The reality is that we live in an era whereby currency debasement is a certainty.  Whether you like it or not, under the current monetary system, inflation is unavoidable.  And in a perverse manner, money creation increases nominal corporate earnings; thereby assisting stock prices over the medium to long-term.

Thanks to the consequences of monetary inflation, prices rise over time and this phenomenon gives a boost to the future cash flows of companies.  So, even if a company does not succeed in increasing sales and profits through an improvement in its business, with the passage of time, its nominal earnings get supercharged due to the inflation tonic.

Now, bearing in mind that stocks in the U.S. have already lost two-thirds of their real value over the past decade and the fact that money-printers are running the economic world, it seems likely that stocks will continue to appreciate over the following years.  Furthermore, if our assessment is correct, stock markets in the fast-growing developing nations will continue to outperform the ‘developed’ world.

After reviewing the macro-economic data, we are convinced that Asia will provide economic leadership and nations such as China, India and Vietnam will climb the prosperity ladder over the following years.  Accordingly, we are holding on to our long-term investment positions in these countries and it is our conjecture that our companies will produce solid growth over the following years.