Investing for the long term

The rise of China over the past three decades has led many to believe that the economic growth of the mainland will be automatic. At the same time, there is no shortage of doomsayers who believe that China’s rise is not sustainable, much like Russia and Japan in the past. In order to answer this all-important question, we have to understand what powered China to become the second largest economy in the world in the first place, and that will give us some clues as to where it will be going in the coming decades...

This paper will elaborate on the reasons why the term EMs is no longer useful as a benchmark classification. The evidence supports the importance and performance of Asian EMs, especially when compared to South American and European EMs. It is time to reconsider asset allocations based on such a weakly defined term and make a considerable, dedicated allocation to China...

Funds that cling onto old organisational architectures and research processes may find themselves increasingly becoming suppliers of inefficiencies rather than exploiters. With an expansion of knowledge comes an expansion of opportunities to exploit inefficiencies...

The way we manage these events is a lot like the way super-catastrophe re-insurance businesses manage these events. As Ajit Jain, Vice Chairman of Insurance Operations for Berkshire Hathaway explained in an interview in 1998, “The reality in the super-catastrophe business is that there isn’t a lot of meaningful data to analyse. What you do is start with historical data and then you make certain projections from that. It’s a very subjective artform”...