Sauberan

Over the past 20 years, the pace of economic activity in the developed world (US, Japan and Europe) has been slowing. To varying degrees, all 3 economic zones are impacted by the deflationary forces of globalization, technology and demographics. The political and economic response to slowing growth has been the same, lower interest rates and rising... debt. From 2001 2007 global debt grew by $55 trillion, twice the rate of economic expansion, with the surge in debt eventually causing the 2008 global economic crisis. Since 2008, the global economy (Debt and (not much) Deleveraging McKinsey) has doubled down adding another $57 trillion. However, this time debt is growing four times faster than global growth. Internationally, governments are responsible for $25 trillion of the increase, nearly 50% of the total. Debt expanding several times faster than the economy is eventually destabilizing with the majority of new debt being misallocated to unproductive investment or excess consumption. Despite total debt around the world reaching $200 trillion, economic activity remains well below historical averages and the global economy is heading towards deflation for the first time since the 1930s. Combined, the aforementioned factors create a significantly higher level of systemic risk than in 2008. The eventual outcome will be a market correction similar to 2008 where diversification provides little protection as the price of all but the safest assets fall considerably. To effectively manage assets in an overleveraged, slow growth environment Sauberan & Co. uses a macroeconomic approach analyzing and forecasting directional changes in key economic statistics identifying assets that should outperform and/or underperform given the economic environment. The basic premise to this approach is that economic activity (GDP), corporate earnings, and stock prices are closely correlated over time. Our fundamental investment philosophy is based on three main tenets, preservation of capital, long term time horizon (7 10 years) and ...Read More