In both life and investing, in tough times, it can be hard to hold faith in the future while observing the present. But in the words of Warren Buffett, “Someone is sitting in the shade today only because someone planted a tree a long time ago.” Let us not underestimate the heart and will of the entrepreneurs, investors, bureaucrats, and young people who are planting trees in China today.
I’ve been wondering lately which country—if any—can be the next China. Much of what made China a manufacturing powerhouse didn’t happen overnight; it took generations.
For example, when I was growing up in Taipei, my grandpa took piecework from the local hairbrush factory. I would sit next to him and insert thousands of plastic bristles into wooden handles, one at a time, until we hit his quota. Then he’d return the assembled brushes to the factory and get a new order.
My interest in emerging markets is largely driven by my personal experience. My parents participated in the spectacular growth of Taiwan, where they saw their annual income increase exponentially. But not all emerging markets have been so fortunate. Why do some emerging markets “emerge,” while others do not?
Some investors avoid China due to headline risk. But that itself may be the biggest risk of headlines: avoiding China. In this article I explain why.
Many investors say they “don’t invest in China” at all – despite having tens or even hundreds of millions invested in an emerging markets portfolio. These investors would be well-advised to understand the extent to which their EM portfolio is, in fact, invested in China.
Jason is making some predictions…and fully acknowledging that all of them could be wrong. There are only two sustainable options in investing: lose money fast, or compound returns slowly. Diversification remains the only free lunch in investing, and it has always been (and is likely to remain) the best way to successfully weather turbulent markets.
What will happen if our politicians pursue an economic “hard landing” that weakens employment for below-median households? What if Fed rate hikes crater consumption by further reducing their real income and wealth? If these things happen, we will achieve a Friedman-esque victory against inflation … but an ultimately empty victory for Main Street. At its heart, our current inflation is a political problem. It is going to require a political solution.
The so-called “fear premium”—the alpha opportunity created by fear-driven markets—is well-studied and understood. And yet, few investors have the discipline to avoid the behavioral mistakes caused by fear. Those who do will not only survive, but thrive.
For the past decade, many investors have been living in the Matrix. Buoyed by extensive quantitative easing and overseas production, their portfolios have ballooned. They believe in their illusory world, a place they have the ability to grow wealth unimpeded and without consequence. Unfortunately for them, this is the real world—and inflation is the blue pill.
PRESS RELEASE Rayliant Quantamental China Equity ETF Surpasses $100 Million in AUM Los Angeles, Monday, May 23, 2022 – The Rayliant Quantamental China Equity ETF (Ticker: RAYC) has surpassed $100 million in assets under management. RAYC is the world’s first active China ETF and is managed by Rayliant Asset Management, an asset management firm…