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David Booth on a Trade War and Emerging Markets

August 17, 2018
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FA Magazine interviewed DFA Funds co-founder David Booth about tariffs, a trade war, and the recent downturn in emerging markets.  You can read the entire article here.

In general, Booth had this to say about the economy and current geopolitical risks:

The co-founder of Dimensional Fund Advisors cited steady global growth, improving fundamentals and better policies from Argentina to Saudi Arabia as reasons for long-term optimism toward developing-nation assets. And while the Trump administration’s tariffs pose the biggest potential threat to investors, they have yet to reach a full-blown trade war.

"We’re nowhere close to being there right now," Booth, 72, said in an interview from his office at Dimensional’s headquarters in Austin, Texas. "Everybody’s doing a little dance move back and forth."

While many of Washington’s targets for tariffs or sanctions are particularly susceptible to external pressure, triggering recent declines, these risks don’t spell gloom for the asset class long term, according to Booth, chairman of the $592 billion investment firm. In fact, today’s doomsayers may end up in his colleague Wes Wellington’s scrapbook of hyperbolic forecasts that went awry.

"Over the years, he’s saved magazine articles where people made forecasts and the ones that turned out to be really awful he highlights," Booth said.

To read more detailed thoughts on emerging markets, risks and expected returns, and how Dimensional things about frontier markets, and even cryptocurrencies, check out the rest of the article.

-EN