Daily Commentary

Providing succinct, entertaining and savvy thinking on global capital markets. Our goal is to provide discerning investors the most essential information and commentary to stay in tune with what's happening in the markets, while providing unique perspectives on essential financial issues. And just as important, Fisher Investments MarketMinder aims to help investors discern between useful information and potentially misleading hype.

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‘India Has Arrived’: Why Modi’s Economy Offers a Real Alternative to China

By Diksha Madhok, CNN, 2/27/2024

MarketMinder’s View: This is quite an optimistic take on the outlook for India, which we think has some accurate aspects but likely gets carried away in making the case for Indian stocks. Fundamentally, things like infrastructure development are contributing to fast GDP growth in recent years, which is a plus not only for India, but global demand. The country is also benefiting from discounted Russian oil, both in terms of lowering import costs and serving as a fillip to exports of refined products. And perhaps outflows from China have targeted India to an extent, although we think inflows don’t really drive equity market returns so much as they follow them (see: China’s outflows, which didn’t really start until well into a three-year bear market). But all of this is widely known in the investment community at this point. Much of the rest of this highlights a key problem with the case for India, despite only a passing mention of it in discussing valuations: Sentiment toward the country is remarkably high. The rosy take on markets hitting a record high, for example, overlooks the fact much of the world is seeing the same—without pundits citing it as a reason for bullishness. The election? There is a long history of people overrating Emerging Markets and, specifically, Indian elections as crucial for the economic outlook. It has happened before with Prime Minister Narendra Modi and could again—particularly since he has already achieved many major economic measures he sought, like tax cuts, leaving the reform part of his agenda threadbare. And the country has a shaky attitude toward foreign investment and economic reform, which could rear its head again after the election. Look, we aren’t saying this is a case to be negative on India, but the reality is more balanced than this shows.


What Have You Made on Private Equity? Who Knows?!

By Paul J. Davies, Bloomberg, 2/27/2024

MarketMinder’s View: This is an excellent discussion of a core, basic, key problem with private equity investing: You can’t actually know what rate of return you are earning until you have totally exited the investment, usually years in length. Why? Because as this illuminates, all of the other valuation and performance measures—like internal rates of return, cash distributions versus capital invested or other—are either incomplete looks or rely on the manager’s estimates of unrealized gain or loss. Furthermore, because of these valuations’ idiosyncratic nature, comparison to other funds or assets is nearly impossible. Hence, as this piece notes in closing: “Sebastien Canderle, a former private equity manager who writes a blog for the CFA Institute, concluded a critique of the sector thus: ‘In private markets, no one can figure out your true performance.’” We would add: If you can’t accurately determine your performance, you can’t know if the asset provides any meaningful diversification. The lack of clear, transparent pricing data is a wee bit of a problem people seeking exposure ought to weigh carefully.


What If You Invested at the Peak Right Before the 2008 Crisis?

By Ben Carlson, A Wealth of Common Sense, 2/27/2024

MarketMinder’s View: Look, we believe it is possible to identify bear markets early enough in their lifespan to take action that mitigates declines. But neither we nor anyone we are aware of has done so every time. In that light, this piece offers some rational perspective for investors to keep in mind: Namely, that stocks rise much more often than they fall, and bull markets are stronger than bear markets. To illustrate this, it shows you returns from the peak before 2008’s financial crisis, the biggest bear market in recent memory. “From the market peak just before the financial crisis ripped your face off, the S&P 500 is up just shy of 350% in total. That’s good enough for annual returns of 9.5% per year, which is essentially the long-term average over the past 100 years. … The historical 9-10% annual return in the stock market isn’t simply made up of the good stuff. Those results include some pretty gnarly periods of volatility. And one of the main reasons we get to experience bull markets like the one we are living through today is because there is always the chance of a crash like we experienced in 2008.” So the key is this: Make sure your asset allocation is aligned with your long-term goals and stay patient if and when things don’t seem to be going your way.


‘India Has Arrived’: Why Modi’s Economy Offers a Real Alternative to China

By Diksha Madhok, CNN, 2/27/2024

MarketMinder’s View: This is quite an optimistic take on the outlook for India, which we think has some accurate aspects but likely gets carried away in making the case for Indian stocks. Fundamentally, things like infrastructure development are contributing to fast GDP growth in recent years, which is a plus not only for India, but global demand. The country is also benefiting from discounted Russian oil, both in terms of lowering import costs and serving as a fillip to exports of refined products. And perhaps outflows from China have targeted India to an extent, although we think inflows don’t really drive equity market returns so much as they follow them (see: China’s outflows, which didn’t really start until well into a three-year bear market). But all of this is widely known in the investment community at this point. Much of the rest of this highlights a key problem with the case for India, despite only a passing mention of it in discussing valuations: Sentiment toward the country is remarkably high. The rosy take on markets hitting a record high, for example, overlooks the fact much of the world is seeing the same—without pundits citing it as a reason for bullishness. The election? There is a long history of people overrating Emerging Markets and, specifically, Indian elections as crucial for the economic outlook. It has happened before with Prime Minister Narendra Modi and could again—particularly since he has already achieved many major economic measures he sought, like tax cuts, leaving the reform part of his agenda threadbare. And the country has a shaky attitude toward foreign investment and economic reform, which could rear its head again after the election. Look, we aren’t saying this is a case to be negative on India, but the reality is more balanced than this shows.


What Have You Made on Private Equity? Who Knows?!

By Paul J. Davies, Bloomberg, 2/27/2024

MarketMinder’s View: This is an excellent discussion of a core, basic, key problem with private equity investing: You can’t actually know what rate of return you are earning until you have totally exited the investment, usually years in length. Why? Because as this illuminates, all of the other valuation and performance measures—like internal rates of return, cash distributions versus capital invested or other—are either incomplete looks or rely on the manager’s estimates of unrealized gain or loss. Furthermore, because of these valuations’ idiosyncratic nature, comparison to other funds or assets is nearly impossible. Hence, as this piece notes in closing: “Sebastien Canderle, a former private equity manager who writes a blog for the CFA Institute, concluded a critique of the sector thus: ‘In private markets, no one can figure out your true performance.’” We would add: If you can’t accurately determine your performance, you can’t know if the asset provides any meaningful diversification. The lack of clear, transparent pricing data is a wee bit of a problem people seeking exposure ought to weigh carefully.


What If You Invested at the Peak Right Before the 2008 Crisis?

By Ben Carlson, A Wealth of Common Sense, 2/27/2024

MarketMinder’s View: Look, we believe it is possible to identify bear markets early enough in their lifespan to take action that mitigates declines. But neither we nor anyone we are aware of has done so every time. In that light, this piece offers some rational perspective for investors to keep in mind: Namely, that stocks rise much more often than they fall, and bull markets are stronger than bear markets. To illustrate this, it shows you returns from the peak before 2008’s financial crisis, the biggest bear market in recent memory. “From the market peak just before the financial crisis ripped your face off, the S&P 500 is up just shy of 350% in total. That’s good enough for annual returns of 9.5% per year, which is essentially the long-term average over the past 100 years. … The historical 9-10% annual return in the stock market isn’t simply made up of the good stuff. Those results include some pretty gnarly periods of volatility. And one of the main reasons we get to experience bull markets like the one we are living through today is because there is always the chance of a crash like we experienced in 2008.” So the key is this: Make sure your asset allocation is aligned with your long-term goals and stay patient if and when things don’t seem to be going your way.