e-fundresearch.com: What are your personal lessons learned from 2014 market developments?
Alexander Farman-Farmaian: The volatility and 2 major downdrafts in the market in 2014 made us appreciate the value of 1) In-depth fundamental research on our portfolio companies, 2) having a strict valuation discipline that gave the right buy/sell signals and 3) being focussed on the long-term.
e-fundresearch.com: With regards to the new year 2015: How optimistic is your view into the future and what obstacles and challenges should investors be prepared to overcome in 2015?
My view for 2015:
• Likelihood of global financial market volatility due to dislocation created by steep drop in commodity prices and economic softness in Europe and Emerging Markets.
• US economic growth likely to accelerate due to 2 strong trends: 1) Fiscal loosening by government, and 2) An estimated $550m daily energy cost reduction to consumers ($200bn annualized) allowing them to save or spend more.
• U.S. Federal Reserve likely to raise short-term rates in 2015. Coupled with strong economy should help drive dollar up.
• Stronger Dollar usually coincides with higher U.S. stock market Price/Earnings ratios. Should be positive for U.S. equities.
Hinweis: Alexander Farman-Farmaian (Edgewood Management LLC) ist Speaker beim ARC Outlook 2015 am 21. Jänner in Wien
e-fundresearch.com: Why should investors consider an increase in allocation to your asset class in 2015?
Alexander Farman-Farmaian: The US economy doing well, the dollar likely to rise or stay high, and with liquidity abundant, I believe the US could be the place to invest in 2015. Furthermore, given that the economic cycle is getting old, I think that the US growth stocks in our client portfolios will outperform.