Lardy vs Pettis

Here is a fantastic letter from both camps on Chinese growth.

Most know which side Valor Private Wealth is on, but it is important to note that we spend considerable amounts of time looking at the other side of the argument.

Many of our new readers may think that Valor has a large exposure attempting to profit from a slowing China. We believe that China has some difficult rebalancing years ahead, but we prefer to invest in wonderful businesses that can grow their owner earnings over the next few decades. Our main goal is to attempt to remove as much risk from our clients portfolios from a China slowdown and the only upside we expect is a potential fall in the Australian Dollar or our international holdings.

Our position is that owning cyclical businesses that are closer to the top of their cycle than the bottom is not a sure path to wealth and can destroy capital faster than most predict when margin contraction occurs.