While we don’t have a crystal ball at First Eagle, we do have a sense of current valuations and of the underlying vulnerabilities in the system. If the broader markets themselves are priced for low returns, investors who choose passive vehicles face the prospect of singularly disappointing returns over the long term.
This morning’s election results once again drove home the futility of human efforts to predict the future.
The United Kingdom’s vote to leave the European Union has already led to signficant turbulence in global currency and securities markets. Beyond this immediate reaction, we believe that political and economic uncertainty could continue for several years as the UK negotiates its new relationship with the EU.
In the past few years, gold and gold-mining stocks have been among the weakest performers in our Global Value and International Value strategies. Given the dramatic decline in some of these holdings, clients have questioned their presence in our portfolios. We believe that gold and gold-mining stocks continue to have a fundamental place in our Global Value and International Value strategies. We’ve organized this paper around the three major reasons for this conviction.
First Eagle's High Yield PMs discuss their approach to investing in a volatile market environment.