February 18, 2011

"In China, of course, just like in most emerging markets, you're dealing in a country where the rule of law and the independence of the courts are extremely questionable... That's why emerging markets...deserve to trade at a discount compared to developed markets."


Being Evergreen Capital’s chief investment officer has many advantages, but taking relaxing vacations isn’t one of them. This downside has been driven home over the last couple of weeks as my wife and I have attempted our usual mid-winter getaway with mixed success (in her mind, there’s no doubt about it; she would definitely classify our supposed holiday as a “daycation”―just a day or two with no e-mail or research to do).

One small concession I’ve made to my spouse is to take a week off from writing EVA but, as has been my past practice, I want our growing list of regular readers to receive a more than worthy substitute. Fortunately, my usual stand-in, GaveKal Research, was gracious enough to agree to share one of its particularly interesting efforts, in this case an interview with the firm’s founder, Louis Gave, conducted by veteran newsletter writer Kate Welling.

Last month, two of my Evergreen team members and I had the opportunity to connect in person with Louis at his winter home in Whistler, B.C. (Louis normally plies his trade from GaveKal’s headquarters in Hong Kong or his alternate office, the business-class section of countless transoceanic flights.)

In addition to the pleasure of meeting his young wife and children—Louis has managed to earn both a sterling reputation and bountiful personal wealth at the tender age of 36—we were also able to gain more insights into his exceptionally agile mind. He particularly impressed me with the breadth of his reading; over adult beverages at his home, I brought up a relatively obscure book by one of Barron’s regular contributors and, to my amazement, he’d already read it.

Moreover, his knowledge of global economic trends is impressively deep and he communicates his thoughts with unusual lucidity. If you think those plaudits are a bit over the top, the accompanying interview is almost certain to change your mind.

Among the important topics he covers are:

♦ The emerging market inflation threat
♦ The fact that this is the first monetary tightening cycle being led by the central banks in developing countries
♦ The GaveKal take on the still unfolding financial crisis in Europe
♦ His very surprising comments about the changing nature of China’s labor force
♦ The unsustainability of present US fiscal and monetary policies
♦ Germany’s need to accept higher inflation

One suggestion: While there is a copious amount of valuable information in this piece, it is lengthy; therefore, I suggest you print a hard copy and read it at your leisure. It’s my sincere belief you will not be disappointed.



This report is for informational purposes only and does not constitute a solicitation or an offer to buy or sell any securities mentioned herein. This material has been prepared or is distributed solely for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. All of the recommendations and assumptions included in this presentation are based upon current market conditions as of the date of this presentation and are subject to change. Past performance is no guarantee of future results. All investments involve risk including the loss of principal. All material presented is compiled from sources believed to be reliable, but accuracy cannot be guaranteed. Information contained in this report has been obtained from sources believed to be reliable, Evergreen Capital Management LLC makes no representation as to its accuracy or completeness, except with respect to the Disclosure Section of the report. Any opinions expressed herein reflect our judgment as of the date of the materials and are subject to change without notice. The securities discussed in this report may not be suitable for all investors and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. Investors must make their own investment decisions based on their financial situations and investment objectives.

  • Categories