October 14, 2019, Malcolm Polley visited the Eberly College of
Business and Information Technology to present for Daniel Lawson’s Finance Seminar class (FIN 422) and
meet with the Student Finance Association.
Malcolm is a graduate of Iowa State University and currently
serves as president and chief investment officer of Stewart Capital
Advisors LLC. With over 25 years of experience in the investment and financial
services industry, his past positions include serving as executive vice
president and managing director of S&T Wealth Management, as well as
president of the CFA Society of Pittsburgh. Polley holds a certification as a
Chartered Financial Analyst, and previously served as adjunct faculty
member in the Eberly College for several years.
Polley’s presentation for the seminar class was titled “Prepping
for Zero,” and it focused on the likelihood that inflation rates will drop
to zero, remaining low and less volatile for the foreseeable future. He
associated this drop with several factors, the primary factor being the current
workforce demographics in the United States.
He outlined the correlations
between the working age population growth rates and inflation rates, noting
that this growth has declined from over 8 percent in the late 90s to below 4 percent in
2019. Similarly, he gave an overview of the average income in our economy and
noted that an individual’s income peaks around 50–55 years old.
“The problem in our economy is a math problem.” By this, he meant that historical
economic spending from the “Millennial” generation has not been enough to
offset the average decline in “Boomer” income. Therefore, he suggested, we
cannot achieve more rapid inflation rates or GDP growth rates because the rising
incomes of millennials and declining incomes of boomers are offsetting each
Malcolm cited that changes in the US GDP post-1981 have been
less volatile, and economic expansions have lasted roughly seven to eight years. He
suggested that, since there is a net add to the labor pool and more jobs are
available than people searching for them, a recession in industries like
manufacturing and agriculture is unlikely to have a negative impact on the
overall economy in the foreseeable future. This assumption also comes from the
idea that the economy is currently transitioning from a labor-based economy to
a knowledge-based economy. This means industries like manufacturing and
agriculture are becoming less impactful on the workforce as labor jobs are
being replaced by artificial intelligence.
In conclusion, Polley mentioned his expectations for the working
age population growth rate to continue its decline as we see a shift with boomers
leaving the economy and millennials/Generation Z entering and beginning to dominate
the economy. He expects this decline will result in shallow or no economic
booms, shorter recessions, and longer periods of economic expansion. If this is
the case, it would be difficult to maintain inflation at a desirable level, and
global growth will be constrained in most countries.
Seth Thomas, a junior
finance major and current intern with Stewart Capital Advisors, said, “Mr.
Polley gave an in-depth explanation on how population and demographics
influence economies and investments. His presentation aided me in understanding
the key drivers of inflation and how it impacts his investment decisions.”
Thank you, Malcolm Polley, for visiting with our classes and
sharing your knowledge and experience with our students!