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.
We are quick to criticize other countries’ regulatory and fiscal missteps, but it would be foolish to imagine the US Federal Reserve and our other institutions are not similarly capable of self-harm. It could be out of ignorance, hubris, or politics. Regardless, the coming stagflation is cause for concern in the US.
Dr. Jason Hsu looks at a unique and recent regulatory push in China (one still not on Western radars) that is an illustration of how US and Chinese regulators are trying to tackle the same problems…but with very different toolkits.
Beijing’s consumer tech crackdown last year led some global investors to hypothesize that China is punishing success. But the likely real reason is simpler: Beijing feels uncomfortable with the power a few firms harness through their unbridled access to personal data. Western regulators are grappling with similar concerns.
Beijing’s consumer tech crackdown last year led some global investors to hypothesize that China is punishing success. But the likely real reason is simpler: Beijing feels uncomfortable with the power a few firms harness through their unbridled access to personal data. Western regulators are grappling with similar concerns.
This piece was originally penned to address concerns over how the invasion of Ukraine might exacerbate a potential conflict between China and Taiwan. For those asking my opinion, I predict China will deescalate with Taiwan in the coming years because it simply has too much to lose by invading—and too much to gain through patience.
There is one piece of asset allocation advice we’ve been giving over and over again since Rayliant launched: The onshore China A shares are a better place to be than the ADRs and Hong Kong listings trading offshore.