From Mark Gilbert at blombergview.com:
Take a look at this chart, courtesy of the website ZeroHedge. It compares the 15-year performance of Martin Taylor’s Nevsky Capital emerging-markets fund with various MSCI benchmarks against which money managers measure their investing skills:
If you’d have put a dollar into a fund tracking the best-performing index in March 1995, you’d have a bit less than $3. If you’d given your dollar to Taylor, you’d have more than $64. You might think that the career of a guy in his late 40s who’s delivered returns for his clients that are more than 20 times better than his benchmark was unassailable. You’d be wrong. Taylor decided this week to shut up shop — and not because he wants to spend more time with his money:
The decision to stop managing the fund, after just over 15 years, has been a very difficult one. This decision has been driven by a growing awareness that certain features of the current market environment, which we believe might persist for a considerable period of time, are inconsistent with the achievement of our goal of producing satisfactory risk-adjusted absolute returns.
Taylor cites a laundry list of obstacles to investing that make for worrying reading, especially in light of what’s currently happening in Chinese markets. (Full disclosure: I’ve known Taylor for almost three decades since we were at university together.) As China and India become increasingly important on the world stage, the dishonesty of their economic data undermines any efforts to get a true picture of the global outlook:
China is the world’s second-largest economy, but already much larger than the U.S. in a broad swathe of sectors. India will be the world’s third-largest economy in a decade. Unfortunately, their rise is increasing the global cost of capital because an ever-growing share of the most important data they produce is simply not credible. This obfuscation and distortion of data, whether deliberate or inadvertent, makes it increasingly difficult to forecast.
China’s stock market is suffering its worst start to the year in two decades, with worldwide repercussions. Global equities have lost more than $2.5 trillion of their value in the past week. So you can see why Taylor is so fearful of the opaqueness of Chinese data, both from the government and its companies.
To continue reading: He Made 6,400% But Can’t Trade These Markets
