CAMP KOTOK - As Seen in Sarasota Magazine - March2014

8/13/2019 CAMP KOTOK - As Seen in Sarasota Magazine - March2014

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92 SARASOTA MAGAZINE | MARCH 2014

Every summer, Sarasotas David Kotok invites some of the

biggest names in global finance for fishing and freewheeling

discussions deep in the woods of northern Maine.

Contributing editor Tony DSouza listens in.

Writer

DSouza

shows off

his catch.ERICROSENBLUM


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SARASOTA MAGAZINE | MARCH 2014 93

ome people in this world are well-liked. Ten

theres David Kotok.

Its because o Kotoks power o personality that

in early August o last summer, I find mysel standing in the

rain in what has to be one o Americas most remote corners. Its

taken me three flights to get here, a our-hour bus ride, and the

rest o the trip Ive done in a rental car. Now Im in Grand Lake

Stream, in ar eastern Maine, a beautiul, orested place less than

20 miles rom the Canadian border.

Ive been told that there are moose in these dark woods, and I

certainly believe it. I dont know that Ive ever elt so cold in the

smack-dead-middle o summer.

How was the fishing? I call rom the shore to David Kotok,

chairman and chie investment officer o Sarasotas Cumberland

Advisors, as he arrives rom

his day on the lake.

What can I say? he says

with a laugh. Te weather.

We were like wet rats.

Tis is the 13th edition o

the our-day Camp Kotok

retreat, a coveted invitation-

only meeting o some o the

brightest, most influential

minds in economics and

finance. Held at the historic

Leens Lodge fishing camp,

Camp Kotok counts among its nearly 70 attendees the chie

economists o Wells Fargo, Fannie Mae, Nationwide and

Deutsche Bank, and representatives rom the Federal Reserve

Banks o Chicago, Dallas and Philadelphia.Over the two days that Im here, Ill meet high-profile

financial analysts, und managers, leading economic proessors,

one ormer Presidential adviser, and even a commodities

meteorologist. Collectively, these luminaries manage roughly

$100 billion.

Tat the affable Kotok, 70, continues to convince these people

who could certainly be on a beach somewhere to join him up

here in the rain should illustrate just how well-liked this man is.

I the ridiculous journey werent enough, it should also be noted

that these wizards o Wall Street spend the Camp Kotok weekend

sleeping on rustic bunk beds.

onight, the second o the retreat, Kotok has invited yet an-

other luminary to address the group at dinnerMaines outspo-

ken Gov. Paul LePage. But right now, everyone is gathered on the

lodges back deck to enjoy the evening drizzle over fine wine and

steamed clams. I there has ever been a happier group o cold,

wet people, Ive never seen it.

I strike up a conversation with Danielle DiMartino Booth,

senior financial analyst and adviser at the Federal Reserve o

Dallas, and Jack Rivkin, who among many other projects, serves

on the board o directors o Idealab, a Pasadena-based venture

capital incubator associated with Caltech. Why have they chosen

to subject themselves to this subarctic weather, I ask?

Tis is probably the most unique, interesting, riendly gather-

ing in all the country, DiMartino Booth tells me as she sips a red

supplied especially or this event by Caliornias Martinelli Win-

ery. Its Chatham House Rule. You can say whatever you want.

Tere is a lot o animated discussion, Rivkin agrees. But no

one is calling anyone else names.

Or they wont get invited back, DiMartino Booth explains.

Chatham House Rule, a confidentiality protocol that prevents

anything that anyone says here rom being quoted without

their permission, allows everyone at Camp Kotok a rare, un-

guarded orum or sharing their opinions. Many o those here

including Kotokare regular commentators on CNBC, able

to affect markets with their words. Camp Kotok is a welcome

respite rom that.

Te financial press is all here, Bloomberg, Dow Jones News-

wires, Reuters and the Wall Street Journal,or scheduled media

interviews, but otherwise as bound by Chatham House Rule as

everyone else.

A well-known money manager pulls me aside to tell me a storyhe says I can quote as long as he remains anonymous. I learned

my lesson during the 89 crash, he tells me. I was at Salomon

Brothers, the Wall Street Journalinterviewed me, the quote they

pulled out was that the economy was making me cancel my

second patio and a cobblestone driveway. I got back to work and

was told, Tis wont happen again. You get quoted by the Wall

Street Journalagain this year, youre out on your ------ ass.

Camp Kotoks great, Rob Arnott, chairman o Research

Affiliates, nods and says. You know you can relax and say what

you want. You get fierce debate over seemingly minor minutiae,

and what happens in Vegas stays in Vegas.

Tis is probably

te most unique,interesting,friendly gateringin all te country.


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avid Kotok ound this wild, rugged place a quarter

century ago on a lucky tip. As we wait or Gov.

LePages arrival, Kotok, with his trademark bonhomie, recounts

or me the story o how he was shopping in the L.L. Bean in Free-

port, Maine, one day with his son, then 13, when a guide asked i

he wanted to go to a great fishing hole.

He had a boat, the three o us got in his truck, and then werode orever, Kotok tells me. Where he ended up was right here,

Grand Lake Stream, a tiny plantationthe Mainer word or a

small, rural townadjoining the Passamaquoddy Indian Reser-

vation. Tey headed out on the lake, the fish started biting, Kotok

came back with riends, and the rest is history. Tat guide? It was

a young Pat Keliher, now commissioner o the Maine Depart-

ment o Marine Resources.

Camp Kotok is a major annual event here, employing nearly

every local member o the Grand Lake Stream Guides Associa-

tion, and bringing much-needed revenue to one o the North-

easts poorest regions. Te town itsel is a small collection oweatherized homes, many with boats in their yards, centered

around the Grand Lake Stream Fish Hatchery, which rears the

areas signature landlocked salmon. In the Pine ree Store, you

can admire the mounted deer heads, choose rom a huge assort-

ment o dry flies, or order a pizza. Te bench by the door is called

Te Liars Chair, where the locals tell fishing tales.

Charles Driza, once a city engineer in Patterson, N.J., and the

owner o Leens Lodge, is tending a huge pot o Maine lobsters

outside as we wait or the governor. Steam blows off the boiling

waiter like smoke rom a refinery. His niece, Angela, is here to

help out with the cooking, as is the extended amily o Laura Jean

King, the lodges Passamaquoddy head cook. Drizas son, Charles

Jr., 26, a University o Connecticut graduate with a degree in

finance, takes a moment to tell me about how coming up to the

woods was a liestyle decision

his ather made to spend more

time with his son.

He bought it when I was 13years old, he tells me. When

we first came up here it was

literally just him and me. Youre

talking about a business that

had been amous, but had

become ragged buildings and

empty bunks. Weve almost rebuilt every cabin over the years.

Te success comes partially rom ignorance about what we were

getting ourselves into.

Back in the 50s, Leens Lodge was a avorite haunt o ed

Williams; the sportscaster Curt Gowdy and the band TreeDog Night entertained their riends here later on, too. And now

the Drizas have David Kotok, who theyve taken in like amily.

Charles Jr. tells me, Te connections David brings here are just

ridiculous. Te odds o seeing one o the guys on V are very

high. I a guy cancels that day, the bed will be filled that night.

People really want to come to this event.

An SUV arrives in the small gravel lot. Its embattled Gov.

LePage come rom the politically divided state capital, Augusta,

with a security guy and a press secretary. I catch him on his

way in, ask why hes here. He gives me one o his rumbling laughs

and says, Anytime youre invited to this part o the state, you

If a guy cancelstat day,

te bed will befilled tat nigt.

Guests in casual mode for canoeing, a fish in hand, simple dining pleasures.


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nevasay no. Neva. You have to spend a day in Augusta to see why

this is such a treat.

Inside the lodges trophy fish-lined dining room, David Kotok

calls or silence, reminds the group o riends who have passed

and the scholarships in their memories, then transitions into a

story. He tells us, Last year we had an honored guest and we had

a lot o un. I said to him, Governor, you have to be nice to me.

He said, Why do I have to be nice to you? I said, Because

our firm has 350 million in Maine bank bonds. You owe us money.

We had a glass o wine and toasted each other and he said, David,

you have to be nice to me. Youre the one who wants to get paid. Its LePages turn to talk, and the Republican tells his audi-

ence, Last year was tough or the state o Maine. Te President

was re-elected handsomely, we took a real licking. We lost a ma-

jority in the House and Senate. What I care about is this: I youre

going to be respected in the world, you pay your bills. Tere is an

enormous amount o brainpower in this room and wed like to tap

it to help Maine move orward.

Ten the governors mood changes; he grows quiet, almost

reflective. He puts his hands together like hes praying and tells

the group, My latest comment was a very bad slip o the tongue.

Tat was not a good comment and I apologize to everybody. I got

a couple cases o Vaseline sent to me by a lot o people; I can have

a sale on it. Ill try to leave the Vaseline at home because, man,

Im running out o room.

Hes talking about the scandal he ignited back in June, when

he said o a rival party state senator, [He] claims to be or the

people, but hes the first one to give it to the people without pro-

viding Vaseline. Hes been the target o withering criticism ever

since, and i I hadnt ully understood the power o the people

David Kotok has assembled here, I do now. Perhaps the brashest

governor in the United States has brought his apology to them.

David Kotok brought Cumberland Advisorsa registeredinvestment advisory firm (RIA) with more than $2 billion under

management in 1,700 separately managed accounts and another

significant amount under management or institutional cli-

entsto Sarasota rom New Jersey our years ago. Te move was

widely regarded as a coup or the city. A member o the National

Business Economics Issues Council, the National Association or

Business Economics, and director and program chairman o the

Global Interdependence Center, Kotok calls some o the most

important names in U.S. economics riends. Hes been generous

with his connections, supported students and programs at New

College, and has invited Sarasota financial advisers to his retreat.


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ver breakast on my second day, I chat with Carla

Plush Smith o the Sarasota accounting firm PlushSmith PA, whos enjoying her first weekend at Camp Kotok. She

tells me, He invited me; it sounded like an adventure. With all

these people who are learned, intelligent, who is going to pass

that up? David loves to get people together. Hes an awesome

resource or Sarasota.

Judy Schwartzbaum, a Morgan Stanley senior VP o wealth

management in Sarasota, is also a newcomer to Leens Lodge. As

we head out to meet our guides, she tells me, Tis is an opportu-

nity to hear rom some o the best minds in a casual environment.

Ive been doing more listening than talking, coming away rom all

o this with new ideas. Tis is good or my clients, absolutely.

Fishing seems to be the perect metaphor or what the people

assembled here do. Among the topics that have been hotly

debated over the dinner tables

and late-night poker games

are who President Obama

will chose to replace Ben

Bernanke as the next Federal

Reserve Chairmanthe near

unanimous consensus is Janet

Yellenand when the Feds

highly anticipated tapering o

stimulus policy will begin, onwhich there is no consensus at

all. Attendees have been mak-

ing $5 bets on everything rom

what the price o gold will be this time next year, to oil, the euro,

and the level o the S&P 500. Tere are fiscal hawks and doves in

this group, people rom both sides o the political aisle. Ive heard

so many opposing opinions on housing, it eels like everyone is

fishing, even when theyre not in the boats.

I arrived too late yesterday to make it out on the lake, but

today Im assigned a canoe with Bill Strauss, senior economist

and economic adviser in the Economic Research Department atthe Federal Reserve Bank o Chicago. Its his first Camp Kotok,

too, and he tells me that the day beore, the rain had drowned his

luck. But today the sky is clear, and or all my teasing about how

cold its been, Im able to strip down to just three warm layers. We

help our guide, Steve Schaeer, put our canoe in the water, and he

motors us out onto Big Lake.

Ive come to understand that this is David Kotoks master plan, to

have unlike minds spend the day together, trading ideas in a boat.

And its not just any boat, Schaeer reminds me, but a handcrafed

Grand Lake Stream canoe, a source o prestige around here. He

should know; or 10 years he was Grand Lake Streams First Select-

man, roughly equivalent to mayor. Te canoe is the only thing

Ive taken care o in my lie, he says with a grin.

We end up a hal hour later in a small wooded cove called

Chets Hole, bait our hooks with worms, toss out our lines.

Were there a while, nothings happening; Strauss asks me what

the writing lie is like, and I ask him how he sees the economy.

Im very optimistic, he says. Te viability o U.S. manuac-

turing is very strong. With hydraulic racking and horizontal

drilling, well have relatively low-cost energy or decades. With

energy, were just on the cutting edge, like computers in the

1980s. Te plants are just now being built.

Ten my pole bends and Schaer hollers, Hit em! which is

exactly what I do. Its a strong fish, lively, tons o fight on the line.

Soon enough, Ill be posing or a photo with a beautiul 18-inch

smallmouth bass.

Strauss and I will catch dozens o bass that morning, banter

Fed policy all day. At lunchtime, Schaer will motor us to join the

others or fish chowder at a place called Spooners Island. Ill see

an image there that Ill have to take a picture o, 25 Grand Lake

Stream canoes pulled up to shore in a long and photogenic row.

Someone at the lunch tables will bring up China, and the voiceswill all weigh in.

But thats not yet. Right now, theres a fish on the line, and were

just three excited guys in a boat. Steve, Bill and me. I know thats

exactly how David Kotok wants it.

Contributing editor Tony DSouza has won a number of awards

in the past year for articles for Sarasota Magazine. He was a

finalist for the Society of Professional Journalists 11-state Green

Eyeshade award and the SPJs Sunshine State award for Investiga-

tive Reporting. He also won Florida Magazine Association awards

for Best Investigative Reporting and Best Feature Story.

Strauss and Iwill catc dozens

of bass tatmorning,

banter Fed policyall day.

Kotok, right, and his

longtime fishing guide,

Ray Sockabasini;

sunset over the lake.


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ON HOUSINGJOSH ROSNER,Graham

Fisher & Co.: I were expecting housing

to drive consumption, that will just not

be. Prices are coming back not because

o first-time homebuyers, but becauseo investors bidding against each other.

I you strip out the investor share o the

market, we only saw 1 percent home price

appreciation last year. Its not the basis o

a sustainable recovery.

ON THE FEDJIM BIANCO, president,

Bianco Research:Te street is 50-50 the

Fed will start tapering in September. Im

in the camp that theyre not going to; i

they go on data, theyre not. Ive graded

the economy C-. Its not in recession, but

its not great.

DANNY BRANCHFLOWER, CBO, professor

of economics at Dartmouth:Te Fed has

done a pretty darn good job. I rate the

economy a B-; its better than it would

have been i the Fed hadnt acted. I come

rom Europe, and what people here dont

understand is how good the economy is

compared with everybody else. I doubt

the Fed will raise interest rates until 2017.

ON THE ECONOMYJACK RIVKIN, Ide-

alab:Were in a little bit o a new normal.

Our standard o living is going down rela-

tive to the growth economies. For young

people, its about managing a career. Youhave to figure out what youre going to do

sooner than you did beore. [echnology]

offers young people more opportunities,

but ofen with higher risk.

DEAN EISEN, family wealth director,

Graystone Consulting:Its hard not to be

deensive coming out o 08 or every-

body, but its five years later. 2008 is in the

rearview. A little bit o inflation wouldnt

be a bad thing.

ON BANKSHARVEY ROSENBLOOM, for-

mer executive VP and director of research,

Federal Reserve Bank of Dallas:Te oo

Big to Fail banks dragged the economy

down, theyre holding it back, and theyre

going to mess it up in the uture. Teyre

allowed perverse incentives that encour-

age them to take on too much risk. We

have to restructure the banks through

legislation to make the cost o the next

oo Big to Fail as cheap as possible.

ON OBAMACAREBILL DUNKELBERG,

chief economist, National Federation of

Independent Business:Obamacare is ter-

rible. In June, part-time jobs rose 360,000

while 240,000 ull-time jobs disappeared.In macroeconomic terms, it works out

perectly, a one-to-one swap. You want

two part-time workers doing what one

ull-time worker could do? Its just the

beginning o a trend.

ON THE MIDDLE EASTMICHAEL

DRURY, chief economist, McVean

Trading & Investments:I was in the

World rade Center on 9/11. Tat was

an event, it was terrible, but hundreds

o people have died in terrorist events in

Europe, in the Middle East. We have tun-

nel vision. When Russia was the biggest

country in the world, what was our

fixation? Russia. China is the biggest

country in the world and what is our

fixation? Syria.

ON ECONOMISTS ANONYMOUS:

Why did God create economists?

o make weathermen eel good about

themselves.

Here are some predictions from the August gathering: How right were they?

CAMP KOTOK - As Seen in Sarasota Magazine - March2014

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