Some recent Marc Faber Videos

[sishya]

This website has some recent Marc Faber videos where he portrays how things will fare.

One point he noted - if Interest rates rise, Gold will fall because then Gold will no longer be attractive.

http://bestdocumentaries.blogspot.co...om-report.html

[FRED]

Re: Some recent Marc Faber Videos

This website has some recent Marc Faber videos where he portrays how things will fare.

One point he noted - if Interest rates rise, Gold will fall because then Gold will no longer be attractive.

http://bestdocumentaries.blogspot.co...om-report.html

This is true only if interest rates rise more than inflation. The reason gold is at $700+ today is because real interest rates remain negative.

[BiscayneSunrise]

Re: Some recent Marc Faber Videos

As always it is interesting to hear Faber's ideas, ,maybe it's the accent.

anyway, the videos are about 40 minutes. normally too long but I had some time to kill, here are the takeaways. I only started taking notes about halfway through so it's not complete but much of it we have already
discussed here:

Greenspan is a fool and has been dishonest. He denied being able to identify bubbles here in the US while at the same accurately pointing out bubbles overseas. He knows what bubbles are and continued to fuel the one's here in the US.

Bernanke is "The Money Printer" He will continue Greenspanss disastrous policies. Together with Greenspan, he created what no one has ever been able to do, a worldwide bubble in EVERY asset class.

The dollar will experience a brief rise for about 6 months. It is likely the Chinese yuan will rise significantly over time.

The gold supply will not keep up with the increase of the dollar supply making gold more precious

He likes gold and prefers the metal over the miners due to high costs, taxes, nationalization risk, etc. Juniors have the ability to make the biggest money but only have a 2% success rate.

0% interest rates do not help the economy only fuel inflation in some sector of it. The growth and low interest rates of the last decade did not help the whole economy in terms of building a stronger industrial base it only helped the "money shufflers"

The market broke about a year ago and was met with widespread disbelief. The stock market was in a bubble phase as well. The bubble was not in PE's which were actually relatively low but were in EARNINGS. The earnings of many companies especially financials (and also GE Capital and GMAC) were off the chart high because of financial leveraging. That earnings bubble has burst. The financial sector is now dead for those expecting any rebound.

PE's at the beginnings of bear markets are between 15&20, at the end of bear markets, PE's are around 6. In real terms, bear markets last about 16 years.

Dollar will likely collapse. It already has against gold. Gold is a relatively safe place, possibly dropping to $600 before rebounding but he expects it to outperform relative to other assets. Gold performs better in negative real interest rate environments (like now) vs high inflation environments.

The next few years will continue to disappoint investors in all asset classes. There is NO rush to invest trying to find a bottom. Neighborhoods popular with financiers like park Avenue and Mayfair will continue to decline. He likes farmland for fear of a terrorist attack in a big city.

The only areas he likes are in China around healthcare, real estate in tertiary areas, tourism, and infrastructure.

Demographics in Asia (ex Japan) are favorable until around 2025. While some major chinese cities saw real estate over inflate, overall Chinese real estate is relatively cheap vs. local incomes. Asian real estate is certainly reasonable compared to that of Anglo saxon countries.

Continued Asian urbanization along with low personal debt, more infrastructure build and a mortgage market being introduced for the middle class bode well for Asia.


When you see a secular downturn in gold is when you know everything else is healing. He advocates an exposure to raw materials and gold. Commodities have come down from their peaks but he does not see a return to their 1990's levels.

My Own Thoughts

We know that an asset class that lead one bull market is not the asset class that leads the next bull market. So if everything was in a bubble does that mean that there is nowhere to invest. Well, as Faber alludes there are some areas that were not experiencing bull markets. By and large, the rural areas in Asia were left behind the last few years. I expect to see more emphasis in those tertiary areas. The emphasis will not only be in physical infrastructure but human development. Schools, adult education, etc. There are very few, if any, pure plays here for equity investors but anyone with a modern, western skill set and an inclination do start their own business, some may find some opportunities in those tertiary markets.

As for Faber's fear of an attack on a major western city, we have had this discussion before. Cities have historically, been the best and safest places to live in times of trouble but if one is truly concerned about a significant terrorist attack my recommendation would be to live in a highly desirable, affluent, tertiary city with all the amenities, like a Naples, Florida, a ski resort town or a Carmel, California. Lots of great university towns too in the country like Charlottesville, VA.