General

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

“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

"The US stock market has been this high only three times before since 1881." - Yale University’s Dr. Robert Shiller, referring to the price/earnings (P/E) ratio that bears his name. Mauled by a bear. One would need to be a very cursory or infrequent EVA reader—God forbid!—to be unaware that this author believes most investment assets are presently priced so high as to virtually offer return-free risk. And I’m aware that many of you think I’m a party-pooper for believing this but the fact is the math is on my side* (a more detailed analysis can be found at the end of this section). Yes, I know most of you also hate math (I can empathize with that) especially when it leads to an unpleasant conclusion. But there is some good news in this regard that I think you’ll want to hear. For years I’ve attended the National Association of Publicly Traded Partnerships (aka MLPs), missing only a couple over the last decade. The information I’ve gleaned at these has turned out to be invaluable, as have the relationships I’ve formed. In case you think MLPs are too messy to deal with (those pesky K1s), you should know that this sector has produced an annual return of 16% since Y2K (that would be 1/1/00). Fortunately, Evergreen’s MLPs have done even better, though I don’t want to incur the wrath of our compliance folks by telling you how much better.  Read More

“The US stock market has been this high only three times before since 1881.” – Yale University’s Dr. Robert Shiller, referring to the price/earnings (P/E) ratio that bears his name. Mauled by a bear. One would need to be… Read More