Friday, March 28, 2014

Can foreigners own companies in Vietnam

There are restrictions. Non-Vietnamese investors can't own 100% of the shares, but in time the rules will be liberalized. 

Wednesday, March 26, 2014

China impact on commodity prices

I think that investors are not sufficiently aware that the Chinese economy is far more important for other emerging economies than the United States because China is a large importer of resources. In other words, iron ore, copper, zinc (inaudible). And at the same time, they are a huge exporter to commodity producers of their own manufactured goods, as well as Korean exports. The commodity producers are much larger than Korean exports to the US.

So if the Chinese economy slows down, commodity prices - industrial commodity prices are likely to remain under pressure. They've already come down a lot. They remain under pressure and the resource producers have less money. In other words, the Brazilian goes into recession. The Middle East does not grow as much as before. Central Asia, Africa and so forth all contract, and then they buy less from China and you have a vicious cycle on the downside.

Tuesday, March 25, 2014

Marc Faber vs Jeremy Siegel study of Dow Jones

 I always am skeptical about these studies. For example Jeremy Siegel published a study on how the Dow Jones has performed between 1800 and today.

I once told Jeremy, “Look Jeremy, if you invested in 1800, in stocks in the U.S., 80% of the companies at that time were canal companies and banks. In the first big bust, the Depression of 1840, 1841, most of them went bankrupt. And eventually all the canal companies in America went bankrupt, all of them, even the most profitable ones, like Erie Canal.”

Then people invested in railroads in the 19th century. By 1895, 95% of the railroads went bankrupt. The studies don’t take these statistics into account; like how many companies failed if you had invested in stocks in 1929. Most of them no longer exist.

Monday, March 24, 2014

Which data more reliable on China

If you look at the figures of China, exports are still growing. If you look at the trade figures China exports to Taiwan, so China records exports of so and so much. The Taiwan report imports from China at a much lower level. 

So which figures are more reliable? 

I think the figures of the trading partners of China are more reliable. And they would suggest that growth has slown down considerably.

Friday, March 21, 2014

Marc Faber on China vs Europe growth

Even if China grows by only 3% or 4%, it is better than Europe. People are moving up the economic ladder in Asia and into the middle class.

Thursday, March 20, 2014

Asians are risk takers while Swiss take few risks

I went to a high class school in Switzerland. Not that we were rich, but in the class there were several very well-to-do Swiss family members. Of the children of these families, most have no more money. 

One still has a lot of money because his grandmother was studying in Paris in her youth and took a liking to the 1910-1920s impressionists. So they have Van Goghs and Renoirs and Matisses — even in the bathroom they have so many of them. The appreciation in value of these paintings was fantastic.

Another one is well-to-do because he inherited money from an uncle of his. So it’s funny that entrepreneurial families that were – at that time — either in construction or the textile industry, are essentially all gone. The largest wealth of my school friends came from inheritances.

I liked Asia when I first came there in 1973. I went to Hong Kong because people were very entrepreneurial and risk takers. They like to gamble and they’re not afraid. In Switzerland everybody is always afraid of losing money. 

In Asia, they take risks and some of the entrepreneurs have become immensely rich — immensely rich starting from zero. These are people that were frugal with themselves. They worked very hard and they also benefited from asset inflation. In Hong Kong, property prices went ballistic over the last 30, 40 years. So anyone who owned properties became very rich.

Wednesday, March 19, 2014

China pollution and water problem is bad

We've been discussing China's water problem. 

In addition to water problems, pollution, too, has become so horrible that people are leaving China with their children. Sometimes, entire cities break down. 

You hardly have a clear day in Hong Kong any more, or in Shanghai. Agriculture is in disarray because the water table is falling, and agricultural commodities prices have corrected significantly, despite all the money-printing around the world.

Tuesday, March 18, 2014

Marc Faber says "Buy low sell high"

Well basically, we had a huge run-up in prices starting in 1999, from $255 oz. to $1921 oz. in early September 2011. We’ve been in a correction period since.
Now, I think the correction period was partly justified because there was too much enthusiasm and too much speculation, leading to the peak in September 2011.

But I think that there may have been some market manipulation as well. My sense is that the correction has probably come to an end. If anything, the fundamentals for gold are much better today than they were at the time of the peak, but the price is down.

Every investor understands “buy low and sell high” as a principle, but when prices are low, nobody wants to buy. We had very negative sentiment recently.

Of course, we could one day enter a long-term downtrend after the long period of growth and asset inflation over the last 20 to 30 years.

But when I compare gold to the S&P, the S&P is up substantially since 2011 and gold is down substantially. If you compare the performance of gold shares to the S&P, it has been a disaster for gold shares.

When I look around at asset prices; real estate, bonds, equities, paintings, collectibles, vintage cars, I think the price of gold is actually one of the few assets that are relatively cheap, relatively inexpensive now.

Monday, March 17, 2014

How Marc Faber invests by hiring experts

Well, most of the money that I look after, I manage myself. I believe that we don’t know the future; I may have my views about investments and someone else may have a different view, a different skill set, or a different niche of expertise.

For example, I don’t know anything about biology. I also don’t understand social media. But there is probably someone out there who is specialized in those sectors, and I would allocate some money to that person. Or for instance, I’m familiar with Russia because my partners and I founded one of the first Russia funds, Firebird, in 1993.

But I’m not an expert on each Russian company today. So for investing in Eastern Europe and in Russia, or even in Asia, I would give my money to somebody else. I don’t have the time to visit every company. I know lots of families that own businesses and so forth, but I’m interested to see what other fund managers are doing.

So if I know a fund manager that is specialized in Asian shares and is value-oriented, I may give him some money. So I allocate some money to different managers.

Friday, March 14, 2014

Gold relatively cheap

When I look at asset prices; real estate, bonds, equities, vintage cars. I think that gold is actually one of the few assets that is relatively cheap, relatively inexpensive.

Thursday, March 13, 2014

Marc Faber: Short Turkey Lira

I recommend shorting the Turkish lira. I had an experience in Turkey that led me to believe that some families are above the law. When I see that in an emerging economy, it makes me careful about investing.

Wednesday, March 12, 2014

Tesla, Netflix, Facebook, Twitter, Veeva, 3D Systems are all overpriced

I recommend shorting a basket of momentum stocks, including Tesla Motors [TSLA], Netflix [NFLX], Facebook [FB], Twitter [TWTR], Veeva Systems [VEEV], and 3D Systems [DDD]. They might be good companies, but they are overpriced.

via  Barrons Roundtable Jan 2014

Tuesday, March 11, 2014

This bull market has gone for very far

This is the second longest bull market in the last 100 years. These are all signs of a top, so I wouldn’t buy shares here. I’m not interested.
Can the market go up another 20 percent? Perhaps.

I wasn’t interested in buying the Nasdaq in late 1999, but between January and March 2000, the NASDAQ went up another 30%. Of course, people were crying shortly thereafter when they realized their losses.

So, the markets go up and down. I think that the upside potential for most stocks is very limited now and there is considerable downside risk. Probably more downside risk than investors realize.

Monday, March 10, 2014

Reasons to be cautious

Over the last two years, most equity markets around the world, in emerging markets, have been down or moving sideways. They’re no longer following U.S. stocks up. In the U.S., an increasing number of shares are breaking down.

We had extremely optimistic sentiment just before Christmas. We had very heavy insider selling, with high valuations, and extremely high corporate profits by historical standards.

The bull market will be five years old. This is the second longest bull market in the last 100 years. These are all signs of a top, so I wouldn’t buy shares here. I’m not interested.

Friday, March 7, 2014

Join a successful company to learn

I advise my younger readers who come out of school or university to first work in a successful company in order to learn the ins-and-out of an industry. And while working for a company, it is important to make the best out of it either by joining or by forming a “fake family.” Some of your colleagues will be close friends for life even if you work somewhere else, while others will become your customers or will be in a position to help you in many different ways (the Goldman Sachs people seem to be very good in this respect). 

In fact, whereas my life improved after starting my own business (although I worked harder than when I was an employee), the one and only thing that I occasionally miss working on my own is the daily interaction with colleagues or as Kellaway puts it, working and living within a “fake family.” 

Another point I wish to make about corporate life is this: Corporate life is usually not particularly pleasant. But since most people will work all their lives as employees of companies and therefore, spend more time at work than at home, they can greatly improve their working lives (and their performance) by having a cordial relationship with their colleagues and superiors. 

Personally, I actually believe that most people have a better relationship with their co-workers (their fake families) than with their spouses at home.

Thursday, March 6, 2014

Ha Noi-Hai Duong Beer, FPT and Vietnam Dairy

My favorite investment is Ha Noi-Hai Duong Beer [HAD.Vietnam], a local brewery. FPT [FPT.Vietnam], an information-technology company that sells mobile phones, Internet services, and software, is another pick. It is a technology conglomerate with more value than its share price reflects.

Vietnam Dairy Products [VNM.Vietnam] is a Vietnamese blue chip. It has been growing around 30% a year, and can continue to grow by about 20% a year. The stock hasn't been acting well lately, but the company has a big market in Vietnam and will do well long term. 

Asian consumer companies aren't cheap anymore, but in time, multinational consumer companies will want to acquire them because they have distribution in the region. A basket of Vietnamese shares could be attractive.

Wednesday, March 5, 2014

Marc Faber vs Lucy Kellaway

Lucy Kellaway argues in the Financial Times that the idea so beloved by “the cheesier half of corporate America, that employees are somehow part of the family is one of the most delusional metaphors of modern corporate life.” 
I have to say that I completely disagree with Miss Kellaway’s views about “families” and workplace “fake families.”

I was fortunate because I always had a close relationship with my co-workers, and all my superiors were always most courteous toward me, my wife and my daughter. 

In fact, they always went out of their way to support and help me. This, despite the fact, that I was probably their most “difficult” employee. But my bosses took my unpleasant character in stride and told me smilingly that if I were not “difficult,” they would not have hired me in the first place.

Tuesday, March 4, 2014

More Europeans may choose to live in Singapore

The outlook for property in Asia isn't bad because a lot of Europeans realize they will need to leave Europe for tax reasons. They can live in Singapore and be taxed at a much lower rate. 

Monday, March 3, 2014

Market Commentary March 2014

In early January 2014 I opined that, 
“It might seem to my readers counter-intuitive to have a position in 10-year Treasuries, and at the same time to believe that commodity prices could rebound.” 

However, since the beginning of the year, both long-term Treasuries and most commodities rebounded strongly. Long-term Treasuries are up 5%, gold is up 12%, and the Junior Gold Mining Index (GDXJ) is up 52% from the late December 2013 low. 

Also, as I explained in previous reports, I would reduce my US equities positions altogether because valuations (and profit margins) are stretched.

I do own some long-term Treasuries because I believe that owning them is an inexpensive and relatively low risk strategy for shorting the stock market.