When Erik Davidson talks to a room full of millionaires, he has their undivided attention. That was certainly the scene May 18 at Cheyenne Mountain Resort when Davidson offered financial advice to some of the Pikes Peak region’s wealthiest investors.

Davidson, who is Wells Fargo’s chief investment officer, is accustomed to guiding the country’s rich and somewhat famous. He’s been associated with Wells Fargo’s Private Bank division for more than a dozen years.

“Our typical investor in the Private Bank has about $8 million with us,” he said.

While he’s accustomed to rubbing elbows with some of the country’s top investors, Davidson said his company also values the little guy.

“The beautiful thing with Wells Fargo is we manage people with $10,000 IRAs and we also manage billionaires,” he said.

Davidson spoke at a breakfast gathering in one of Cheyenne Mountain Resort’s banquet rooms. He sat with the Business Journal afterward, sharing and comparing ideas with Tatiana Bailey, director of the UCCS Economic Forum. Bailey was preparing to speak at the luncheon gathering for the Wells Fargo conference.

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Both Davidson and Bailey offered a mostly positive outlook for the economy — both locally and nationally — but each expressed reservations due to uncertainty they ascribed to President Donald Trump’s administration.

“In my presentation, I was pretty explicit that I wanted people to leave with the idea that the glass is at least half full,” Davidson said. “A lot of things are going well. Certainly the stock market is at an all-time high, the gross national product is at an all-time high, unemployment’s at 4.4 percent and even the underemployment rate has come down. Housing prices are recovering, consumer confidence and small business confidence has jumped dramatically. And this is outside the realm of politics. Of course, politicians will try to take credit for it, but this is a trend that has been in place for several years now, from a Democratic administration to a Republican one, so neither one can really take credit for it.”

Davidson emphasized four points to the big crowd that braved a mid-May snowstorm to hear his advice:

• Don’t be emotional

• Diversify

• Globalize

• Buy and manage

“It’s graduation season and all the commencement exercises are about, ‘Follow your heart, follow your heart,’” Davidson said. “And that makes sense academically and vocationally and romantically, but when it comes to financially, my commencement speech would be ‘Don’t follow your heart,’ because too many people let their emotions drive their investments and their fears.

“And you want to be diversified. I use the analogy of all-weather tires; that you want to have an all-weather portfolio. You need to be globalized. So much of the growth is outside our country where the demographics are favorable and the valuations are attractive.

“I say don’t buy and hold, but buy and manage. So many people invest and leave it on cruise control, but you need to adjust based on your changing goals, your changing temperament for risk. Your portfolio also changes as things go up and some go down. Like an untended garden, you’ve got to trim back or redeploy when things don’t go well.”

“The beautiful thing with Wells Fargo is we manage people with $10,000 IRAs and we also manage billionaires.” 

— Erik Davidson

Davidson advised against trying to time the market.

“When you time it, you have to be right twice; you have to know when to get out and when to get back in. Nobody can do that. And when you sit in cash, you’re nothing,” he said.

Bailey noted that Davidson had presented the globe to his listeners.

“Only 4.5 percent of the world’s population is from the United States, but are you only going to stick your investments in just 4.5 percent of the market?” she said. “I like the balanced approach.”

Bailey, who moved to Colorado Springs in 2014 from Michigan, said, “I really like the trends I’m seeing. When I got here, our median wage was about $6[,000]-$7,000 lower than the Colorado median. About a year later, it flipped. Now we’re about $8,000 above the Colorado median. And we have significantly more jobs than we have people looking for work.

“Overall, I’m really optimistic. I’m keeping my fingers crossed,” she added. “We have had some struggles here locally and now we’ve found our way and we have great leadership in city council and the mayor’s office and that’s something that’s eluded us in the past.”

Tom Binnings, a partner at Summit Economics in the Springs, said, “Locally, we’re doing as well as we have in a long time. The national economy has picked up steam and there’s an optimistic outlook for the rest of the year. The biggest influence has been on business investment.”

Bailey, however, couldn’t help offering a word of caution.

“If you go back to 1930 and look at when recessions hit — and this is just one indicator — the probability of an economic downturn within 12 to 18 months of a new administration is quite high,” she said. “It does make intuitive sense because there’s so much change. And if the last four months are any indication, there’s a lot of potential change — some of it could be good — but there’s so much in flux, so much distraction, so much uncertainty that it could overtake things. That would be very unfortunate, and boy I hope I’m wrong, especially here locally, because there’s no way we could be completely sheltered from that.”

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