A Commentary by Louis Vincent Gave, foreword by Victor Niederhoffer

The following article by the Gavekal group is indicative of their world view, as are the books they write including Our Brave New World, which we have reviewed favorably on this site. I find them a modern incarnation of the practical implementation of the creative spirit of enterprise - the purveyors of a program that Hank Reardon might have been head of, had he been in the financial consulting field. They offer a link and free trial subscription to their service to the first 100 of our readers that are so inclined.

We are often complimented by readers of this site that we are not hawking, self aggrandizing, or selling products here. While this is true, we find it enobling to proffer a mutually beneficial opportunity for improvement to our readers, and this link is made in that context. However, do understand that we have no connection of any kind with Gavekal, except for the value we receive from their contributions of knowledge and opinion to our benevolent forum. VN

Announcing the publication of a new Gavekal book:

The End Is Not Nigh, by Louis-Vincent Gave, Charles Gave, Anatole Kaletsky & Steven Vannelli

A brief review of the book: Today's global financial system is characterized by a curious mixture of freedom and manipulations. Between the two main currencies of the world, the US dollar and the Euro, we have a free float. But between the dollar and a lot of other currencies, especially in Asia, we have a dirty float, or fixed exchange rates, the goal being to maintain the exchange rate at an abnormally low parity to the dollar.

To make matter worse, a lot of those countries (especially China and India) have decided to make their currency inconvertible. This would not matter if these currencies were small and irrelevant, but they are increasingly less so by the day. This state of affairs leads to profound price, and volume, distortions some well understood (i.e.: the RMB is undervalued and can only go up) and some not as well understood. It also triggers a number of important questions. Namely:

1) What distortions does the intervention of non-market players in the Asian foreign exchange markets engender?
2) Are the distortions abating? Or accelerating?
3) How long can those distortions last?
4) If/when the adjustment comes, what assets will be most at risk?

Of all these questions, the last one is probably the most important. As we never tire of writing, money management is often more about avoiding the assets that implode, and diversifying amongst the rest, than about picking outsized winners.

While it may be tempting to adopt a very defensive posture in the face of such blatant distortion, there are many reasons to believe that the current distortions may last and that the overall positive growth environment will continue for the coming years.

In The End is Not Nigh, we push some of the themes developed in Our Brave New World a little further and review the reasons that have led us, in recent years, to shy away from prophecies of doom and why we remain positive on global financial markets.

We will be distributing the book at this Thursday's London seminar, this April's Paris & Stockholm seminars, and the May New York seminar. Clients who cannot attend these events, or who wish to receive a copy before then, can email me for a copy. Please include your hard copy mailing address in any book request.

For non-Gavekal clients, the book will be available for sale at our website starting today for US $22 per copy (incl shipping). Starting next week, the book will also be available for sale.    

Needless to say, if you like the book, we would be most grateful if you could plug it to your circle of friends and colleagues. Thanks to the "word of mouth" effect, we sold what we felt was a surprisingly high number of Our Brave New World. We ended up having to do four re-prints of Our Brave New World, and this with no advertising, hardly any PR and only the GaveKal distribution network. Thanks to our readers, Our Brave New World ended up being widely read and discussed. We hope that The End is Not Nigh will be able to follow in the same path.

If you do not like the book, or if you find some factual or conceptual errors, please let us know.

We take this opportunity to once again thank you for your support.





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