Tuesday, December 29, 2015

Marc Faber on oil prices and market value

It [oil] can go down to lower levels for a brief period of time. We were at $147 in July 2008, and by December 2008, we dropped to $32. And then we rebounded from it. Markets are volatile; anything can happen. But from a demand/supply point of view, the equilibrium price is probably between $40 and $60.

Tuesday, December 15, 2015

How Governments can take your Gold

I think the US government, when gold really starts to move, will take it away. They will pay something. Say like in 1933, they paid $25 per ounce of gold that people held, and after they have collected most of the gold – of course not the gold that was held by government officials, or to precisely say “by corrupt government officials,” because they’re all corrupt – they revalued the gold to $35. So the investor lost out. And I think what will happen, the US will eventually, under some kind of an excuse, whether it’s terrorism or whatever it is, expropriate gold. 

Tuesday, December 8, 2015

Monetary policies can produce unintended negative consequences

We both economists and fund managers - usually think more interventions mean better outcomes. We often forget that every experiment and intervention with fiscal and monetary policies can go wrong, produce side effects or lead to additional interventions that themselves can go wrong. 

We have learned this lesson with central planners in the former Soviet Union and in China under Mao Zedong. Despite often repeating the mantra “First, do no harm to the market and to the capitalistic system,” economic decision makers have difficulty with doing less - even nothing. They find it hard to refrain from trying another QE, government spending spree, bailout, new regulation, transfer payments, or outright wealth confiscation through negative interest rates.”

Tuesday, December 1, 2015

Lows in interest rates near

Well you know it is like you have a wife and you have girlfriends! And the wife is maybe permanent but the girlfriends come and go! Optically, long term I would say ten years treasury or thirty years US treasury is of course unattractive, that we all agree because interest rates have been trending down since 1981 so we are more than 35 years into a declining interest rate structure, so we must be close to a low in interest rates.

Tuesday, November 17, 2015

Currency devaluations is a dumb move

I believe trying to boost economic growth by depreciating your currency is one of the most ridiculous ideas. But this is what precisely what Japan, Europe and the U.S. have done. In my view, these people belong to an asylum of crazy people.

Monday, November 9, 2015

Central bank coordinating money printing

I think we live in a world where there is coordinated action by central banks to print money in the U.S., in the EU, in Japan, and of course also the Bank of England. They coordinate monetary policies, and as you know, the yen has depreciated very strongly against the U.S. dollar over the last three years. And I think the Chinese will adjust their currency down somewhat.

Tuesday, November 3, 2015

Monthly Market Commentary - November 2015

Michael Smithson, a social scientist at Australian National University uses this analogy about knowledge and ignorance: “The larger the island of knowledge grows, the longer the shoreline - where knowledge meets ignorance - extends. The more we know, the more we can ask. ....Answers breed questions. Curiosity isn’t merely a static disposition but rather a passion of the mind. ....Mapping the coast of the island of knowledge, to continue the metaphor, requires a grasp of the psychology of ambiguity. The ever-expanding shoreline, where questions are born of answers, is terrain characterized by vague and conflicting information. The resulting state of uncertainty, psychologists have shown, intensifies our emotions: not only exhilaration and surprise, but also confusion and frustration.”

Matthew Winkler, Editor-in-Chief Emeritus at Bloomberg, opines that, “Markets, represent the judgment of buyers and sellers of what’s valuable. By that yardstick, shareholders already have decided that Obamacare is a boon for the American economy.”

The facts, however, seem to repudiate Winkler’s views. According to Bankrate.com, which conducted a survey of 1,000 adults, nearly one in three (29%) American adults (that’s roughly 70 million) have no emergency savings at all - the highest percentage since Bankrate began doing this survey five years ago. What’s more, only 22% of Americans have at least six months of emergency savings (that’s what advisers recommend) - the lowest level since Bankrate began doing the survey.

These findings mirror others - all of which paint a rather unambiguously abysmal picture of Americans’ ability to withstand an emergency. Greg McBride, the chief financial analyst for Bankrate.com, says these low savings reflect that households haven’t seen their incomes ramp up and thus ‘household budgets are tight.’ Plus, he adds ‘people don’t pay themselves first - they wait until the end of the month to save what’s left over and then nothing is left over.’ 

Thursday, October 29, 2015

Feeling gloomy on weakening global economy

I am most gloomy about the prospects of the global economy but that doesn't mean the markets will go down.

Tuesday, October 27, 2015

China government economic reports contradicting each other

Tuesday, October 20, 2015

People should not have all their money in cash

The economic recovery in the US began in June 2009, so we are six years into an economic expansion, and this is historically the third longest expansion. We have been six years, March 2009 low S&P 666, where it went over 2100 so we are over 6 years into bull market, then I say to myself, I see the global economy weakening and I see French, Italian and Spanish bond yields lower than US treasury yields so with the view that most people have that the US dollar will remain relatively strong, I say to myself everybody is bullish about stocks in the US and everybody is bearish about bonds.

I say to myself maybe treasury notes, the ten years and the thirty years as an investment for the next 3 to 6 months is maybe not so bad. Then I also advocate in my investment strategy, always diversification between real estate, equities, bonds, cash and precious metals. And if someone comes to me and says Marc you are bearish about the world, shouldn’t you be all in cash?

I say yes, maybe that is correct except if I put all my money in cash with the banking system I take a huge risk because we have seen it in the case of Greece, we have seen it in the case of Cyprus and now they have announced that basically investors if there is again a crisis they will also have to pay something so if you have say 20 million dollars with the banks, and they have a problem, maybe you will only get 50% back. So I say to myself, rather than have the money in the banks I would have it in treasuries.

Tuesday, October 13, 2015

Markets could crash and stock prices could go much lower

Markets may not crash right away but its possible that it will.....

Tuesday, October 6, 2015

Gloom Boom Doom October 2015 Report

The late Kurt Richeb├Ącher opined that, “Capital and wealth increases when a community produces more than it consumes. Capital and wealth decreases when the community consumes more than it produces. What is happening in the United States is the latter - with the consequences of general impoverishment.” In an earlier report I explained how Friedrich Hayek gained fame among English-speaking economists at the London School of Economics in 1931, because he made the distinction in the use of credit for investment or consumption his key theme. At the time he explained in detail how excessive consumer spending brings about “a shortening or shrinking of the production” and so causes recession. What shrinks is the economy’s capital base. In essence, production that uses capital gives way to production using little or no capital. In other words, the whole economy adjusts to the changes in the pattern of demand implemented by the credit excess. Looking at changes in employment in the US over the years, I note that employment in capital-intensive manufacturing has plummeted, while employment in all kinds of low-paying services has soared.  

There is a difference between excessive credit growth (defined as an “increase in money capital from credits which do not originate from savings but are created out of nothing through the banking system”) flowing into capital investments, and excessive credit growth flowing into asset inflation and financing consumption. Once the boom comes to an end, the severity of the downturn can be equally severe (most likely more severe in the case of a capital spending boom), but the capital spending boom leaves the entire system with investments such as railroads, canals, and other infrastructures, and new technologies. It is a well-documented fact that all canal companies, including the most successful of them all, the Erie Canal Company, went bust. Equally, by 1895, 95% of all US railroads were either in default or bankrupt; however, the transportation network that had been built by the canal and railroad companies was a huge boon to the expansion of commerce and trade within the American continent.

Similarly I would argue that, while there certainly has been capital spending excesses in China, at least there is now infrastructure in place whereas there was none 20 years ago (unlike in India, where infrastructure is still decrepit and extremely poor). On the contrary, in the case of an asset boom and excessive credit creation which financed consumption, the system is left with hardly any new capital structures but an over-indebted consumer. In addition, consumer credit allowed the consumer to advance consumption, which then leads to reduced demand once the consumer exhausts his borrowing capacity (as is now the case for the majority of American families).

This report explains why under current fiscal and monetary policies the global economy will likely enter a recessionary phase and why equities will unlikely perform well. 

Sunday, October 4, 2015

Donald Trump is not a genius

In my view, you know you look at Trump, Donald Trump is no genius or anything, and he is not a particularly honest person either because his investors that bought bonds that were issued by his companies, most of them lost money, but he touches on one point, and this is a great dissatisfaction of the American of the typical American with his government.

Tuesday, September 29, 2015

We will see inflation again because of the Fed

Well you know it is like in a bubble. The bears are right and the bulls are right but at different times. Every bubble will go up and then eventually the bubble will burst and then you know prices collapse. So during the bubble stage the bullish people are right and during the collapse the bears are right, but at different times. This is the same with deflation and inflation; I think both will be right, but at different times. I believe that most people have a misconception of what inflation is. In other words most people, they think of inflation as an increase in price of goods they go and buy in the shop over there and over there, at the butcher and at the baker and in the grocery store and so forth when in fact this is just one of the symptoms of inflation.

You can have inflation that manifests itself in sharply rising wages, this hasn’t taken place but if you look globally, say in China, wages have gone up substantially or you take Thailand, wages have gone up substantially. Or it can manifest itself in rising commodity prices. Well I mean commodity prices have been weak lately but the oil price is still close to 50 dollars a barrel and it was at 12 dollars a barrel in 1999 and gold is still around 1000 dollars and it was at 300 dollars and below in the 1990's, the low was at 255 dollars. You understand? A lot of things have been weak recently but they are still up substantially compared to the past.

Or you take bond prices, in other words bond prices go up when interest rates go down. Bond prices in the last hundred years have never been this high; in other words interest rates have never been this low on sovereign debts. Or you take equity prices, ok some markets are down, mostly the emerging markets whether it is Russia or Brazil or the Asian markets, they are down from the peak but they are still much higher than say ten or fifteen years ago. Or you take property prices, it depends which properties but most property prices, for example if you look around here in Switzerland, the prices are much much higher than they were fifteen, twenty years ago.

Even in some areas, they may have come down a bit but in luxury areas there are record prices. Or you take the Hamptons, or Mayfair in London, or Chelsea in London, Kensington and so forth, prices are very high compared to say twenty years ago. Or you take paintings, art... I mean when I grew up and I started to work in 1970 in New York, in New York at that time a Rothko painting was offered to me for 30,000 dollars. I didn’t buy it because I thought why would I pay 30,000 for something like this! Now a Roscoe is maybe ten, twenty, thirty million dollars and I have a Warhol, it is not a big painting but nevertheless I bought it for 300 dollars in the 1970s. You understand? Prices have gone up dramatically, so if someone says to me, well there is deflation, I tell him, well tell me in what? You know, Hong Kong property prices, Singapore property prices, even Bangkok, Jakarta and so forth, all have been grossly inflated.

Therefore I think we have to re-examine the definition of inflation whereby maybe we have some sectors of the economy that are deflating, like if we measure wages inflation adjusted, they are all going down in the western world because a) the consumer price inflation that the Federal Reserve and Europeans report has nothing to do with the cost of living increase, the cost of living increases and we have studies about this, in most American cities are rising at between 5 and 10% per annum and if you include insurance premiums, health care costs, education costs and so forth.

So these prices are going up strongly. Or taxes, indirect taxes like tunnel fees or bridge tolls and so forth, all that is going up much more than the CPI and this is where people have to pay for to actually go to work and live. This is then reflected, this kind of inflation is reflected in a diminishing purchasing power of people, that’s why retail sales are relatively poor in the US despite of the fact that we are six years into an economic expansion. I am always telling people, you know when I started to work I didn’t have to be smart because if I put my money on deposit with the banks or bought government bonds they were yielding 6%.

Then from 1970 to 1981 interest rates continuously went up, so the compounding impact was very high. Now if I am a young guy, say your age; then I want to put my money on deposit, I am being F*d essentially by the banks because they are not paying me anything. If I buy ten years US treasury notes I am getting a yield of less than 3%; 2.3% at the present time and it was below 2% six months ago. So how can I really save? How can I make money? I want to buy a house ok?

Then you have to pay a huge price and the mortgage rate may still be around 4% you understand? So it is still relatively high interest rates on mortgages and one of the reasons that new home sales are not particularly strong is that young people just don’t have the money to buy it because a) they are also burdened with student debts. So I mean these are all issues that are very complex.

My sense is that knowing the central banks, and knowing the way that they think, what will come up when they realise that the global economy is not healing but actually back into contraction under the influence of the neo-Keynesians like Krugman, they will say, you know what?

We haven’t done enough, we have to do much more, and then they will print again and that is why I think that eventually we could have high inflation rates and a renewed increase in commodity prices.

They will print again and that is why I think that eventually we could have high inflation rates and a renewed increase in commodity prices.

Monday, September 21, 2015

Japan printing money because it has no choice

In America many cities are basically bankrupt as well as some states or semi states like Puerto Rico. Then, have a look at Japan, the Japanese situation is very serious in the long run because if interest rates, they are now on 10 years JGBs 0.03% but already at these very very low rates, Japan pays, I think close to 45% of tax revenues go to payment of interest on the debt. Now if the interest rates went up on JGBs to say 1%, all the tax revenues would have to be used to pay the interest on the debt! 

In my view, Japan has no other option but to print money or default and that will then imply that the Yen will then become weaker and so forth.

*Last update : Sep 21, 2015

Wednesday, September 16, 2015

Vietnam an outstanding growing economy for long term

In Asia, one country that stands out as having great economic potential is Vietnam.

And by the way the whole Indochinese region with Vietnam in the east and then north west with Laos, south west with Cambodia and then Thailand, Myanmar, India, Bangladesh and in the north China, and in the south Malaysia, Singapore... that whole region with over 500 million people has tremendous growth potential and Cambodia at the present time is a boom town, a boom country because it is also politically related, the Japanese and Koreans invest a lot of money as well as the Americans and the Chinese so they all compete essentially because Cambodia is strategically important.

Vietnam has a very strong export performance, the stock market has performed very badly for the last few years like China, until a year ago, properties have come down but in my view they are now bottoming out. The Vietnamese people are hardworking people not like say easy going like the Thais or the Indonesians or Filipinos, so I believe the country has a great potential.

Monday, September 14, 2015

Thursday, September 10, 2015

Regulations hurting economic growth

As an aside, according to Agence France Presse, the Labor Department just reported that Americans on average saw income decline for the second straight year in the 12 months.......

“The average pre-tax income fell 0.9 percent from the same period a year earlier, to $64,432. But broken down into quintiles, those in the top 20 percent of incomes saw their money stream grow by 0.9 percent to $166,048 on average. Every other group lost ground, with the bottom 20 percent losing the most: their average income dropped 3.5 percent to $9,818.” These are facts, and they don’t depend on any starting points, as Shaoul maintains.

It is commendable that the Fed has decided to sponsor more research on wealth and income inequality — and is well understood 20 years after income and wealth inequality began to increase sharply.

Now, we at least know what Fed chair Yellen means when she says that the Fed’s policies are “data dependent.” (William Dudley commented in regard to increases in the Fed Fund rate: “How we react after lift-off is going to depend on the market reaction that we get.”)

But I shall now get to the point I really wanted to make about Fed- sponsored research and the Fed’s consultants. I am on the board of several companies and I am amazed at the number of consultants, lawyers, accountants, and auditors a company has to employ in order to be compliant with all the regulations. Similarly, a fund manager has to spend an enormous amount of time in order to be recommended by consultants such as Cambridge Associates.

Now, it seems to me that this entire consulting business is largely driven by increasingly complex laws and regulations, which frequently change, as well as by people who are no longer willing to take personal responsibility for their actions.

In fact, people frequently cannot assume responsibility for taking their own decisions, without employing consultants to do so on their behalf, simply because they would then open themselves to the potential for some serious litigation by disgruntled shareholders or government regulators.

But, as the American poet and essayist Adrienne Cecile Rich (regarded as one of the most influential poets of the second half of the 20th century) opined, “Responsibility to yourself means refusing to let others do your thinking, talking, and naming for you; it means learning to respect and use your own brains and instincts; hence, grappling with hard work.”

My point is this: Regulation an a jungle of laws increase the cost of doing business significantly and are stifling overall economic growth.

Wednesday, September 9, 2015

Emerging markets vs USA valuations

In terms of relative value I don’t think emerging markets are cheap cheap but I think the return expectation I would have over the next seven-10 years by investing in emerging markets would be much higher than say US stocks.

The US market is overhyped and expensive in terms of valuation from a historical perspective.

Monday, September 7, 2015

QE4 effects on inflation, commodities

Should the Fed implement QE4 (increasingly likely in future), I think that the additional liquidity could flow into commodities, consumer price inflation, and especially into precious metals. 

Tuesday, September 1, 2015

World economies heading to a slowdown [VIDEO]

Start at the 2:00 minute mark to hear Marc Faber's interview

Tuesday, August 25, 2015

US markets will get cheaper coming ahead

The bank credit analysts said there will be a bloodbath in emerging economies -- we already had one to a large extent. If you adjust the poor market performance and the currency weakness, probably more to come but I don’t believe the U.S. will not be affected at all and I would look at valuations. 

Valuations are not exactly cheap in emerging markets but they are becoming reasonable… I think the U.S. will be the last to unfold.

Thursday, August 20, 2015

Why the US Fed will not raise rates next month

The world is run by central bankers and when investors see that central bankers are essentially engaged in some kind of money printing exercise, which currency devaluation is, then obviously it affects other currencies as well and because of the size and the importance of the Chinese economy, it puts further pressure on other emerging market currencies.

Having said that, the US dollar is relatively high against emerging market currencies and also against the Euro and this strength in the US dollar is obviously damaging the US to some extent. Therefore, I do not believe that the Fed will increase rates in September. 

The bond market in the US has been very strong, it has rallied in the last two weeks, which suggests that the economy is weak not strong.

Tuesday, August 18, 2015

Money printing is politicians easy way out specially in the Western world

In the Western world money printing is the politically right thing to do according to Marc Faber who was interviewed on Bloomberg News.

Monday, August 10, 2015

Could see 50 percent correction in Chinese stocks

I think that a year ago in June/July 2014, Chinese stocks were very inexpensive compared to other markets in the world. They had been going down relative to the S&P since 2006 and compared to other Asian markets like the Philippines, Indonesia, Thailand... they had performed very poorly.

So a year ago my view was that a) because of the crackdown on visitors to Macau and more importantly because the property market in China was beginning to show cracks, prices were no longer going up and many markets were over supplied so my sense was that domestic money would shift out of the property market or de-emphasise property investments and go into equities, at the same time international investors were grossly underweight Chinese stocks and my sense was that as an international investor you look around the world and see all of these markets, the S&P is up at an all-time high last year already and then you see a market like Japan that two years ago was very depressed compared to other markets, so money went into there.

A year ago what was very depressed relative to everything else was the Chinese stock market. So money flowed also internationally into Chinese stocks and the market in China is relatively illiquid. You have to see. Because most blocks of shares are owned by the government or by large Chinese groups so what is available for trading is not that large.

Then the money flowed into Chinese stocks and they went up by more than 100% within a year and the whole thing became very speculative because in China people borrow a lot of money against what they buy whether it is properties or stocks and so the margin accounts increased dramatically and the margin debt reached almost 4% of GDP whereas in the US it is around 2% of GDP and it is at its highest level ever. So 4% was a very big figure. I think the government´s measure to support the market will largely fail and that eventually there will be more selling pressure and stocks will retreat somewhat more.

Do they go back to the levels of a year ago, to the 2014 lows? I don’t think so. I think this may be the beginning of a new bull market in China, but after a 100% rise we could have, like, from peak to trough a 40% correction. Or even 50%.

Thursday, August 6, 2015

Sectors in a bubble

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

Tuesday, August 4, 2015

Investing in China real estate via HK or Singapore

Everybody is so negative about the banks [in China]. Yes, I think the banks [in China] have some problems, but equally, it’s a sector that has been neglected. Also, I wrote in my report about Macau gaming stocks. I don’t think there is a rush to buy them, but after having declined by up to 50%, Macau gaming stocks are probably in a bearish range.

I’m sure there will be some good value in Chinese property companies. I prefer to play the Chinese property market through Hong Kong or Singapore companies that have developments in China.

Wednesday, July 29, 2015

Monday, July 27, 2015

Tuesday, July 21, 2015

Rising wealth inequality can be explained by asset inflation

Bloomberg News recently noted-
"Even though wages are improving, the rate of growth in what companies pay employees pales in comparison to what stocks have handed investors over the last six years. In fact, with equities rising 20 percent annually and wages up 2 percent, the gap has never been wider in any bull market since 1966."
 “Earnings have been so strong in part because wage growth has been so weak" said Mark Zandi, chief economist at Moody’s Analytics Inc. in Philadelphia.

Bloomberg also quotes Michael Shaoul (I visited Israel recently with Michael, who is CEO of Marketfield Asset Management, worth US$10 billion), who opined that the gap between wages and stocks since 2009 is partly a statistical illusion that reflects the severity of the bear market and how little wages fell during the credit crisis.

According to Shaoul, a comparison of their respective growth rates since 2000 or 2007 (I should point out that these were peak years in stock prices) shows pay rising more closely with shares. As with all statistics, he says, “A lot of this depends on starting points…. Time is the main ingredient missing with regards to this wage cycle. Many factors are coming back into the employees.”

I fully agree with Shaoul that all statistics depend for their meaning “on starting points.” Furthermore, statisticians can show anything they want with statistics, but I need to remind Shaoul that we can take practically any starting point over the last 50 years and show that an inflation-adjusted total return index (including the reinvestment of dividends) has vastly outpaced real median wage growth.

Furthermore, it is easy to show that, even in nominal terms, wages haven’t kept pace with the rise in the S&P 500 Index (not the total return index, which would include dividends) if we look at how many hours of work are needed to buy the S&P Index.

From the figure, it is clearly visible that, aside from the 1966-1982 period when workers had the upper hand because their wages rose while the S&P 500 was flat and declined in real terms, workers’ salaries haven’t kept pace with the rise in the S&P Index (and even less so with the S&P inflation- adjusted total return index).

So, as much as I like Michael Shaoul, as much as we enjoyed travelling together through Israel and on to Petra (Jordan), and as much as I agree that with statistics everything “depends on starting points,” in this particular instance all the evidence would suggest that part of the wealth inequality can be explained by the huge asset inflation we have had since the early 1980's.

Furthermore, it is easy to show that, even in nominal terms, wages haven’t kept pace with the rise in the S&P 500 Index (not the total return index, which would include dividends) if we look at how many hours of work are needed to buy the S&P Index.

Thursday, July 16, 2015

Democracy may not necessarily be better for a nations fortune

We have to see the outcome of democracy. I don’t believe it will be a good outcome. But anyway, different people may say, “Okay. All governments are bad, but democracy is the best.” I’m not sure about that. Because I’ in Asia, Japan in the ’70s, ’80s, and South Korea, ’70, ’80s, Taiwan ’70, ’80s, Singapore until today, Hong Kong, until today, these countries never really had democracy, but they prospered.

Now you may say, “Well, there were some unusual conditions because of this and that, and so forth.” That may be true, but nevertheless, I’ve seen prosperity already in countries like, or in cities like Venice, Florence, Amalfi,Siena, developed, and they didn’t have democracy. In the German towns where prosperity developed, the trading towns, the Hanseatic towns, they never had democracy. So I’m not sure if democracy is the best system. I’m not saying that it’s not necessarily the best system, but it’s not yet proven. It’s just that society says democracy is good, but maybe it’s a farce. Does your vote have any impact?

Monday, July 13, 2015

China economy weakening considerably [VIDEO]

Marc Faber talks about China bubble bursting, Global economy weakening and year 2015 will end in a recession.

[Watch the interview above from Bloomberg News]

Tuesday, July 7, 2015

Marc Faber against Racism

One view holds that racism is best understood as 'prejudice plus power' because without the support of political or economic power, prejudice would not be able to manifest as a pervasive cultural, institutional, or social phenomenon.            

Furthermore, what sociologists tend to overlook when discussing racism are economic issues.

Having visited South Africa before Apartheid was lifted and experienced first-hand racial discrimination combined with viciousness and extreme cruelty I am naturally against any form of racism although, as my friend Laeeth Isharc points out in my report, this should not prevent us from being proud of our heritage.   

Thursday, July 2, 2015

Marc Faber wishes these 2 goals for India

Besides GST reform—which will have a positive impact on India’s fiscal position and reduce the friction costs of state tariffs—the two big new laws I would like to see are the Land Acquisition Bill, passed and fully and fairly implemented, and a new Labour Law.

The Land Bill will allow factories and infrastructure projects to go ahead faster. At the moment, there is a complex process that most parties in such a land transaction are not happy with.

Besides the Land Bill, the other big impediments to growth and expansion are the very restrictive labour laws; it is very hard to fire people and labour regulations are both complex and inflexible. This is a harder thing to change, as there are many interests active in keeping the status quo.

If we see these two laws implemented, we can be more certain about a positive future for India. India has the largest and youngest labor force in the world and a cheap one, especially compared to China, and which also speaks ‘OK English’. Which company in the world would then not want to have some of its operations there?

But if India cannot achieve these two [goals], I think it will have to wait longer for the future that has been promised to them so many times by their politicians. But the future belongs to those with a young and energetic population: India has that more than anywhere else. Few other countries do. 

Tuesday, June 30, 2015

Massive price drops coming ahead

Basically, we are six years into an economic recovery… there are huge distortions in the markets, where basically financial assets have been going up very substantially, and real wages for the typical household, or real household income, has been either flat or down. So it’s created huge market distortions, and I think eventually this will be resolved by a massive deflation in asset prices.

Wednesday, June 24, 2015

Cost of living rising while wages going lower

Wages in real terms are basically down. The cost of living has gone up substantially — partially also because of this brilliant idea of Obamacare. So all I’m saying is the household is suffering at the present time. That’s why retail sales are not picking up. And while the employment numbers look better, I say that jobs have been replaced by low-paying jobs. In the 70's we had high consumer price inflation, now we have extremely high asset price inflation.

Monday, June 22, 2015

Marc Faber on Asset Diversification [VIDEO]

Marc Faber on asset diversification and his past calls on markets.

Friday, June 19, 2015

Why Chinese economy could outperform USA

Some people are very bullish about the dollar, and think it will stay strong for the next five to ten years. That is not my view. If the dollar continues to strengthen, the U.S. Federal Reserve will initiate another round of quantitative easing, QE4 or QE5, to lower the value of the dollar.

China would probably not take up such policy. If the Chinese currency appreciates against the Japanese Yen or the Euro, I don’t think it’s a disaster for China. Because China buys resources, processes them and sells them to the world. With a strong currency, it will be cheaper to buy resources from other countries. Therefore, my inclination is to think that the Chinese will not print money.

Tuesday, June 16, 2015

Marc Faber prefers China to India stocks

A few prominent economists are critical about India’s growth rate and Rajan [India Central Banker], but they are bullish about the stock markets. 

I am not sure whether India will perform well, if you compare it to China A Shares.

Tuesday, June 9, 2015

Volatility, Affordability in USA, Europe [VIDEO]

Volatility has come back in the markets. The Yen has broken down and I think it will go lower.

[Watch the full interview below]

Monday, June 8, 2015

Emerging markets could face headwinds

Most forecasts show that emerging markets are likely to fare negatively. I have been telling my clients that the growth of emerging markets has slowed down, including in China, and will continue to do so. But I am still of the view that if China and India try to grow by 5 percent, it would be a lot better than trying to reach unachievable targets.

Thursday, June 4, 2015

Raghuram Rajan should get a medal

Most economists believe that Rajan [Governer of Reserve Bank of India] needs to cut rates, but I am not sure if that is what he should do. He may do it because he is under pressure. But he should concentrate on currency stability and a moderate monetary policy. I personally think he has done a great job. He has dared to criticise the US Federal Reserve... he should get a medal for that.

Wednesday, June 3, 2015

China stocks could now see a strong correction

We live in a world with excessive liquidity created by money printing of central banks. That liquidity flows into real estate, stocks, bonds, art and commodities from one place in the world to another.

Relative to the US, China’s stock market has become inexpensive. So, we had recently this huge bull market in Chinese stocks with colossal speculation. It doesn’t mean that the whole thing will collapse and make new lows. But after this burst of volume, we could easily see a significant correction.

I bought China Life Insurance at HK$21, and now it’s close to HK$40. It almost doubled in less than six months. I think it can easily drop 20% to 30%.

Monday, June 1, 2015

Marc Faber was refused Tourist visa in India

To achieve meaningful growth, India has to curtail the power of bureaucracy. 

I had applied for a visa to come to India in January this year, but was refused one. They said that because I am the chairman of the India Capital Fund, I should apply for a business visa. But I was coming here as a tourist.

India has the right intentions to simplify the ease of doing business. But if you look at the numbers, India is not high up there. [India was ranked 142 out of 189 countries by the World Bank Group in 2015.]

Thursday, May 28, 2015

Janet Yellen will not raise rates this year

The US economy has been decelerating over the last six months. Given this weakness and the backup in yields, I doubt if the Fed will increase rates this year. Rates will essentially stay where they are for the whole year. Furthermore, I would not be surprised if, at some point, they initiate another asset purchase program or QE4.

Tuesday, May 26, 2015

Indian stock market could drop 30 percent

In general, we had a big move to essentially 30,000 and now we can correct about 30% from the highs. Some stocks have already corrected quite a lot. So, I would not be surprised to see the Sensex dropping to 24,000 levels.

Thursday, May 21, 2015

Britain a degenerated country now

You just had the news on Cameron. You look at Cameron. What interest is he to the people of the world? Britain is no longer an empire – it’s a degenerated country….Britain is a great country but economically it’s completely meaningless.

Wednesday, May 20, 2015

Good credit vs Bad Credit

The worst credit is what the U.S. has, which is consumer credit. People borrow to buy a car or a washing machine. That does not generate income and becomes burdensome to the household.

If you look at Korea and Japan in the 1950's to 1970's, credit was used for capital spending, infrastructure, plants, education, research and development. That credit generates cash flow, which can repay the debt.

Some people argue that China has overbuilt roads, tunnels, bridges and trains. But I don’t see it that way. In the U.S. during the 19th century, the country constructed lots of canals and railroads. All the canal companies, including the Erie Canal, went bankrupt. About 95% of the railroads had to be refinanced or went bankrupt. But the network facilitated the country’s trade and commerce significantly. So China is doing the right thing.

Monday, May 18, 2015

Greece issue a political one

If Greece leaves, the North Atlantic Treaty Organization [NATO] countries led by America are very afraid that Russia will establish closer relationships [in the Mediterranean]. This is a political issue overlooked by many people. 

Thursday, May 14, 2015

Why Indian stocks are correcting downwards now

I think there was a lot of hope with the election of Narendra Modi that we would essentially have wide ranging reforms. So the stock market rallied very strongly. Now, we have a kind of an awakening that reforms will take a lot of time and many will not be implemented. Some reforms will be accompanied by new regulations. So I think that investors are sobering up a little bit.

Wednesday, May 13, 2015

Vietnam stocks could be a profitable buy

If we look at what happened in China, the economy has been weakening and some of the leading indicators are actually very weak. But still the stocks have rallied over 100 per cent. In my view, a similar rally can happen elsewhere, say not by 100%, but still the move could be sharp. I think Vietnam would be a candidate; the Vietnamese stock market has been a horrible performer since 2006 but the economy has been doing reasonably well. While there is potential in Vietnam, it may not be realised this year and may take a year or two. If one buys Vietnamese shares around the current levels, one can expect a significant gain. 

Monday, May 11, 2015

EU powers wants Greece to stay in the EU

NATO (North Atlantic Treaty Organization) led by the US is very concerned that if Greece left the European Union (EU), it will be courted by China or Russia or by a joint effort of a foreign power. I don’t think it is much of an economic issue as it is a political issue. I think the bureaucrats in Brussels and the politicians that are very close to the US will see to it that Greece stays united with the EU.

Tuesday, May 5, 2015

Asian markets have outperformed USA since last year

When you look at the market since November of last year to now. The market is up 2 percent. It hasn't done much, and a lot of stocks are breaking down. I

Other markets, European and some of Asian markets have outperformed the US. From the lows in China from June-July 2014 up to today the market is up 80 percent. So I'm focusing globally on stocks, This year Japan is up 15 percent, China is up 30 percent, Hong Kong this year 20 percent. So many markets have out performed the US massively over the last six months.

Monday, May 4, 2015

Marc Faber still likes gold miners

I don't trust governments and I don't trust Banks. So I want to own some equities, some properties, some precious metals. And when we talk about stocks the only group that stands out as great value around the world are gold mining shares. 

This year the GDX etf is up 12 percent, Neumont mining is up 37 percent, Barrick is up 13 percent. When we talk about this year its not so bad. But I don't know if Gold prices will go up right from here. If I look at the ignorance of Central bankers and their recklessness from the US to ECB to Japan to the Bank of England, I want to own some precious metals.

Thursday, April 30, 2015

Greece potential exit of Euro a political issue not economic

Europe and the US do not want Greece to leave the euro-zone, because if you do, other people will knock on the door of Athens – the Russians or the Chinese could be. This is a geopolitical chess game that is played in the moment.

I personally think that this is not so much an economic issue but a political issue.

Tuesday, April 28, 2015

Central Banks are clueless

There’s a big bubble in debt, in financial assets. But the biggest bubble is the belief that central bankers know what to do. They have no clue. That is the biggest bubble.

Friday, April 17, 2015

Monday, April 6, 2015

Japan monetary policy like a "ponzi scheme"

Abenomics is a failure. The real purpose is defeated. Income adjusted in dollar terms is tumbling, exports are down in dollar terms, while retail spending is low. Government debt is increasing and the Bank of Japan is keeping on buying bond. I see this like a ponzi scheme run by the government. 

While the Japanese market doesn’t attract me, international investors are bullish because in dollar income terms corporate earnings are improving.

Wednesday, April 1, 2015

Asset Allocation and Asian stock exposure

As an asset allocation I have 25 per cent each in precious metals, equities, real estate, and bonds and cash. This may not be the best of allocation. But it’s a disciplined approach. Today no one can tell where the world will go in the next three to five years. But with such asset allocation I am sure that in terms of purchasing parity I will be better [off].

I have been investing in precious metals. In fact, whenever there is a sell-off I had added them in my portfolio. Among equities, my investment in the US is near to nothing, though recently I have added some oil shares. My largest exposure is in Asia with investments in Vietnam, Malaysia, Singapore, Thailand and China. Six to nine months back I invested in China when valuations were really low and attractive. In 2012, I had invested in European shares. Some of my bond investments are in Latin America.

Monday, March 30, 2015

US Stocks expensive, Europe India reasonable valuations

The US is an expensive market, whereas Europe is attractive in terms of valuation. Emerging markets are inexpensive, while markets like India at 17 times forward [earnings] are not necessarily expensive. But there are stocks like Nestle that are trading at 50 times, which is expensive. Therefore, India is both expensive and inexpensive. You will have to be selective in terms of sectors and stocks.

Monday, March 23, 2015

Own Gold as a hedge

One generally owns some physical gold because in the back of their mind people know something may go wrong in the financial system. We had debt crisis in 2008 and 2009 and now global debt levels have increased by another $57 trillion. Global debt as a percentage to global GDP continues to expand. No one knows how this will end and in this environment one would want to own some real estate and some precious metals.

Wednesday, March 18, 2015

Oil could trade to around $40 to $60

The same analysts who had predicted that crude would go to $150 a barrel when oil was at $100 are now predicting it will drop to $20. My feeling is that crude will stabilise between $40 and $60 a barrel.

Monday, March 16, 2015

Fed will print money if dollar gets too strong

In my view, if the Dollar because of the moves overseas becomes even stronger, the Fed will then use the strong dollar as an excuse to ease again.

Wednesday, March 11, 2015

To invest in India better than USA, Europe

My sense is that if you look at the world, and if you break it down into the US, Europe and emerging economies, then the US market is the most expensive market.

If you have to invest your money in the next 5-10 years, your choice is the US, Europe and, say, Asia and India, then I would say I would rather have money in India than in the US. 

Monday, March 9, 2015

Greece could get closer to Russia and China if it exits EU

In the discussion on Greece what is frequently overlooked -for the NATO, EU and the US, an exit of Greece might open up an opening of closer relationship between Greece and Russia or Greece and China, and that the western allies want to prevent at all costs. 

So I think in the context of Ukraine where the West will have to make concessions that Russia controls Eastern Ukraine including the strategically important cities, at the same time a compromise will be made that Russia stays out of Greece and that more money will be forthcoming from the EU, maybe partly also paid by the US. But strategically speaking Nato, EU and US don't want Greece to leave because its strategically very important. 

Wednesday, March 4, 2015

Greece cannot repay its debts says Marc Faber

The Greek problem has been postponed, it has not been solved and the problem is really that it has debts. The country with its economy simply cannot service or pay the debts amount which amount to something like  $250 Billion to $300 Billion and the economy is not strong enough to support that. 

Monday, March 2, 2015

Marc Faber is chairman of the India Capital Fund

I am the chairman of the India capital fund and so I invested in India already over the last two years and the India capital fund, because it was overweight banks, last year was up around 50 percent. 

So I am not inclined to buy right now although I think that the market could finish the year somewhat higher when it all depends also on foreign investment flows and on foreign economies and ideally as I mentioned before that the global economy is not healing, but it is slowing down largely because of a very meaningful slowdown in China.

Thursday, February 26, 2015

Euro will get stronger if Greece leaves

I believe [if Greece is out of EU] it will strengthen not weaken because the Euro needs strong countries not weak countries. We have to take a write off at this stage if Greece leaves

Monday, February 16, 2015

Marc Faber wants to stay invested in Gold partially

I buy every month physical gold and I own gold as part of my physical allocation. I don't speculate in gold, these are my iron reserves. 

I'm not concerned about the price of gold.. maybe goes down, maybe goes up. If you buy Tesla, maybe it also goes down, maybe it goes up or if you buy Apple maybe one day its worthless, and maybe one day its worth much more.... who knows. The point is simply I want to have some of my assets in Gold.

Wednesday, February 11, 2015

Marc Faber quotes Will Durant on Rome Collapse

I am not agnostic to the view that society has changed because millennials prefer not to have any responsibilities and therefore opt not to get married (a view for which I have great sympathy, I should add). 

Young people are more inclined than their elders to view cohabitation without marriage in a positive light. (My grandparents on both sides would have considered cohabitation without marriage a terrible sin.)

As Will Durant said, “A great civilization is not conquered from without, until it has destroyed itself from within. The essential causes of Rome’s decline lay in her people, her morals, her class struggle, her failing trade, her bureaucratic despotism, her stifling taxes, her consuming wars.”

Monday, February 9, 2015

Marc Faber predicts sactions to Russia will ease

The Europeans will break from the U.S. and ease sanctions against Russia. A deal will be done in the next six months. Americans don’t realize that Europe has a lot of trading relationships with Russia. A lot of capital flows between them. An embargo on Russia won’t work.

Thursday, February 5, 2015

Marc Faber likes Macao gambling stocks

Only 1% of Chinese have been to Macau. About 10% of Americans have been to Las Vegas at least once. If 10% of China’s residents go to Macau, that is huge volume. More facilities will be built. Macau is going to be a huge success. In the next six months, I would accumulate some Macau-related gambling shares.

Tuesday, February 3, 2015

2015 to be the year people lose confidence in central banks

I want to short central banks. Eventually, they will go bust massively. 

This is the year that people will lose confidence in central banks, mostly because of the failure of Abenomics in Japan. 

Friday, January 30, 2015

Gold could be the next big trade

The only stock that I think has a great upside potential from here and in fact the GDXJ, the Junior Gold Mining Index is up 41 percent since the October lows and gold is up 14 percent since the October lows and this year 9 percent.

Over the last 4 months, the sentiment on Gold was the most bearish I have seen. 

I think gold has a lot of upside potential, because I think people will wake up finally. I say finally that if they could short, sell short the central banks, that is the trade of the century. The central banks will be exposed of what fraud they commit.
Marc Faber not a big fan of US Federal Reserve

Monday, January 26, 2015

Monday, January 19, 2015

Most people would rather have an unpleasant experience than do nothing

Recently, Bloomberg published an article by Michelle Fay Cortez (July 4, 2014) entitled: “Shocking: Many Pick Electric Jolt Over Solitude in Study.” 

The article explains that most people vastly prefer passive activities like reading or listening to music over spending just a few minutes by themselves. People tend to avoid being alone with their own thoughts.

According to the study published, "Being alone with no distractions was so distasteful to two-thirds of men and a quarter of women that they elected to give themselves mild electric shocks rather than sit quietly in a room with nothing but the thoughts in their heads. Maybe the mind is built to exist in the world, and people would prefer to have a negative experience rather than none at all."

Randy Kasten who is the author of “Just Trust Me: Finding the Truth in a World of Spin” explains that, “The ability to think critically is one skill separating innovators from followers. Critical thinking reduces the power of advertisers, the unscrupulous and the pretentious, and can neutralize the sway of an unsupported argument.” 

Monday, January 12, 2015

Marc Faber says everything will collapse in the end game

I happen to believe that eventually we will have a systemic crisis and everything will collapse. But the question is really between here and then. Will everything collapse with Dow Jones 20,000 or 50,000 or 10 million? 

Tuesday, January 6, 2015

Detroit's decline was unimaginable in 1920

When I moved to Hong Kong in 1973, Mao Tse Tung was still alive, the cold war was on, the Vietnam war was on. Then starting 1978, the breakdown of socialist communist policies began. 

The real opening started in 1989 - 1990. The changes in the world have been mind boggling. Nobody could have expected the lands where nothing at all 20 years ago, which is now modern cities. 

Equally in the 1920's nobody could have expected where Detroit was probably one of the richest cities in the world, that the city would disintegrate as much as it has.