“If everyone is thinking alike, then somebody isn’t thinking.” - George S. Patton Jr.   In this week’s Evergreen Exchange, we are introducing a new member of the Evergreen GaveKal team: Worth Wray. Worth is Evergreen’s Chief Economist, a contributing member of the investment team, and new EVA author. Previously, he served as Chief Strategist at Mauldin Economics, an online economic and investment research firm with over one million weekly readers (a firm with whom many of our EVA readers are most likely familiar). Worth’s e-book on China, “A Great Leap Forward?”, co-authored with John Mauldin, was a bestseller on Amazon, reaching as high as #1 on the Investment & International Economics lists and #4 on the overall Business list.  We are pleased to have him on our team and hope our EVA followers are as excited as we are to read what he has to say. Read More

“To me, being prepared means being suspicious of trends that common sense tells us cannot last forever and yet have been in force for so long that a majority of investors sees them as being ‘normal’ .“ - Super-star investor, Howard Marks   LIVE BY THE TREND, DIE BY THE TREND The sound-bite that “the trend is your friend” is one of the most common (and dangerous) misconceptions in the investment world—perhaps rivaled only by “don’t fight the Fed”. Certainly, nowhere is such thinking more pervasive than in emerging Asia, where momentum investing is as common as chain-smoking and knock-off luxury items. (One amazing anecdote in the latter regard was relayed to me by my close friend, Louis Gave: A few years back, there were more bottles of Chateau Lafite Rothschild sold in China than were ever produced in France!) Just recently, we’ve witnessed a real-world demonstration of the combination of the “trend is your friend” and “don’t fight the Fed” (in this case, the Communist Party) in the People’s Republic of China. It provides me with a stellar opportunity to point out what I believe is one of the most underappreciated realities of financial markets worldwide: the über-importance of dollar-weighted returns, also known as money-weighted returns. This is a crucial distinction versus the typical way returns are reported on a fund or an index. The standard method ignores when and at what prices investors in the fund or index buy and sell. In other words, dollar-weighted returns are what investors actually realize from a given investment vehicle. As you will soon read, the difference between the two can be enormous. Read More

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“Revive the A shares, benefit the people; revive the A shares, benefit the people.” - A required chant from last Sunday’s graduation ceremony at China’s prestigious Tsinghua University, referring to shares that trade on the Shanghai stock exchange. Ka-put? To kick off this edition of our monthly Guest EVA, I thought I’d share some good news: This is not another nauseating essay about Greece! The more sobering message is that it is about the possible expiration of an extraordinarily market friendly device—the legendary “put”, which has undergirded financial markets in recent years. Today’s Guest EVA highlights the work of two extremely savvy females on this topic, following up on my theme from last month that women often are more rational when it comes to investing than men. The first note is from our partner firm GaveKal’s Joyce Poon. Over the years, I’ve become a big fan of her consistently well-reasoned insights into Asian markets, particularly China. As you may have noticed, there has been some rather interesting market action in China recently. Read More

"There is nothing wrong with America that cannot be cured by what is right with America.” - William J. Clinton The Fourth of July has always been my favorite holiday. Growing up in the Pacific Northwest, Independence Day always meant the “official” start of summer and a big reason to celebrate. As I’ve gotten older, not much has changed. I still look forward to the parade, great weather, fireworks, and, most importantly, time spent with friends and family. Since America’s birthday lands on a Saturday this year, we realize most of our readers will be celebrating with loved ones when EVA gets sent out. So, we decided to mix up the format and employ a more digestible video edition of the Evergreen Exchange. Read More