Investments in EuropePublikováno: 22.12.2011
We bring you two interesting video talks about why and where to invest in Europe, even in this unfavorable time. First interview transcript is below.
Why It's Time to Invest in Europe and Where to Invest in Europe
Jack Otter: We’re here with Charles de Vaulx manager of the IVA International Fund and a renowned investor for many years. Now Charles, your fund has the virtue of being able to go anywhere in the world but many people are looking at the investing landscape right now and they see stocks or at least fairly valued, corporate bonds had wonderful yields for a while there that’s come down and sovereign debt as we know has a lot of problems mainly being dead in this so many country. So where do you go?
Charles de Vaulx: Well one of the options when you have a go anywhere fund is to have cash. So indeed you're right. Sometimes as the location does not work once every 30 or 50 years because at times every asset class has been beat up. In ’07, small stock works as expenses as big, high yield, commodities, even goal, the insurance policy had gone up. So we have the flexibility to be in cash, two months we had 22 and a half percent in cash. Markets have come down over the past two months. We’ve been able to do some shopping. Now the cash levels had to come down to 13%, the fact that we’re not fully invested tells you that we still don’t feel a 100% comfortable with what’s out there.
Jack Otter: And you are a fan of Europe which as most people think is falling apart. Why would anyone put money in Europe?
Charles de Vaulx: Jack, I'm not a fan of Europe. I'm a fan of the prices at which certain securities in Europe. It's important to understand that in Europe, Europe has many companies that are very global in scope even more multinational companies than we have here in the United States. And so the companies we own in Europe are companies such as Nestle, the food company, a multinational company. Total big global oil company. Even French based Sodexo owns myriad of services here in America. So that 40% of the business is right here in the United States. So a lot of European based companies may not necessarily do a lot of business in Europe. But then even for the companies that are Eurocentric the price matters as much as the outlook. So the outlook maybe oblique but it’s important to understand that European stocks today are a lot cheaper than US stocks and so some stocks are attractive just based on the price even though the short term outlook is not too inspiring.
Jack Otter: That’s true, so let’s talk briefly about gold. I know before you run this fund, you did run a gold fund. So you have many years of experience there and you own some gold now. The price is going up a lot though, you’re a value guy. What do you feel?
Charles de Vaulx: Yes, you're right. The price of gold has gone up from $255.00 in the summer of ’01 to $1240.00 today. Now the good news is that in the 70’s gold went up twenty fold. And so we may not be totally done with the moving gold. More importantly we think that there’s so much that in a system that it's very tempting in many countries to try to inflate the weight, it’s easier, to inflate away by printing money and then taxing people or reducing spending. One of the traditional marks against gold is that it pays no interest. That knock is a lot less relevant when nominal interest rates are very low and when real interest rates minus the inflation are negative which the case is today.
Jack Otter: Thank you very much Charles and thank you for watching.