Monday, September 30, 2013

Stocks are in tail end of bull market

We are in a bull market that is in the tail-end instead of the beginning but that does not mean prices will collapse. I don't think that stocks are the greatest bargain anymore, but it's not that expensive either.


Sunday, September 29, 2013

Balanced approach to investing

Between now and then [Chinese bubble burst], there will be opportunity in various asset classes.

I recommend the investors to take a balanced approach to invest in equity, corporate bond, real-estate and gold.

Friday, September 27, 2013

China inflation is higher than seems

The inflation in China is much higher than it seems. Credit growth in China will slow down. It is very much depends on whether they're going into hard landing or soft landing, but this will inevitably lead to economic slowdown in emerging markets.

Thursday, September 26, 2013

Malaysia Stocks, economy is stable

Marc Faber comments on Malaysia and its stock markets:
Malaysia may not be seen as an exciting market and the stock market is certainly not cheap, but this is a well-balanced economy and stable enough to let you sleep soundly at night

Malaysian equities are not exciting. However, they are relatively stable, supported by a well-balanced economy coupled with no major downward risks

Opinion on their Banks:
Unlike US banks, Malaysia's are solid and they do not involve in derivatives or gamble.

Malaysia's Banks are solid.

Wednesday, September 25, 2013

Marc Faber says Janet Yellen to beat Bernanke

She[Janet Yellen] will make Mr Bernanke look like a hawk. In 2010 she said if she could vote for negative interest rate, in other words you have a deposit with the bank at $100,000 at the beginning of the year and in the end you would only get $95,000 back, that she would be voting for that.

Basically her view will be to keep interest rates in real terms, in other words in inflation adjusted, and don't believe a minute the inflation figures published by the Bureau of Labor Statistics.

The consequences of these monetary policies and artificial low interest rates is that government gets bigger and bigger and you have less freedom. That is the consequence.

Tuesday, September 24, 2013

Fed is failing to lower interest rates

On September 14, 2012 when the Fed announced QE 3 that was then extended to QE4 and then now to QE unlimited. The bond market has peaked out a year ago at 1.43% at the 10 year treasury note. Mr Bernanke said at that time at a press conference the objective of the fed is to lower interest rate. Since then they have doubled.

Monday, September 23, 2013

US economy is weakening

I believe the US economy is weakening, and if it gets worse they will have to even increase the purchases, maybe even to $150 billion a month.

Sunday, September 22, 2013

Faber on buying govt bonds

I have to confess longer term I am of course negative government bonds, and that I think yields will go up and eventually there will be sovereign defaults. But in the last few days when yields went to 2.9 and 3% for the first time in years I bought treasuries because I have the view that they overshot and they could ease down to 2.5 percent to 2 percent because the economy is lot weaker than people think.

Nothing is safe anymore

In terms of investment, there is nothing safe any more. The US money-printing has distorted all asset prices while cash in the bank has not given you any return when inflation is adjusted. Inflation in Thailand is running at 10 per cent per annum. I don't look at the government's statistics. All governments around the world lie.

Friday, September 20, 2013

My investment strategy at the moment is Diversification

My investment strategy during this time is that you have to diversify and minimize your risks from economic, political, geopolitical and other factors. Your portfolio should include properties, stocks and equities, corporate bonds, gold and silver, plus cash. It should be 25 per cent of each, or 125 per cent - just to mimic the US accounting standard where things now do not add up.

Thursday, September 19, 2013

Marc Faber makes case to invest in emerging markets

Many emerging markets are down 50% from their highs post recovery 2009. Where do you invest ? The case can be made to should one want to invest in equities he will choose the depressed markets.

Thai stocks topping

Thai stocks are now not cheap, but the economic cycle has seen expansion topping four years. I own a lot of Thai shares but I don't think Thai stocks will go up much [from the current SET Index of around 1,400]. Good stocks like Kiatnakin Bank and CP Food have fallen by more than 50 per cent.

On properties, we have seen tremendous speculation on Thai real estate as prices have gone up significantly in Chiang Mai, or areas bordering Laos, Cambodia and other countries, but if you look at Hong Kong, Singapore, London, or New York's Manhattan, they are extremely expensive compared to Bangkok's high-end condos, which are now not cheap either by local standards.

Wednesday, September 18, 2013

I like bonds from Russia, Kazakhstan, India with yields of 5-6 per cent

On corporate bonds, I like issues from Russia, Kazakhstan and India with yields of 5-6 per cent, but they are not 100 per cent safe unless they are triple-A. Corporate bonds have an equity character. They don't move much when stock markets crash. When things go bad, government bonds on the other hand tend to go up in value because of flight to safe havens.

Tuesday, September 17, 2013

Own physical gold, not gold papers.

On gold and silver, I think people should have 20 per cent of their money in physical gold, not gold papers. I would put the gold bars into deposit boxes at banks. Don't speculate but buy regularly and keep them safe. We live in a volatile period. Gold is not like other commodities, it's the only honest currency when paper currencies are not.

Monday, September 16, 2013

India could outperform S&P 500

I would rather buy Indian equities than the S&P 500. However, I do not think Indian equities will rally substantially in the near future.

We may still go lower in sync with other markets in the world because India is not an isolated market. If the S&P drops 100 or 200 points, India is not likely to rally. It may outperform the S&P, but it is not likely to go up when S&P goes down.

FOMC will taper 5 to 20 billion dollars

Dr Marc Faber on the Fed Taper this week:

I think maybe they will taper 5 or 10 or 20 billion dollars off the current $85-billion monthly purchase of assets, and they would say they will reassess the situation depending on economic and market conditions.

Thursday, September 12, 2013

India currency weakness

India has pursued poor economic policies and one cannot really accuse the Reserve Bank of India. The entire political elite has mismanaged the Indian economy for the last 50 years. You cannot solve a crisis that is borne as a symptom of mismanagement in just five minutes or in a week. It will involve significant sacrifices and pain and I doubt that in India there is the political will to face the music.

When I went to India for the first time in 1973, one US dollar was about Rs 7 and now it is close to 70. The oil price increase has happened in the world, but of course it is magnified in India by the currency weakness.

Tuesday, September 10, 2013

Gold has made a major low

The impact[geopolitical risks] will be more severe on financial assets. The price of gold has recovered sharply from $1180 to around $1400. On further hostilities, we will have some profit taking in gold, but we have made a major low at $1180.

India poor economic policies

India has pursued poor economic policies. Political system has mismanaged Indian economy for 50 years. I doubt India has the political will to face the music.

Monday, September 9, 2013

Indian stocks are coming into buying range

In my view, there has been a huge correction in Indonesia and Thailand from the recent highs. The market is down by around 30-35% from the April-May high, but following a rebound, we will see further weakness.

Indian stocks, because of the currency weakness, have already experienced a very substantial bear market. It may last a little longer, but we surely are coming into a buying range.

Marc Faber: There will be No tapering of bond buying

The US economy is still weak, otherwise McDonalds and Walmart would have reported much favourable results. Given the weakness in the economy and employment, and given the frame of mind of Fed members, most of them are extremely dovish. I think there will be no tapering of bond-buying program. And I won't be surprised if in a year's time the Fed increases asset purchases.

Friday, September 6, 2013

There are some very good companies in India

I have very substantial positioning in India. There are some very good companies in India, though the macro economic conditions are not very favourable. A very desirable and attractive sector is the consumption sector. The largest weight of India Capital Fund is in banks and financials, as they are very cheap and inexpensive; however, they are likely to remain inexpensive for quite some time.

Thursday, September 5, 2013

Asset purchase program has been a complete disaster.

I think capital flows have moved out of emerging economies because the US equity markets have started performing well over the last one year. Investors must realize that the yield on US 10-year treasury notes bottomed in July 2012 at 1.43%, and after that it moved to 2.88%. In my view, the asset purchase program of the Fed has been a complete disaster.

Wednesday, September 4, 2013

India is in a bear market

The rupee is down nearly 50% in the last three years. Stock markets are down only 12% to 15% from their peak in rupee terms. Thus, in dollar terms, India is in a bear market as it has fallen nearly 60%. But I don't think the Indian stock markets will fall to that extent in rupee terms.

Monday, September 2, 2013

I am negative about the rupee

The falling [Indian] currency is not the problem; it is the symptom of the problem. It is like fever, which is just a symptom of a disease and not the disease itself. The currency depreciation is the symptom of poor balance budget and excessive consumption, which is reflected in the trade and current account deficit. If there is an increase in the short-term interest rates, where there is real return of rupee deposits, then the rupee will bottom out in the near term. However, over the long term, I am negative about the rupee.