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A
Today's Animal Spirits Talk. Your book is brought to you by Schaefer cullen. Go to Cullenfunds.com to learn more about the Cullen Emerging Markets High Dividend Fund. That's Ticker C, E, M, F, x. Again, that's Cullenfunds.com to learn more.
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B
Welcome to Animal Spirits, a show about markets, life and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Rithol's Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.
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A
Welcome to Animal Spirits with Michael and Ben. Michael, insert the al Pacino from Godfather 3. Just when I edit it out, they pull me back in. That's got to be one of the only good parts about Godfather 3.
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C
Never saw it, never will.
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A
All right, don't. Emerging markets, I looked on a total return basis, are up over 32% this year. We're recording this on October 20th.
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C
I'll do you one better, okay. Or no need to one up. I'll do you one also.
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A
Okay.
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C
This is surprising since the beginning of January 2024, almost a full two years. And think about all of the dominant financial headlines. Mag 7 US stocks, American exceptionalism, OpenAI. Yeah, all that industrial revolution since January 2024. Emerging market stocks and US stocks are even. Steven, that's kind of hard to believe.
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A
That is surprising with how well the US stock market did in 2024.
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C
Now, a very easy counterpoint, which doesn't negate what I said, but, you know, is all right, well, how about 23 and 22 and 21 and 20 and 19? Like us stocks have been in a bull market for a long time. Em hasn't. Nevertheless, it's just I, I, I was surprised to see that it's neck and neck for the last almost two years.
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A
Right. And, and I guess if you were going to make a claim, you'd say, well, listen, things have changed, right? The dollar is down a lot. It's possible the US Will continue to pursue a weak dollar strategy. And that would be good for emerging markets. It's really good for international stocks. I think it's really, really good for emerging markets. If that is, we can quantify that. And so a weak dollar, which we haven't had in a while, a sustained period of it makes a lot of sense. Yeah, I definitely wouldn't have said it. Yeah, sure, emerging markets is going to be the outperformer this year, but I guess that's how this thing works. So on today's show, we talked to Raul Sharma, who is a portfolio manager at Schaefer Collin Capital Management. We've had Raul on the show before. He has a real boots on the ground approach. He tells us about his trip to China, which after we read Dan Wang's book, Michael, I almost feel like I have to see it now.
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C
Well, I also read China and Apple. Or no, I'm sorry. Geez.
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A
Apple and China.
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C
Apple and China. So I've read 100% more books than you have been about China. So catch up.
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A
I think the actual growth there is 50% more books than me.
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C
Well, either way.
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A
Yeah, you're going to.
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C
No, no, no, no, no.
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A
I've.
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D
Excuse me.
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C
I've read twice as many books as you have.
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A
Okay. So yeah, you've graduated from tourists to actual expert. And I'm still a tourist.
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C
China and Apple.
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A
Nailed it. Anyway, we talked with Raoul about a bunch of different stuff. We talked about the dollar and China and dividends in emerging markets, which still matter a lot, and then their EM strategy, which is the Cullen Emerging Markets High Dividend Fund. So here's all that and more with Raul Sharma from Schaeffer Cullen Capital Management.
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C
Raul, welcome back to the show.
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D
Thanks, Mike. Thanks for having me again.
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C
All right, so Ben and I recently read a book called Breakneck by Dan Wang, China's Quest to Engineer the Future, which makes us pretty much experts on China. And he wrote something that was obvious after reading it, but Ben and I are tourists here. So he. Basically, the premise of the book is that China is run and built by engineers and the United States is built and run by lawyers. And so the way that things get done, the way that things are built, very different incentives, very different structures. Obviously, China is a third of the benchmark, give or take. How do you think about. And maybe since you had firsthand experience, how do you think about how the different cultures trickle into equity markets, how they think about shareholders and how that impacts how you build a portfolio?
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D
Yeah, Michael, that's a good question. In terms of the engineering talent from China and kind of what we're seeing there. And I just gotten back from China and we spent a lot of time looking at some of their newer technologies, whether it be what they're doing with AI, autonomous driving, robotics, humanoids, all those sorts of things. And they're just very, very good. They have a lot of engineering talent. You know, more engineers probably than any other country in the world. And they're just very creative of how to build things in a less costly way and in a more constrained way. So if they can't get Nvidia's best chips, that's not really holding them back as much as maybe the US Thought it would when they put those kind of restrictions on them. And, you know, if you just look at their large language models, you know, their leading models are maybe only 5 to 6% behind, say, a ChatGPT, which is kind of the industry standard. But I've heard estimates of the cost being about 90% less expensive to build. So when you think about the cost efficiency of what they're building, it's really quite impressive. And, you know, being 5 or 6% behind is really, you know, you got to really think about who actually needs that 5 or 6%. I mean, the models are so advanced as they are, so I was very impressed with that. And if you just look at other areas, particularly newer technologies like, say, electric vehicles, robotics, humanoids, battery storage, they clearly have a global lead. There's a lot of ways to point to this. You can look at the number of patents filed, the number of scientific papers that have come out. They're still behind in older areas like, say, semiconductors or software or maybe space and defense technology. But even there, they're definitely catching up. And I think it is a tribute to, you know, the engineering talent they have and just how hard they work. I mean, these people are working very, very hard. And, you know, so I'm impressed with that. In terms of, you know, kind of the second part of your question, in terms of kind of governance, that's something that's definitely sweeping Asia this year, that you're seeing a massive wave of governance reforms. It kind of started a couple years ago in Japan. Now this year, it's really South Korea is probably in the forefront. But I would say almost every country, even places like Thailand, Indonesia, they're doing things also to try to improve corporate governance and improve valuations. And China has also been the same. In fact, I would say that China has probably been the global leader in terms of the percentage of share buybacks and dividend increases that the companies have made over the last five to seven years. And they're not calling these reforms kind of any program. Like in Korea, they call it the value up program. They're not calling it anything. But it's essentially the same thing where the government is telling companies to have better corporate governance, to do more buybacks and Just to be better companies. And I think that that is, you know, making a difference and it's one of the catalysts for that market this year.
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A
So there's the old saying that the the US Innovates in China imitates. Right. Do you think that a lot of people who have that mindset are totally underestimating what they can do in China? Because it's not just like they're taking our plans and building out the hardware and software that we tell them to? You're right. They're actually engineering things on their own now. Do you think a lot of people underestimate what China can do on the tech front these days?
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D
Definitely, for sure. And like I said, especially with regards to the leading and emerging technologies where there's really nothing to imitate because they already kind of have the lead in so many of these areas. So I think that was more of a model in the past. I mean, I'm sure there's still a lot of that kind of going on, but I think it's a lot less. And when you sit down with some of these companies, they're just very impressive across the board. Not just AI companies or tech companies, but a lot of their electric vehicle companies are really kind of trendsetters in what they're doing. If you look at some of the new EVs that they're producing, these are just really beautiful cars. I mean, I think the Ford CEO was on record of pointing out to how good these cars are. He actually used one for several months to just kind of get a sense of, you know, how capable they are. And I know he came away quite impressed. So there's a kind of a US Industry insider kind of pointing to the same thing.
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C
Raoul, I know we've had you on before, but for listeners that might be new to Schaeffer Cullen, let's zoom out. Before we zoom back in. How do you all think about running a portfolio? What's different about what you do versus some of the traditional ways that advisors might get access to emerging market exposure?
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D
Well, first of all, we're active and I think that's a big difference. We use a Benjamin Graham style value investment discipline, which basically means two things is that we're trying not to pay up. We don't pay up in terms of the multiples that we pay for stocks. And then we're very long term investors and we don't stray from our discipline. So I think that that's pretty unique. But then we do a lot of other unique things within this strategy, which I think are particularly important to emerging markets. We do a lot of country research to manage country related risks because they matter just that much more in emerging markets. So if you look at our alpha generation over time, I think you see a healthy split between stock selection and country selection. And I think that's, you know, a function of the Ben Graham style process. But then also that, you know, kind of top down, kind of more risk management work that we do as well.
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A
Do you find? Because a lot of people have decided like, I'm abandoning the Ben Graham framework in the US it doesn't work anymore. These big tech stocks of growth just seems to always beat value. Do you find that there's a difference between the growth and the value parameters overseas and especially in emerging markets where it's. That stuff still works much better than it does in the U.S. yeah, definitely.
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D
I mean, I think there's. Well, for one, there's a lot less of a distinction between growth and value in emerging markets now. It's starting to grow again as growth outperforms value in the year to date. But because some of the former darlings, particularly some of the Chinese companies, some of the Chinese Internet companies, corrected so much in recent years, these growth stocks essentially became value stocks. And we pounced on them. We bought them too, because they were finally in our range and they were paying dividends and increasing dividends like I mentioned. So there's a bit of a less disparity, I would say, in emerging markets. And there's certain kind of growth themes like AI that I just think are much better ways to play it than in US or in emerging markets just because the stocks are, you know, so much cheaper. I was looking at a group of like AI suppliers, like semiconductor companies, server companies, companies making cooling systems that we own in our portfolio and comparing them to the US counterparts and they're, you know, 50% cheaper with a yield that's still over 3%. And if you look at some of the AI enablers called companies like Alibaba or Tencent, they're still about a third cheaper than the US counterparts. So it's a cheaper way to play, I think mega tech growth themes and not just AI, but really across the board because a lot of technology supply chains run through emerging markets and you know, those stocks are still trading at attractive valuations.
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C
One of the big headwinds for US investors anyway has been the dollar. Talk about how that impacts both like international flows and maybe more importantly how it impacts investors.
- [11:48]
D
Well, a declining dollar has always been a huge catalyst for emerging market stocks. I think we've shown that if you look at the 10 periods where the dollar declined by more than 10% before this current period, emerging market stocks were up on average by about 45% and there was a 90% hit rate. It happened nine out of 10 periods. And so it should be no surprise that in the current year when the dollar has gone down by over 10%, emerging markets are up over 25%. It's quite typical and there's reasons for it that it really kind of relieves emerging market countries, particularly those that have a lot of debt or US Dol denominated debt or depend a lot on US imports, which is a lot of countries. All of that gets better for those sorts of countries. So it really is a big thing and we tend to think it's probably going to continue to happen. And we could talk about why that might be if you'd like.
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A
So I was looking at this today and I was looking at the emerging markets versus foreign developed stocks versus the S&P and the NASDAQ and the Russell 2000 and emerging markets had the lead over all of them. And I'm not sure many people have predicted that coming into the year. How much of this is part is because of the dollar falling double digits and how much of this is other fundamental factors at play?
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D
I think the big thing is the dollar, no doubt. But then, you know, I think it's also those reforms I mentioned that these are very positive things, these corporate governance reforms, like I said, particularly in markets like South Korea, which had really been a dead market for the last 10 years. All of a sudden it's. It might even be the single best performing emerging markets and country. And that's all in the back of these reforms that they're doing. I mentioned that's also happening in China. Certainly you're seeing very strong earnings growth coming out of particularly the technology side of em, which we were talking about for the same reasons you're seeing it in the US I mean they're essentially benefiting from the very same demand drivers as the Mag 7 is because they're supplying the Mag 7. So those are some of the things that are really helping emerging markets. And yeah, I think that the fact that foreign investors are losing money on US stocks or not making much because the dollar has gone down so much, all of a sudden they're looking for other places. And that's a good thing for fund flows.
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C
When you think about value within your mandate is that, is that at the country level, the company level, the sector level, because A lot of these names and a lot of these countries tend to trade cheap to the US for reasons that you can get into if you'd like. So how do, how do you think about that and how do you incorporate that into your framework?
- [14:08]
D
I mean, first and foremost, it's on a company level more than anything else. But yeah, I mean, you are going to see us where you see kind of P's lower and dividend yields higher and also not overhangs in terms of kind of country factors that create overhand. So whether it be the external position of a country or poor corporate governance, that's where you're going to see more of our exposures. But I like to think that there's good ideas kind of everywhere in terms of how we think about value. I mean, I tend to think of that we're kind of more of a core value manager. I mean, we like deep value stocks, but with deep value stocks you tend to get kind of a lot more hair on those stocks in terms, especially in emerging markets with things like poor corporate governance or with things like balance sheet risk. So while we're always looking for those kinds of ideas, it tends to kind of be more core value in nature. But then as I mentioned, I think the distinction between value and growth is that much less in emerging markets.
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A
You mentioned before thinking through the country selection, how that's a big part of trying to find alpha in emerging markets. I'm curious how you try to balance that out when thinking through a valuation framework. Because obviously there's plenty of emerging market countries that could have single digit P es. Right. But it's for a reason, because they're not shareholder friendly. So how do you balance out that desire for value with the fact that you need to make sure the country is high quality enough where they're going to take care of shareholders?
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D
Yeah, I mean, we try to use it more as a risk management tool or a country research. And we try to kind of limit exposures to countries that might be cheap but might have a lot of other problems. Now the single best example that over the last 10 or 15 years would be Russia, because if I just looked at low PE and high dividend yield and even dividend growth, I would have probably had a third of my portfolio in Russia. But because Russia has a lot of other problems from an investment perspective, we always had a lot less. And I think it's just important to understand like when, you know, discounts to the historical valuations of countries grow. So I think that's another thing that sports supporting The Chinese equity market versus say three to four years ago. You know, three to four years ago, I'd say there was a discount that was due to, you know, three reasons. One was, you know, first, how poorly the domestic economy was doing. Second, there's a huge regulatory crackdown on the Internet companies, the leading companies there. And then third, there's the really, you could say four reasons. Transparency and corporate governance was just kind of okay. And then fourth, you always have this risk of a war with Taiwan. So if you fast forward to today, I'd say that two of those factors have gone away, that all of a sudden the government's kind of supporting the technology companies. And I mentioned all the reforms that they're doing to improve corporate governance. So then you could see how a discount that might have been a lot larger in the past should be a lot smaller. And we could kind of talk about this all day depending on the countries where discounts are growing and where they're not. Certainly the external position of a country is very, very important. There you see countries like say Turkey or Egypt. I think they're very cheap just because they have such a weak combination of twin deficits, low levels of reserves, lots of debt. That's another thing that tends to weigh down the country valuations in those sorts of countries.
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C
One of the things that makes our capital markets different is not just we have the best companies in the world, biggest earnings, highest growth, all that sort of stuff, but it's the investor appetite for risk. How does that compare to other countries around the globe, specifically the ones that you're covering? And is that a permanent headwind for investors? Or are they getting wise to the fact that they need to do something more similar to what we're doing? And does that potentially unlock value going forward?
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D
Yeah, I think the countries are realizing that we need to do things more like us in terms of some of the governance. Although it's very interesting because what's happening out in the US I would argue we're going the other direction all of a sudden. And because all of a sudden we're having SOEs, state owned enterprises being created in the US with the government taking big ST companies, we're having these cross shareholdings emerge, which we never had before with, you know, companies taking big stakes in one another. And then I think there's no doubt that there's a lot more companies that are kind of trying to please the administration by some of the investments they're making. And all that reminds me of what happened in markets like China to be completely Honest with you now, it's very, very small. But what I'm saying is I, I, I think it's, I think it's important that there's a shift, because then, as I described, in places like Asia, you're seeing the opposite happen, where they're trying to be like we've always been in the past and improve that governance, get rid of those cross shareholders. That was probably the biggest driver of the Japanese market. Cancel treasury shares, improve corporate governance. So I think it's interesting to see which way the tide is turning in emerging markets compared to the U.S. so.
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A
Michael started talking about China and that again, I think it's a third or so of the EM index. Do you believe that they'll start caring about shareholders? I think that, I mean, a lot of people have talked about this, the fact that the economy was growing at like 10% a year, but the stock market went essentially nowhere since like, 1990. Like, are they actually going to be willing to accept that as part of their culture? Because that does seem like it's a cultural thing where they haven't been as reliant on the stock market as we have for household wealth.
- [19:12]
D
Well, yeah, that's become much more important for them. In fact, the stock market is the key tool now for them to kind of, I would say, get the domestic economy going, which is what they really want to do. They can't really rely on the property market because that's just too far. It just has a lot of problems. There's still high youth unemployment. That's not so easy to fix either. So the thing that they can do to make people feel better about spending more is to have the stock market do better. And I think that's one of the reasons why you've seen them be quite supportive of the stock market and want to put in those governance reforms so that the multiples of your average stock can go up. And it's not that Chinese people do not have a lot of money. They have a lot of money. They just don't want to spend it right now. So there's a lot of speculation. And another potential catalyst for emerging market is that you're going to see a lot of that money coming into the market. And I think you definitely have. You're especially seeing it coming if you look at some of the H Share, these new listings in the H share market of leading Chinese companies. These IPOs are doing very, very well. I mean, the Hong Kong market's having a banner year for IPOs, and a lot of that money is coming from local and domestic investors, international equities.
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C
I assume that the drivers of returns are the same as here. I mean over the long term it's earnings or is there anything different about the way that they're stocks behave relative to fundamentals and hours?
- [20:32]
D
I mean the big difference is that here we benefited from a lot more from multiple expansion. You've seen a lot less of that in virtually all markets. Maybe you're starting to see some of it now. But generally speaking, yeah, it's very similar in the sense that earnings growth drives stock prices and there's a very good correlation between long term earnings growth and stock prices. And that's another thing that is good for emerging markets is that if you look at say Bloomberg consensus, which admittedly that's usually wrong, but still if you look looking after three years, the index actually has the best average annual earnings growth than any major index, including the S&P 500. And then you know, the stocks are of course about 40% cheaper.
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C
How much of an overhang do you think the potential conflict between China and Taiwan is having over the index? I know it's been like some of the people have talked about for years now. And part two of that question is is it possible that there is like some sort of, I don't know, positive announcement that might re rate these stocks higher?
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D
Well, I think that, you know, that is a new discount on Chinese stocks that exists, you know, that started to exist a few years ago that didn't exist prior to that. I think it's being offset right now by some other positive emerging factors that I, you know, alluded to. But yeah, it definitely has an impact even on us. I mean we have made one change in the way we invest in that region is that we really don't do small to mid caps, which we tend to like in really either market just because we want to be in a position where if there was a war that we could be out of that market quite quickly. Now I don't think that's going to happen anytime soon, but it's something that we have to be aware of. I think other investors have even gone one or two steps further and said, well, that makes investing in these stocks completely uninvestable. I wouldn't go that far, but it's definitely something that you always have to be mindful of.
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A
You mentioned your trip to China earlier in the talk. Any other countries that you go to that you that you think people in the US would be surprised how far advanced they are in some of the investment opportunities that are available there.
- [22:34]
D
Well, there's been a lot of change in India for sure if you go and visit Indian airports these days. In fact, the newest airport, which is slated to be the most efficient airport in the world is opening up very, very soon outside of Mumbai. But that's a place where you've just seen dramatic change across the board. And another trend, and we were kind of talking about this is definitely the financialization of retail investors. That is definitely a similarity that we're seeing with the US where people really wanting younger, people really wanting to invest more, wanting to learn more. Even in places like India they're doing that. You've seen a huge amount of digitization in these markets. They tend to even use the Internet and things even more than we do. So that's another big change. I'd say back to China. The single biggest change that I saw versus the last time I had been was the environment. Just dramatic improvement in the quality of the environment in terms of pollution. And you know, I think that's because they, you know, are doing a lot of things. I mean half the cars sold in China are electric vehicles and you know, they're the global leader in renewable equipment. So that's been a notable change. You know as well if you were.
- [23:42]
C
To just look at the balance sheets of these companies not not knowing what you were looking at. Is there something fundamentally different about the debt to equity mix? Like how does. I'm just curious about the propensity for these companies and countries to take risk or maybe not. How conservative are they? What does that look like?
- [23:59]
D
I said average companies, I would say they're more debt averse. It could be because it's not as easy to get debt or they have to do it in different kind of ways than in other countries. And then I'd say a bigger dynamic is are they taking on debt in US dollars which creates a lot of risks if the dollar appreciates. Which is why I'm one of the principal reasons why a declining dollar is a catalyst for those sorts of companies. But generally speaking I think companies are a lot more risk averse to debt and em than what you see here. But like I said, that's also a function of just how liquid our markets are. And these days we've got this private credit boom going. So that certainly is fueling that on as well.
- [24:40]
A
So looking at the index, you see I think one of the surprising things is that I think people in the past assumed that that emerging markets were mostly like financial services and then materials and industrials. Right. But technology is now, the biggest sector there, how close do you sit in your portfolio to the index in terms of sector weightings? Is it completely different? Is it pretty close? Like how, how much do you vary there?
- [25:04]
D
I mean, in the past we've been very, very different. These days we're a lot closer than, than we we had been just because, you know, like some of those Internet darlings or other companies corrected or either leading Chinese companies corrected and got cheap enough so we could buy them. And then there's just no doubt that you're just seeing huge earnings growth coming out from the AI supply chain. So certainly we like that exposure. So we're a bit closer to it. I mean, we're still, for example, because remember, within our mandate with the dividend yield, we could have 10% of the portfolio that has a dividend yield of less than 2% at cost. So that's where we own companies like Tencent and Alibaba. But that said, we still are underweight the Chinese Internet sector because there's a lot more companies than just those two.
- [25:50]
C
So how do dividends fit into the strategy?
- [25:53]
D
I mean there's, so that's the mandate, you know, 90% of the companies will have a dividend yield of over 2%, you know, in the year to date. We just think, you know, companies that pay dividends, they care a lot more about governance. You know, there are notable exceptions to that in emerging markets, like some of the state owned enterprises, for example, but we just think they're kind of more reliable and then that we don't think you have to give up on growth. I mean, the biggest difference in emerging markets is just how diverse the opportunity set is. It's not like the US where you're just investing in banks and utilities and consumer staple companies. We can have our largest exposure to areas like technology. So that's very unique. This is a very, very different market. And just the number of companies, when we do the same screens that we do in the U.S. you know, we're getting about six times the number of companies in emerging markets. So it's a, it's a much more diverse universe, you know, out there. And, and you know, we just think it helps lower the volatility, particularly in down markets. If you're getting a fixed component of your total return through dividends, you know, there's a good chance that you're going to go down less in down markets. And you know, we've gone down less in 83% of down markets since our inception. So you know, you're dealing with a more volatile asset class. And we think it makes sense to take kind of a less volatile approach. And dividends go a long way to doing that.
- [27:09]
A
So I think one of the big differences between the US and emerging markets would be that US corporations are more likely to do share buybacks than pay a lot of dividends in the shareholder reform. Do you think that'll come to emerging markets in terms of be more buybacks or are they just so locked in on dividends that that's just not in their wheelhouse as much?
- [27:25]
D
No, you're definitely seeing that happening. You're definitely seeing an increase in buybacks. I mean, I don't think it'll ever approach the level of what we see in the US And I hope it doesn't because we like buybacks, but we like them when, you know, company share prices have really corrected. And unfortunately the track record with buybacks is the companies are often doing it when their share prices are at all time highs, which kind of doesn't make a lot of sense. But yeah, it's like part of those reforms in South Korea or that we talked about Japan or even in China. Definitely you're seeing an increase in buybacks as well.
- [27:53]
C
The conversations that you're having with investors and advisors, are they changing it? Are they coming around to emerging markets as an asset class again? Because it's been years and years of underperformance, obviously. 2025 has been a terrific year, up 31% through October 20th, which is pretty remarkable. It still feels like you're not really, at least anecdotally, I'm not really seeing or hearing about it. It's not something that the Wall Street Journal is particularly reporting on right now. But how are conversations that you're having with clients?
- [28:26]
D
Yeah, I mean, we've definitely had very strong flows. I mean our mutual fund has more than doubled in the last 12 or you know, we're definitely seeing it. But. But I think to your point, there is still a lot to come, but I think people are taking notice. I mean we're definitely in. Our marketing team is fielding a lot more calls. There is a lot more client interest. I think people are starting to become aware of the need to diversify from a dollar or two or have some sort of diversification at least. I mean, you know, I'm not saying the dollar is going to collapse or let it end. Hopefully it won't because we certainly don't want that. That's not good for anything. But I think, you know, we definitely see a raising awareness of that. I think if we could, you know, we got these huge talks coming up between China and the. Just get some sort of, you know, agreement, that would be, obviously huge. I mean, it'd be a really important thing. And I think, you know, that's what we've seen in recent months with other countries. So, yeah, maybe the tariffs are coming, and maybe they're not great, but just the certainty of knowing what they are is in itself, I think, creating a relief rally, you know, relative to the uncertainty we saw at the beginning of the year. So hopefully we'll see that happen between the China. Between China and the US Because I really don't think it's in any country's interest to isolate from one another.
- [29:34]
A
I do think that it's funny that the crashing of the dollar thing, some people like to have that sort of hedge in whatever they want to put it in. But I think people forget these currencies are just volatile, too. They're very cyclical. I think if you look at the chart of the dollar against a basket of international currencies going back to 1970, it's gone up and down a ton, but it's essentially gone nowhere. So you're diversifying against the cycles as much as you are against a collapse of the dollar. Because this dollar has been so strong, really, since the great financial crisis until this year. More or less, yeah.
- [30:04]
D
I mean, I think if you look at the dollar going way back, it is making lower lows over long periods of time. So you have these kind of long cycles of like, say, eight to 10 years, where the dollar appreciates and then depreciates. But, you know, the last high it made was lower than the previous high it made, which I think was in 2021, I'm sorry, 2001. And, you know, the last low it made was lower than the. The low that it made, I don't know, 20 or 30 years ago, whenever that was. So the trend has been kind of down. I. But I just think there's a lot of reasons that it could keep going down again. I think the big thing is President Trump's policies. I think to make his policies success, I think a cheaper dollar is the most valuable tool that he has to do that in terms of making investment, which he's trying to attack into the US Cheaper, in terms of reducing our deficit, in terms of making our exporters more competitive. There's no better way to do that than to have the dollar go down. And several members of the administration are in that camp, maybe even more so than him. And. And hopefully It'll just be orderly. Maybe we get a 4 to 7% decline in the dollar every year for the next three to five years. And if that were to happen, I think it would be good for his agenda. But I think it would be really good for non US equities and especially emerging market equities.
- [31:19]
A
You'd sign up for that, I'm sure.
- [31:20]
D
Sure, I wouldn't mind that, Raul.
- [31:23]
C
For investors that want to learn more about accessing the Schaefer Cullen EM strategy, how do they find you all?
- [31:31]
D
Yeah, definitely on our website. You could Google the Cullen funds. We have regional marketing contacts in every, you know, in most parts of the country. So, you know, those are all very good ways. And I think you'll see that we're pretty accessible.
- [31:43]
A
All right, thanks, Raul. Appreciate it. Okay, thank you. To our UL member. Check out Cullenfunds.com to learn more. That's C U L L E N. And email us Animal Spirits at the Combat.
- [31:56]
D
Nope.
- [31:56]
A
Yes, animals@the compoundnews.com See you next time.
- [32:03]
B
Past performance is no guarantee of future results. Investing in the stock market involves gains and losses and may not be suitable for all investors. Investors have the opportunity for losses as well as profits. Market conditions can vary widely over time. Investing in equity securities is speculative and involves risk. Investing in foreign securities involves greater volatility and political, economic and currency risk, risks and differences in accounting methods. Cullen Capital Management, LLC is an independent investment advisor registered under the Investment Advisors act of 1940 and is doing business as Schaeffer Cullen Capital Management, Inc. The Cullen Funds Trust, cft, SCCM and CCM are affiliates. This information should not be used as the primary basis for any investment decision, nor should it be considered as advice to meet your particular investment need. All opinions expressed constitute Cullen Capital Management's judgment as of the date of this report and are subject to change without notice.