The concluding speakers presented today at the CFA Annual Conference in Frankfurt. The sessions were fruitful and provided much food for thought. I’m excited to bring these perspectives to our investment team, many of which are already present and implemented in our client portfolios.
Finding Value in an Overpriced World
Beginning in 2010 we made clear to our clients our belief that US stocks are overvalued. One of this morning’s speakers, Charles de Vaulx (Chief Investment Officer at International Value Advisers, LLC) agrees. His dilemma is also ours: how to find value opportunities in an overpriced world.
When investment opportunities are scarce, it is easy to get drawn into pursuing higher and higher levels of risk to obtain higher returns. This is a big mistake when value is not present. Mr. de Vaulx says “safe and cheap” and “to finish first you must first finish” matter more than ever, which sounds much like our advice to “focus on capital preservation” and “wait for the fat pitch.”
Hot Spots: The Return of Geopolitics
The conference closed out with Ian Bremmer, an expert in geopolitical analysis and its intersection with investments, and author of several great reads, including The J Curve and Every Nation for Itself.
Today, political events are ever-present in the news.
- The US relationship with Russia appears broken;
- China is going its own way;
- Ties between European countries are coming apart.
Bremmer says that the US and European actions against Russia were not put into place to punish Russians, they were done solely to punish the Putin regime. What are the consequences? Russian cyberattacks against US interests and military action are likely. Russia’s decline, as Putin feels pushed into a corner by the US and Europe, poses risks.
China’s political system is likely to remain stable as Bremmer sees it. China is making inroads one country at a time. Smaller countries like Cambodia today, but larger countries like South Korea in the future. As they accomplish this China will seek to assert their brand of “capitalism”, not the free market democracy that we have in the US and the developed world.
As the conference closes I look forward to exploring other areas of Germany. I’m also excited to work towards a #FutureFinance that helps clients obtain their goals and positively impacts our community and the world at large. One client at a time; one investment decision at a time.
“Best Regards” from the CFA Society of Germany by way of a gingerbread cookie.