Investment Guru Jean-Marie Eveillard managed First Eagle Fund for the past 30 years or so. He retired earlier this year and become the senior advisor to the Fund. Fox Business New had an interview with Eveillard yesterday and here are some of the key points he made:
On why he went to cash heavy back before the financial crisis: Perhaps he was lucky. Back in April 2006, he read a piece from Chief Economist of Bank for International Settlements, which stated that we were on the verge of a major financial crisis and monetary authorities had forgotten one big thing, which is it's not enough to have -- inflation is not a not enough to have more prosperity. You have to make sure that you don't get the credit boom to go on too long, because a credit bust would follow credit boom just as night follows day"
On whether he thinks Fed is making a mistake by keeping interest at almost zero now
The Fed is a addressing in its own way what they seem to be the immediate -- Which is to get the economy going again as quickly as possible. So there is a stimulus in place already both fiscal and monetary. Which is which I think it is ten times as big as a stimulus that was put in place on average during recessions in the past. I don't know whether it's too much or too little. What I'm saying is that there are a addressing and possibly successfully the immediate fall of the economy. The key question in my mind is -- that's recovery be sustainable."
On whether the high unemployment will bring a double dip to the economy
" That again the question is would economic growth be sustainable . We have the typical post World War II recoveries that would go on for a streak of five years after a major recession. I think I have doubts about that it is possible. So if the economy recovery is not sustainable, then you'll have another stimulus, more spending because that's the way. We're sort of following a path more spending and more purchases by the Fed of various assets"
On where to put clients’ money now
"It is the stock market America -- market is up almost 50% from its lows. At the beginning of the year what happened was that, there was some forced selling and there was some selling by people who thought that we would jump to the Great Depression. After that I want to own stock. “
“It appeared to me in a paper money system, the odds that we would have deflation are low. So we were buying at the beginning of the year. Today the market is up more than 50% from its low.
“For the long term’s point of view, for the next 5 to 10 years, the east is rising, the west is declining. “
“The emerging market, China and India and countries in between, but those market have doubled since the beginning of the year, so the opportunities are fewer. But in long term, those are market you want to be in”
“Japan is still 75% lower than its all time high that it reached 20 years.“ He likes companies in Robotics, Health Care and Insurance companies there.
Given the fact some companies taking huge risks, weather he has to change the paradigm as a value investing
“Taking the long term approach like Warren Buffett’s approach is the way to go. The only question I have is that whether the fundamental financial landscape changed. And I do not know the answer to that.”
Watch the video:
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On why he went to cash heavy back before the financial crisis: Perhaps he was lucky. Back in April 2006, he read a piece from Chief Economist of Bank for International Settlements, which stated that we were on the verge of a major financial crisis and monetary authorities had forgotten one big thing, which is it's not enough to have -- inflation is not a not enough to have more prosperity. You have to make sure that you don't get the credit boom to go on too long, because a credit bust would follow credit boom just as night follows day"
On whether he thinks Fed is making a mistake by keeping interest at almost zero now
The Fed is a addressing in its own way what they seem to be the immediate -- Which is to get the economy going again as quickly as possible. So there is a stimulus in place already both fiscal and monetary. Which is which I think it is ten times as big as a stimulus that was put in place on average during recessions in the past. I don't know whether it's too much or too little. What I'm saying is that there are a addressing and possibly successfully the immediate fall of the economy. The key question in my mind is -- that's recovery be sustainable."
On whether the high unemployment will bring a double dip to the economy
" That again the question is would economic growth be sustainable . We have the typical post World War II recoveries that would go on for a streak of five years after a major recession. I think I have doubts about that it is possible. So if the economy recovery is not sustainable, then you'll have another stimulus, more spending because that's the way. We're sort of following a path more spending and more purchases by the Fed of various assets"
On where to put clients’ money now
"It is the stock market America -- market is up almost 50% from its lows. At the beginning of the year what happened was that, there was some forced selling and there was some selling by people who thought that we would jump to the Great Depression. After that I want to own stock. “
“It appeared to me in a paper money system, the odds that we would have deflation are low. So we were buying at the beginning of the year. Today the market is up more than 50% from its low.
“For the long term’s point of view, for the next 5 to 10 years, the east is rising, the west is declining. “
“The emerging market, China and India and countries in between, but those market have doubled since the beginning of the year, so the opportunities are fewer. But in long term, those are market you want to be in”
“Japan is still 75% lower than its all time high that it reached 20 years.“ He likes companies in Robotics, Health Care and Insurance companies there.
Given the fact some companies taking huge risks, weather he has to change the paradigm as a value investing
“Taking the long term approach like Warren Buffett’s approach is the way to go. The only question I have is that whether the fundamental financial landscape changed. And I do not know the answer to that.”
Watch the video:
