Evergreen initiated a slightly modified version of its annual forecast EVA just over a year ago. We shifted from specific predictions to attempting to identify developments that could catch the investment community off-guard. As we noted at the time, this was an unabashed imitation of what Blackstone’s Byron Wien has done for years (including when he was Chief US Investment Strategist for Morgan Stanley). However, we also did this because it is the most unanticipated events that have the greatest market impact.
A Tale of Two Halves: If we simply evaluate global market returns last year, one might conclude 2016 was a fairly uneventful. Global stocks and bonds finished up 8%, and 4% respectively, which is generally what you’d expect in a typical year. However, if we dive a bit deeper “uneventful” wouldn’t be an appropriate description.
Legend has it that Richard Nixon once said: “We’re all Keynesians now.” In reality—and most ironically—those words were actually uttered years earlier by the ultimate anti-Keynesian economist, Milton Friedman. However, former President Nixon did riff off of this when he declared, after removing the US from the gold standard in 1971, “I’m now a Keynesian in economics.” Unsurprisingly, this turned out to be bad news for the American public as Mr. Nixon’s conversion unleashed a decade of stagnation and inflation. As a result, this wrenching experience produced a new term that the disciples of Keynes had previously believed was impossible: stagflation.
“The world currently has an excess of every manufactured good.”
-JOHANN RUPERT, CEO of luxury consumer products company, Richemont.
“Clearly, our consumers’ budgets are pinched.”
-Dollar General CEO, TODD VASOS
First of all, Evergreen would like to wish all of its clients,
“The more certain something is, the less likely it is to be profitable.”
-JIM ROGERS, acclaimed investor and former partner of George Soros
“You can’t buy what is popular and do well.”