Thursday, July 31, 2014

Marc Faber dismisses his naysayers

Over my career, somewhere, somehow I must have made some right calls. Otherwise, I wouldn't be in business.

Tuesday, July 29, 2014

Would buy Hong Kong shares [VIDEO]

The fed has done little to main street, the average family in the United States and average median household. 

[Watch above Video]

Monday, July 28, 2014

Marc Faber likes Jeremy Grantham's thinking

We have a bubble in everything — from stocks to bonds, real estate, high-end real estate and even art. 

I believe stocks are fully priced here. I’m of the view of Jeremy Grantham. That when you have low valuations, future returns are relatively high; when you have high valuations, future returns are relatively low.

Thursday, July 24, 2014

No one is thinking clearly when everyone is thinking the same

Everyone thinks alike in the sense they say central banks will continue to print money and as a result asset prices will go up. When everyone thinks alike, no one is thinking clearly. 

We have seen cases where interest rates remain low or went down and markets still fell, like in Japan or the U.S. after March 2000. In 2001, they slashed the fed funds rate from 6.5% to 1%, yet the Nasdaq COMP +0.48%  still fell, the housing market still fell...the fact that you have low interest rates doesn't mean low asset prices cannot go down. 

Wednesday, July 23, 2014

Social Media stocks dont appear attractive to Faber

Well, globally we have essentially euphoria in anything that is related to social media and the Internet. I am personally not so interested to invest in sectors that are popular and that sell at relatively high valuations.

Monday, July 21, 2014

Stock market is wrong because the global economy is weakening

When I travel and look around economies, I don’t see the global economy strengthening, I see it weakening. 

We are now in the fifth year of an economic recovery which began in June 2009 in the U.S. and we’re more than in the fifth year of a bull market that began on March 6, 2009. 

This is a very mature economic recovery. It would seem to me that the monetary policies that central banks pursue are negative for economic growth, but they are positive for asset price increases. As a result of asset price increases, lots of goods have become unaffordable for the typical household. 

Thursday, July 17, 2014

30 percent correction is a possibility

I have been expecting a correction that hasn’t happened, but it has happened in individual stocks, and it has happened in emerging economies. A 30% [correction] would not surprise me, but the financial media doesn't believe it can happen. When the S&P was at 666 on March 6, 2009, they didn't believe the S&P would go to 2,000 either.

The market is very overbought. The rise this year has been accompanied by fewer and fewer stocks making new highs. GE , GM, IBM , Wal-Mart are no longer participating in the advance. 

Wednesday, July 16, 2014

Marc Faber is feeling conservative on China, India growth for now

We have to be very careful with the data that is published by governments. I do not think that the Chinese economy is accelerating on the upside.

Trend wise, Chinese growth will slow down from, say, around 10% annually in the last 10 years or so to a range of, say, 4% to 6% annually, but you have two huge countries -- China and India.

Some sectors of the economy may grow and some companies may grow, but in general trend wise, both in India and in China, we will have slower growth in the next 10 years than we have had in the past. If India can grow at 5-6% per annum, it will be very lucky.

Monday, July 14, 2014

Marc Faber owns US Dollar vs Euro

I hold some U.S. dollars, and I really can't see how the euro would strengthen a lot against the U.S. dollar. It may strengthen somewhat, but not a lot, because if the euro strengthens meaningfully, they're going to print as well in Europe, the same in Japan and so forth. So for that reason, I own gold.

Monday, July 7, 2014

Big Government is not the solution.. It is the problem

Economist Richard Rahn, the eponymous creator of the Rahn Curve, makes the connection between the rate of economic growth and the size of government. The Rahn Curve suggests there is an optimal level of government spending (as a share of GDP) that maximizes the rate of economic growth. As government begins to rise from zero percent of GDP, initially it spends to protect life, liberty and property; as this happens the economy surges. 

When government makes people safe, enforces contracts, protects liberty and enforces property rights great things begin to happen. As government continues increasing, it next spends on infrastructure. Such spending further accelerates economic growth. It is clear that a little government does a lot of good. At this point government’s share of GDP is between 10% and 20%. From its founding to circa 1930, total US government spending was around 10% on the Rahn Curve.

In general, I have great sympathy for the Rahn Curve, which essentially states that the larger the government becomes beyond a certain point (about 20% of GDP) the slower economic growth will be. Under the influence of the neo-Keynesian interventionists and the professors at the Fed, the public has been brainwashed into believing that governments can revive economic growth. 

But as Ronald Reagan pointed out, “Government is not a solution to our problem, government is the problem.” Barry Goldwater warned that, “The government that is big enough to give you all you want is big enough to take it all away.