“Never think that lack of variability is stability. Don’t confuse lack of volatility with stability, ever.” - Nassim Nicholas Taleb   CALM BEFORE THE VOLATILITY STORM? Tyler Hay I wrote this edition of the Evergreen Virtual Advisor (EVA) from my hotel room in Laguna Beach, California, looking out at the serene Pacific Ocean. The setting seemed very appropriate considering the soothing comments I heard a few nights ago at Schwab’s EXPLORE conference from Liz Ann Sonder, Chief Investment Strategist. Ever since the stormy summer of 2011, US stock market investors have been riding a gentle but persistent wave that has carried them to the ultimate financial promised land of high returns and low volatility. Read More

Slight positive revision to Q1 GDP, which is still negative at -0.2%, but an improvement from -0.7%. Current expectations are calling for 2.2% for the full year with quarterly consensus estimates at 2.5%, 3.0%, and 3.0% for Q2, Q3, and Q4 respectively. Consumption was the largest positive revision, and based… Read More

Weak release today for durable goods orders in May (April revised downward as well). This was released right after data started to finally look a bit healthier for the US economy, which highlights the world we live in with continued sluggish growth. Read More

To subscribe to Insights, email jliu@evergreengavekal.com; Note: all returns represent total return including dividends; YTD Market Style Returns are based on the Russell indices. Please see important disclosure below: DISCLOSURES: This material has been prepared or is distributed solely for informational purposes only and is not a solicitation or… Read More

“It’ll be gone by June.” – Variety magazine referring to rock ‘n roll, in 1955 “We don’t like their sound, and guitar music is on the way out.” – A Decca Records executive on declining to sign the Beatles in 1962 “Reagan doesn’t have the presidential look.”… Read More

“It’ll be gone by June.” - Variety magazine referring to rock ‘n roll, in 1955 “We don’t like their sound, and guitar music is on the way out.” - A Decca Records executive on declining to sign the Beatles in 1962 “Reagan doesn’t have the presidential look.” - A United Artists executive, rejecting Ronald Reagan for the lead role in the 1964 political drama, The Best Man   Don’t sleep on the underdogs. If there’s one dominant message that comes through from this newsletter, it’s my sincere hope it’s the danger of investing alongside the Wall Street consensus. A prime example of the risks of falling for the “wisdom” of the Street was its nearly universal recommendation to overweight emerging stock markets five years ago. This was based on expectations of much faster growth vis a vis the lethargic “rich” countries. Yet, as you can see in the below headline, from yesterday’s front page of the Financial Times, the tables have definitely turned. Read More

“Would we be in the same mess today if Lehman Brothers had been Lehman Sisters?” -New York Times columnist Nicholas Kristof, in an article during the financial crisis. The price of bias. This month’s edition of the Evergreen Exchange will reflect the differing viewpoints of multiple members from our investment committee. In the spirit of competition, we’ve begun to perform a survey to identify which author readers feel makes the most persuasive case. This week, we’ll tackle a topic that is largely overlooked by the investment world: behavioral finance. (Loyal readers will recall that this field of study plays an integral role in Evergreen’s approach to managing our clients’ assets.) Each author will discuss a behavioral bias that affects investors’ psyche and try to convince readers that their choice is the greatest threat to portfolio returns. Specifically, I will address the recency effect, Jeff Eulberg will cover loss aversion, and lastly, David Hay will explore overconfidence. Read More