And So Much For China’s Hard Landing
The case for emerging markets, and particularly India, is a good example of the challenges of managing portfolios in a world that’s often driven by investors’ often-wrong consensus.
Remember when everyone was concerned about China’s hard landing? Right around the time there was a peak in “China hard landing” searches on Google is when the iShares MSCI Emerging Markets EEM ETF (EEM) reached its five-year low.
Since the height of “China slowdown” searches on Google, EEM is up 40%. I have always found that when the noise is the loudest, the risk/reward of investing is generally in your favor and worth leaning on.
For a larger view, please click on the image above.
When I first entered into this industry, I read a long list of investment books along with every single Warren Buffett annual newsletter. None of those books talked about game theory, which for me has increasingly become an important part of the investment management process.
In short, for game theory analysis, we are looking at a cross section of sentiment and positioning indicators to see where positons might be "offside."
Examples such as being long the U.S. dollar and predictions of a flattening yield curve at the beginning of the year are reasons Astoria Portfolio Advisors deploys game theory into our investment process, along with traditional valuation analysis and using quantitative risk modeling to identify key portfolio risks.
At the time of writing, Astoria Portfolio Advisors owned positions in EPI and IEMG. For a list of relevant disclosures, please click here.