While many investors thought the equity market hit bottom in March, the impact of the credit crisis and Federal Reserve interest rate cuts are just beginning to be felt, Mr. Eveillard said.
“I think we are just beginning to see the negative economic consequences of the financial crisis, as well as the unintended consequences of the unusual steps taken by the Federal Reserve,” he said.
Honored by Morningstar in 2003 for having built one of the most successful long-term investment records in the industry, Mr. Eveillard is senior vice president and senior adviser for First Eagle Funds of Kansas City, Mo.
In 1988 he eliminated the fund’s exposure to Japan before stocks there plummeted, and sold technology stocks before that bubble burst in 2000.
“The old-economy stocks held their own and that’s what we owned,” he said.
Today, his funds do not own financials.
“We did not own financials on the way up,” he said.
He also limits exposure in the retail sector. “We have only the stocks of a few of the strong retailers,” he said.
Value investing works, he said.
“You accept in advance that every now and then you will lag,” he said. “Traditional investing means keeping up with benchmarks and peers on a short term basis. Value investors are trying to provide absolute returns.”
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