INVESTMENT SPECIAL: Sell the East, buy the West

The end is nigh for the Asian boom – but parts of Europe look perky

At the beginning of 2010 I was asked to announce my ‘trade of the decade’. Forecasting ten years ahead should be easier than forecasting short-term. But at the time the global economic outlook was more than usually uncertain. That made it tricky. So after a little thought I did what I normally do when stumped. I looked at what everyone else was predicting and went for the diametric opposite.

Fund managers and financial advisers were nuts for emerging markets in 2009 and 2010. I could barely see over my desk for research papers extrapolating 10 per cent GDP growth in China forever. At the same time most observers were down on western markets, despite them being much cheaper. So my trade of the decade was ‘sell the East, buy the West’ (with Japan being considered, perhaps perversely, part of the West).