• Synthesis and “dragonfly eye.” Extensive knowledge can undermine quality of judgment. A professional can always assemble data to support a view and find ways to dismiss contradictory facts. But a large amount of information can improve judgment if it is distilled. The dragonfly is an expert at this, synthesizing information gathered from 30,000 lenses on each giant eye to pinpoint the trajectory of a mosquito. Markets are classic synthesizers on a collective level, distilling a huge array of judgments into a price.
• To err is human. Intellectual humility—the ability to admit a mistake and change one’s views—is essential for good forecasting. The classic path of improvement is Try, Fail, Analyze, Adjust, and Try Again. Human beings are profoundly reluctant to admit error, as it threatens their self-perception. But the successful predictor can adjust to new information.
• Probabilistic thinking. Reality is infinitely complex, and it’s a struggle for humans to know even a part of it. The solution is to reject certainty and accept probability. Probabilistic thinking isn’t natural, but with practice it can become habitual.

The Emerging Market (EM) landscape has evolved significantly over the past few decades, with favorable demographics driving rapid economic advancement and creating a broader set of opportunities for investors. The panelists discussed whether that trend will continue, or whether a global populist movement and rising rates threaten to derail future growth.

• Demographics and middle class expansion will remain defining themes for EM, playing a key role in their rapid economic advancement. India in particular benefits from a young population and a growing and aspirational middle class, though the challenge of effectively educating the population to achieve greater labor productivity remains. However, countries such as China are starting to face the challenges of an aging population. 
• Populism and protectionism are becoming larger concerns for the United States and other developed economies. Although their ultimate effects are not yet known, the possibility of high tariffs and an implementation of the Border Adjusted Tax (BAT) pose near-term risks for EM. The uncertainty may tilt investors towards companies and countries that are more domestically-focused and less exposed to international trade.
• Some investors are concerned about how rising US rates and a stronger dollar will impact EM. The panelists highlighted that EM equities have historically done well in a rising rate environment, provided that the Federal Reserve (Fed) is hiking for reasons that are supportive of EM, such as improving growth.

Lord Jonathan Hill, former European Commissioner for Financial Stability, Financial Services and Capital Markets Union, and Andrew Wilson, Chief Executive Officer of GSAM International for EMEA, discussed the aftermath of Brexit and geopolitical developments across the EU.

• Lord Hill emphasized the will from Europe to negotiate and compromise with Britain. Europe has larger issues to debate than the minutiae of Brexit, with the future of the union being challenged. In particular, the best way to deal with the surge of populism is economic growth; the EU does not want to compromise that. At first, flashpoints will come mainly from contrasting negotiating styles, but that masks a strong desire of the EU to work with the UK.
• Uncertainty is something to get used to, even once this year’s election cycle is out of the way. The French and German elections are a source of uncertainty for Brexit as they limit the ability of these key negotiating partners to engage with the process, but also as their outcomes will have a meaningful impact on the EU itself. For the UK, uncertainty is something to get used to. The luxury of “waiting and seeing” does not exist for British companies.
• Financial services regulation is an example of being in both sides’ best interest to work together. The EU realizes that it is not in their best interest to try to impede London as a financial center and that curtailing financial services in the UK will not necessarily lead to more business in Europe. The UK has a lot of expertise to bring to the issue of regulation. With renewed focus on the topic from the US now is a good time to drive towards greater integration, not less. That is something that businesses would welcome.

As we approach the 100-day milestone of the Trump administration, Stephanie Cutter and Matt Rhoades, influential voices of the Democratic and Republican parties, respectively, discussed timely issues in US Politics. They debated top-of-mind items, including the potential repeal and replacement of the Affordable Care Act, tax reform, infrastructure spending, the Supreme Court nomination and what’s on the political horizon.

• The panelists discussed the likelihood of Democrats filibustering Neil Gorsuch’s Supreme Court nomination. Rhoades believes Senate Republicans will employ the “nuclear option” of changing the Senate rule on Supreme Court nominees from a 60 vote threshold to a 51-vote minimum. Cutter suggested that changing this Senate rule might have an impact on future general elections.  
• In the wake of the failed healthcare bill, the panelists debated the Trump administration’s ability to execute on the balance of his legislative agenda. Rhoades suggested that Republicans need Gorsuch’s confirmation, a tax cut and healthcare reform to maintain their House and Senate majorities. Cutter saw some potential for Democratic participation in infrastructure but saw revenue as a sticking point.
• Cutter and Rhoades agreed that Trump is a master communicator, effectively using social media to reach a broader audience and bypass traditional media. However, they noted that while this approach can change the media narrative, it also carries more potential risks as Trump as a President than it did for him as a candidate.