Marc Faber : Money flows essentially into Stocks

Marc Faber : “I think the difficulty is what to do with money when interest rates are essentially at zero on US dollar then obviously people look at their portfolios and they see stocks that have dividend yields. In Singapore, Thailand, Malaysia, you can have stocks yielding 5% on the dividend. So, the money flows essentially into these stocks.”

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Market update

Stocks are up big to start 2013 but Marc Faber, Editor & Publisher of the Gloom, Boom & Doom Report, says it ends in tears. "Either the market is going to correct more meaningfully now or we have a shallow correction and a continuously rising market until July or August," Faber told me via phone from Thailand. If stocks don't pullback soon, he says we risk a repeat of 1987 when stocks rallied 40% into summer only to collapse 41% in 2 months. "In March of 2009 everything looked horrible, now nobody can find a reason why stocks could go down," Faber claims. "We ask that you should buy stocks when everything looks horrible, you shouldn't rush to buy them when everything looks perfect."

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Markets currently dependent on China

I think that the global economy will be crucial to what happens to China. Do not forget, if the Chinese economy does not recover or recovers for a while, for say a couple of months and then slumps again or decelerates significantly, it would have an impact on raw materials and in this case on the economies of the raw material producers or the resource producers of the world. We could have a shock for the global economy.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Turkey, Thailand short term overbought

I would be careful of markets that have performed superbly last year such as Turkey and Thailand. They are in my opinion, becoming slowly overheated. I am not so sure to what extend India is overheated because currency adjusted, we are still way below the peak in 2007. But, in general I would argue you should buy equities when everything looks horrible and when investors cannot see why the markets would go down. That is the time to be careful because there is always something that will happen to send stock prices down.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

China rising tensions

On the potential for rising tensions for valuable commodities and delivery routers: What would you do if you were a military strategist in China and you knew all the oil (being imported into China) comes through the Straits of Malacca?
Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber interview with MoneyControl.com

Marc Faber interview with MoneyControl.com


Q: You sounded a bit cautious of late. Tactically, are you expecting a phase of risk-off in global markets anytime soon?

A: We had a huge rally since November and it has basically begun in March 2009 for most markets. I think that the markets are getting very frothy at present and whether this is approaching a longer term top or whether we have just a short-term peak, the correction remains to be seen. But, in general, I would be careful of buying indiscriminately in this market.

Q: Would you be expecting a 10 percent kind of correction in global equities across the board or do you think it may not be that deep?

A: Yes, we could easily see 10 percent correction. We have seen over 30 percent correction in Apple. So it is a reminder that stocks move up and they can also move down. My scenario for 2013 is either the market will make a peak relatively soon which will not be exceeded or we have a correction of a month or two and then another strong rally into August, such as we had in 1987 when the Dow Jones between January 1987 and August 1987 increased by 41 percent. However, it then lost 40 percent in two months.

I think there is a chance that in order to actually punish central bankers, markets would become extremely overheated and then crash.

Q: What do you think both outcomes are contingent on? Do you think it is the fiscal cliff issue that will be crucial in determining what happens to equity markets or something else?

A: I think that the global economy will be crucial and also what happens to China. Do not forget, if the Chinese economy does not recover or recovers for a while, for say a couple of months and then slumps again or decelerates significantly, it would have an impact on raw materials and in this case on the economies of the raw material producers or the resource producers of the world. We could have a shock for the global economy.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Expecting a 10% correction

My scenario for 2013 is either the market will make a peak relatively soon which will not be exceeded or we have a correction of a month or two and then another strong rally into August.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Stocks not cheap right now

The stock market is not that cheap anymore. Here in Asia we have many markets that are up 250 percent from the lows. That is not very inexpensive anymore. Let us put it this way...the stock market is discounting already a lot of the good news.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Markets setting for a big crash

For the first time in four years, since the lows in March 2009, I love this market because the higher it goes the more likely we will have a nice crash, a big time crash.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Deflation in property, real estate, bonds

The market will probably not make new highs in US and some emerging markets in Asia. I don’t see the markets as especially attractive. Will they fall strongly? I don’t know but I wouldn’t disregard the possibility of them falling 20%. It’s not a lot 20%. We could also see a deflation in property or in bonds as the yields are so low and the prices therefore so high. Related Stocks: SPY, S&P500, FXI, PIN, DJIA

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Sell Apple on rebounds

Marc Faber : I wouldnt buy Apple right now, I would sell Apple as it underperformed the market. Apple along with lot of tech stocks have significant downside risks.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Gold is a hedge fagainst system crisis

I buy gold because I am fearful we will still have a systemic crisis.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Markets will punish central banks worldwide

When you print money, the money doesn't flow evenly in an economy. It flows to some people or to some sectors first, and in this case, it flowed into equities, and until about five months ago, bonds… I believe that markets will punish central banks at some stage through an accident. The bond market could collapse, and that could lead a stock market bubble.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.