Marc Faber in his usual "optimistic" self (his nickname being "Dr Doom"):
"There is no safe haven. Bank deposits are not safe, which used to be safe. Money in treasury bills is not 100% safe because there is inflation in the system and you hardly get any interest. Bonds are not very safe anymore because eventually interest rates will go up. Equities in the US are relatively expensive by any valuation metrics you might use. I don't see anything particularly safe. The best you can hope for is that you have a diversified portfolio of different assets and that they don't all collapse at the same time."
(on gold):
"We have a strong rally form the lows at 1180 to over 1400 and now we are backing off. I think between around 1200 and 1250 it is getting into buying range. The sentiment about gold is very negative, but if you look at everything considered - the monetization of debt, the debt ceiling, which sooner or later will be increased because both Republicans and Democrats are big spenders and the government's debt has expanded from $1 trillion in 1980 to $5 trillion in 1999, now we are at $16 trillion. Both Democrats and Republicans have been big, big spenders because a lot of money flows through the government."
(On whether what's going on across equities, bonds currencies and commodities, along with the events in US, can be compared to other idiocies by governments in previous decades):
"Yes, idiocies by governments. That is exactly the word. It's basically a dysfunctional government that we have that is far too large that is essentially wasting money left, right and center. The Republicans are wasting money on the military complex and the Democrats are basically buying votes with transfer payments, with entitlement programs, it goes on. It is a huge waste. The problem is that I don’t see a solution. I think the current debate about the debt ceiling and the budget is more a symptom of a problem than a problem itself. The problem is really that the government, not just in the US but other countries as well, has grown disproportionally large and that retards economic growth."
"There is no safe haven. Bank deposits are not safe, which used to be safe. Money in treasury bills is not 100% safe because there is inflation in the system and you hardly get any interest. Bonds are not very safe anymore because eventually interest rates will go up. Equities in the US are relatively expensive by any valuation metrics you might use. I don't see anything particularly safe. The best you can hope for is that you have a diversified portfolio of different assets and that they don't all collapse at the same time."
More information can be found here, on the website of Business Insider.
Showing posts with label Gloom Boom Doom. Show all posts
Showing posts with label Gloom Boom Doom. Show all posts
Tuesday, 15 October 2013
Saturday, 14 September 2013
Faber: "stocks declining 20% is almost a certainty"
Marc Faber's September issue of "The Gloom, Boom & Doom Report" is again full with pockets of wisdom.
A long story about Macau and the enormous increase of outbound travellers from China. After liberalising gambling in Macau, monthly visitors grew from 40,000 in the mid-1990s to 2.5 million visitors. Even though Stanley Ho lost his gambling monopoly, he has done extremely well due to this 60-fold increase.
Also mentioned is Sheldon Adelson from the Sands company, who saw his company's share price drop from US$ 139 to US$ 1.29; it is now back to about US$ 60, quite a rollercoaster ride.
If readers are optimistic about China's growth story, then Macau should be a beneficiary of that, and thus is Faber moderately positive in the long-term about companies with exposure to Macau's casino's. Faber cautions though about the property bubble (both residential and commercial) in China and its weakening economy.
Faber then moves on to the "other casino", the financial markets, especially related to the Fed, which does not feature high in Faber's opinion, to put it mildly.
Important is the following observation:
"More policymakers and economists are coming to realize that the Fed's unconventional monetary policy is not working. Yet there is also a sense that unwinding is too costly right now and can't be reversed" and ".... the probability that we have embarked on permanent asset purchases by the Fed is very high".
He continues to argue that the Fed has lost control over the bond market, with the 10-year yield rising from about 1.5% to almost 3.0%.
Investors should reduce equity holdings, the US economy will weaken.
Faber still likes industrial commodities and mining companies like:
Emerging markets like Thailand, Indonesia and the Philippines look vulnerable.
Finally, he mentions:
"I would be extremely risk averse for now. I am not concerned about stocks declining 20% or more. (In my opinion, this is almost a certainty.)".
He is concerned about the direction of the Western politics and how badly the geopolitical climate has deteriorated. Xi Jinping, President of China, will not be pushed around by anyone, least of all by Obama.
A long story about Macau and the enormous increase of outbound travellers from China. After liberalising gambling in Macau, monthly visitors grew from 40,000 in the mid-1990s to 2.5 million visitors. Even though Stanley Ho lost his gambling monopoly, he has done extremely well due to this 60-fold increase.
Also mentioned is Sheldon Adelson from the Sands company, who saw his company's share price drop from US$ 139 to US$ 1.29; it is now back to about US$ 60, quite a rollercoaster ride.
If readers are optimistic about China's growth story, then Macau should be a beneficiary of that, and thus is Faber moderately positive in the long-term about companies with exposure to Macau's casino's. Faber cautions though about the property bubble (both residential and commercial) in China and its weakening economy.
Faber then moves on to the "other casino", the financial markets, especially related to the Fed, which does not feature high in Faber's opinion, to put it mildly.
Important is the following observation:
"More policymakers and economists are coming to realize that the Fed's unconventional monetary policy is not working. Yet there is also a sense that unwinding is too costly right now and can't be reversed" and ".... the probability that we have embarked on permanent asset purchases by the Fed is very high".
He continues to argue that the Fed has lost control over the bond market, with the 10-year yield rising from about 1.5% to almost 3.0%.
Investors should reduce equity holdings, the US economy will weaken.
Faber still likes industrial commodities and mining companies like:
- Newmont Mining Company: NEM
- Freeport-McMoRan Copper & Gold Inc: FCX
- Barrick Gold Corporation: ABX (featured a few times in this blog)
Emerging markets like Thailand, Indonesia and the Philippines look vulnerable.
Finally, he mentions:
"I would be extremely risk averse for now. I am not concerned about stocks declining 20% or more. (In my opinion, this is almost a certainty.)".
He is concerned about the direction of the Western politics and how badly the geopolitical climate has deteriorated. Xi Jinping, President of China, will not be pushed around by anyone, least of all by Obama.
Saturday, 3 August 2013
Once in a Lifetime Opportunity to Buy Barrick Gold? (2)
I received the following comment on my previous posting "Once in a Lifetime Opportunity to Buy Barrick Gold?"
"Very interesting:
When the original article came out (5 July 2013) the share price dropped, but then when you blogged it (15 July 2013) it went up quite a bit.
Was this your own money? Or do you have many followers?"
I thank "Tony", but the comment is really too flattering for me. My blog did receive almost a quarter of a million hits (about 10,000 to 12,000 hits a month), a pretty unbelievable number for a subject that is perceived to be rather boring by most investors, Corporate Governance. It makes me humble, and despite being very occupied with work lately and not earning once cent through this blog (that is the way I want it), I hope to continue writing in the future.
But I don't think (and actually hope) that the readers of this blog are the people who are looking for a quick punt. I try to stress the virtues of long term investing. I agree, the timing of my posting could have been worse, so far it worked out quite nice.
And yes, I did buy Barrick Gold for my own account, but given the size of Barrick Gold, my purchase would have only caused a small ripple in the ocean. I have not sold my holding, not do I intend to do so in the near future, unless the price really rises fast.
Marc Faber has written a lot about miners in general in the past. I assumed he would be interested at the current prices and was thus not disappointed to read in this August 2013 edition of "The Gloom, Boom & Doom Report":
"Relative to all other assets that I follow, gold mining stocks are inexpensive and should be purchased gradually. Some pundits argue that the Fed manipulated the gold prices lower and that the US doesn't have the gold it officially shows. I [Marc Faber] really hope they are right, because if that were the case, gold prices might explode on the upside".
I did speak recently to someone with deep knowledge in mining companies (he worked before for BHP) and trading in commodities. He told me that there is a lot of stress in the market, many companies are stuck with expensive mining assets that they bought in the last years. Prices of commodities have come down recently, indicating growth in China is slowing down substantially.
Also, although many commodities have risen over say the last 10 years, the cost to mine them has risen more, putting pressure on margins. In other words, short-term results of mining companies might be horrendous, with recently acquired assets being (partially) written down.
I have been very critical about Malaysian SPACs in the past (and will firmly continue to do so, unless I have convincing arguments that they actually might work for the minority investors in the long run), but one of the rare positives is that the ones focusing on mining might be able to buy some assets on the cheap from mining companies with stretched balance sheets.
"Very interesting:
When the original article came out (5 July 2013) the share price dropped, but then when you blogged it (15 July 2013) it went up quite a bit.
Was this your own money? Or do you have many followers?"
I thank "Tony", but the comment is really too flattering for me. My blog did receive almost a quarter of a million hits (about 10,000 to 12,000 hits a month), a pretty unbelievable number for a subject that is perceived to be rather boring by most investors, Corporate Governance. It makes me humble, and despite being very occupied with work lately and not earning once cent through this blog (that is the way I want it), I hope to continue writing in the future.
But I don't think (and actually hope) that the readers of this blog are the people who are looking for a quick punt. I try to stress the virtues of long term investing. I agree, the timing of my posting could have been worse, so far it worked out quite nice.
And yes, I did buy Barrick Gold for my own account, but given the size of Barrick Gold, my purchase would have only caused a small ripple in the ocean. I have not sold my holding, not do I intend to do so in the near future, unless the price really rises fast.
Marc Faber has written a lot about miners in general in the past. I assumed he would be interested at the current prices and was thus not disappointed to read in this August 2013 edition of "The Gloom, Boom & Doom Report":
"Relative to all other assets that I follow, gold mining stocks are inexpensive and should be purchased gradually. Some pundits argue that the Fed manipulated the gold prices lower and that the US doesn't have the gold it officially shows. I [Marc Faber] really hope they are right, because if that were the case, gold prices might explode on the upside".
I did speak recently to someone with deep knowledge in mining companies (he worked before for BHP) and trading in commodities. He told me that there is a lot of stress in the market, many companies are stuck with expensive mining assets that they bought in the last years. Prices of commodities have come down recently, indicating growth in China is slowing down substantially.
Also, although many commodities have risen over say the last 10 years, the cost to mine them has risen more, putting pressure on margins. In other words, short-term results of mining companies might be horrendous, with recently acquired assets being (partially) written down.
I have been very critical about Malaysian SPACs in the past (and will firmly continue to do so, unless I have convincing arguments that they actually might work for the minority investors in the long run), but one of the rare positives is that the ones focusing on mining might be able to buy some assets on the cheap from mining companies with stretched balance sheets.
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