Stocks : No Bargains Anymore

Emerging Asia's shares may have plunged recently, but with the bull market getting long in the tooth, it's not the time to buy, said Marc Faber, the publisher of the Gloom, Boom & Doom report. "I don't think there's a lot of money to be made in equities for the next 12 to 24 months," Faber, also known as Dr. Doom, told CNBC. "We are in a bull market that is more than four years old," with the rally beginning in March 2009, he noted. "Four years into the economic expansion, I don't think that stocks are the greatest bargain anymore." - in CNBC
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 are in tail end of Bull Market

We are in a bull market that is in the tail-end instead of the beginning but that does not mean prices will collapse. I don't think that stocks are the greatest bargain anymore, but it's not that expensive either.

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

Balanced approach to investing

Between now and then [Chinese bubble burst], there will be opportunity in various asset classes.

I recommend the investors to take a balanced approach to invest in equity, corporate bond, real-estate and gold.

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

How to Protect Yourself in a Collapse

A deflationary bust, whenever it may happen, it may only happen in 10 years, but it would seem to me that this will be the eventual outcome. It could also happen tomorrow or in 10 years. It is the opposite of an increase in asset prices from inflation. If you look at how asset prices have increased since 1980, it has been highly irregular. Stocks rose strongly until 1987, then they had a setback. After ’87 some markets made new highs but others didn’t. Then you have some regions like Latin America doing particularly well between 1988 and 1994. Growth shifts around and asset prices rise, but with different intensity. We had a collapse in the NASDAQ, but other stocks continued to go up until 2007, whereas the NASDAQ was still 50% below its high and is still today even 40% below its high in 2000. So I think in a collapse what happens is that, over time, everything goes down but some things go down more than others. Traditionally I would say the best thing in a collapse is to hold cash. But then the question arises about what kind of cash you should hold and in what form. Because if you have bank deposits, and I think what happened in Cyprus is a blueprint, maybe you have bank deposits and maybe not all of it will be paid to you. In some sovereign countries, maybe it will be paid to you and in others not, depending on the quality of the banking system. But in general if there was a collapse, then I think all banks would suffer. Then I would imagine that cash would not be the safest investment. And then the currency choice is also important. Would you put all of your money into US dollars? Yeah maybe the US dollar will be strong for another 3 months, maybe another 3 years, but maybe eventually it will be a very weak currency as I expect. Then maybe you turn around and say, “Well, weak, but weak against what?” Maybe not against the others because all of the others also print money. The dollar, paper money, may be weak because they all print and purchasing power will all go down in concert. So maybe gold is part of the solution, and maybe you would need to own some real estate and then you have to think “OK, real estate, but where?” If you lived in Germany in 1900, and we are now 2013, if you had all of your money in cash, you lost your money 3 times: in World War I, then hyperinflation, then in World War II, so cash was not a desirable alternative nor government bonds which were also lost 3 times. If you owned shares in the leading German companies, most of them are still in business, they may not have been the best investments, but you still have these shares so you preserved your wealth. If you had real estate, then the question arises, if your grand-parents had the bad luck to own the real estate in East Germany, you lost it all after World War II, but if you have the fortune to have it in West Germany, then you are ok. So to people who say that real estate is safe, yes, to some extent, but you also need to diversify, it is like a stock portfolio. You should not necessarily put all of your money in one stock, but you should have a diversified portfolio because companies also die and go out of business eventually. When I started to work in 1970, 2 of the most respected companies to buy and put in a drawer and never look at again were Polaroid and Kodak and both are out of business. So there is the question of obsolescence and the same happens to real estate; for political reasons you may lose it.

So I would say we do not know how the world will look in 5 or 10 years, nobody has a clue. There are some people that will say that it will look this way or that way. I am very skeptical of any forecasts, especially long term forecasts. There are some trends that we can see about how society has changed in the last 30 years. I moved to Asia 40 years ago and I can see that Asia has developed a lot and grown a lot and we can see this. But I do not know if in 5 years or 10 years if Asia will continue to develop at the pace it developed in the last 40 years. I can see very clearly that until now, the middle class and the poor people admired the successful rich people. Now, partly under Western influence, there are some misgivings about the distribution of income and wealth. We see this very pronounced in Hong Kong and Singapore where there are a few families that own a great deal of the properties that are incredibly rich and the people pay very high rents and their real incomes, in other words incomes adjusted for inflation, have been going down. So these people ask themselves these questions and then go and demonstrate. So we have some social problems in Asia. Of course, as I have mentioned, we have some geopolitical problems in the world, obviously in the Middle East. We have this rise of the Chinese geopolitical influence in the world and the old masters, the US and Europe, they see their influence waning and they do not like it. So also there, tensions will arise.

- in The Prospect Group:

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

Malaysia Stocks, Economy is stable

Malaysia may not be seen as an exciting market and the stock market is certainly not cheap, but this is a well-balanced economy and stable enough to let you sleep soundly at night

Malaysian equities are not exciting. However, they are relatively stable, supported by a well-balanced economy coupled with no major downward 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.

China Inflation is higher than it Seems

The inflation in China is much higher than it seems. Credit growth in China will slow down. It is very much depends on whether they're going into hard landing or soft landing, but this will inevitably lead to economic slowdown in emerging markets.

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 on taper

 Marc Faber on taper: 

"My view was that they would taper by about $10 billion to $15 billion, but I'm not surprised that they don't do it for the simple reason that I think we are in QE unlimited. The people at the Fed are professors, academics. They never worked a single life in the business of ordinary people. And they don't understand that if you print money, it benefits basically a handful of people maybe--not even 5% of the population, 3% of the population. And when you look today at the market action, ok, stocks are up 1%. Silver is up more than 6%, gold up more than 4%, copper 2.9%, crude oil 2.68%, and so forth. Crude oil, gasoline are things people need, ordinary people buy everyday. Thank you very much, the Fed boosts these items that people need to go to their work, to heat their homes, and so forth and at the same time, asset prices go up, but the majority of people do not own stocks. Only 11% of Americans own directly shares."

On Interest rates

"On September 14, 2012, when the Fed announced QE3, that was then extended into QE4, and now basically QE unlimited, the bond markets had peaked out. Interest rates had bottomed out on July 25, 2012--a year ago--at 1.43% on the 10-year Treasury note. Mr. Bernanke said at that time at a press conference, the objective of the Fed is to lower interest rates. Since then, they have doubled. Thank you very much. Great success."

On the final

"Well, the endgame is a total collapse, but from a higher diving board. The Fed will continue to print and if the stock market goes down 10%, they will print even more. And they don't know anything else to do. And quite frankly, they have boxed themselves into a corner where they are now kind of desperate."

On Janet Yellen:

"She will make Mr. Bernanke look like a hawk. She, in 2010, said if could vote for negative interest rates, in other words, you would have a deposit with the bank of $100,000 at the beginning of the year and at the end, you would only get $95,000 back, that she would be voting for that. And that basically her view will be to keep interest rates in real terms, in other words, inflation-adjusted. And don't believe a minute the inflation figures published by the bureau of labor statistics. You live in New York. You should know very well how much costs of living are increasing every day. Now, the consequences of these monetary policies and artificially low interest rates is of course that the government becomes bigger and bigger and you have less and less freedom and you have people like Mr. De Blasio, who comes in and says let's tax people who have high incomes more. And, of course, immediately, because in a democracy, there are more poor people than rich people, they all applaud and vote for him. That is the consequence."

On gold direction:

"When I look at the market action today, I would like to see the next few days, because it may be a one-day event. The markets are overbought. The Feds have already lost control of the bond market. The question is when will it lose control of the stock market. So, I'm a little bit apprehensive. I would like to wait a few days to see how the markets react after the initial reaction." On 10 year treasuries "I will confess to you, longer-term, I am of course, negative about government bonds and i think that yields will go up and that eventually there will be sovereign default. But in the last few days, when yields went to 2.9% and 3% on the 10-year for the first time in years i bought some treasuries because I have the view that they overshot and that they could ease down to around 2.2% to 2.5% because the economy is much weaker than people think…I think in the next three months or so." On gold prices: "I always buy gold and I own gold. I don't even value it. I regard it as an insurance policy. I think responsible citizens should own gold, period." Marc Faber: "Fed's Neo-Keynesian Clowns... Are Holding The World Hostage"

"There is nothing safe anymore, because the money-printing distorts all asset prices," is the uncomfortable response Marc Faber gives to Thai TV during this interview when asked for investment ideas. Faber explains how we got here "massive money-printing and ZIRP creates a huge pool of liquidity that does not flow evenly," as it washes from Nasdaq stocks to real estate to emerging markets and so on. Each time, "the bubble inflates and then is deflated as the capital (liquidity) floods out." The Fed, based on the doubling of interest rates since they began QE3 "has lost control of the bond market," Faber warns; adding that while he expects some "cosmetic tapering," the Fed members and other neo-Keynesian clowns will react to a "weakening US and global economy," and we will be a $150 billion QE by the end of next year, as the world is held hostage to US monetary policy. The interview is interspersed with Thai translation but is well worth the time (starting at 1:25):



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

Malaysia Banks are solid

Unlike US banks, Malaysia's are solid and they do not involve in derivatives or gamble.


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

the Asian countries are less likely to take the gold away than Western countries.

I wonder what will happen one day. Let’s take the worst-case scenario. We have either a social unrest, a revolution, or war. Governments decide, “Oh, the price of gold is going up substantially, let’s take it away from people.” In other words, you expropriate it. I think it will, at that stage, not matter very much where you hold your gold, except it may matter where you hold your gold in terms of sovereign state. My sense is that the Asian countries are less likely to take the gold away than Western countries.

- Source, Sprott Money Ask the Expert:

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

Pollution Problems in China

“Somebody’s going to make a lot of money cleaning it up, now the Chinese government and the Chinese citizens know that it’s terribly filthy. For the next 20 or 30 years, huge amounts of money are going to be spent, and therefore, profits made.” - in CBS Market Watch Blog

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

Fed failing to lower interest rates

On September 14, 2012 when the Fed announced QE 3 that was then extended to QE4 and then now to QE unlimited. The bond market has peaked out a year ago at 1.43% at the 10 year treasury note. Mr Bernanke said at that time at a press conference the objective of the fed is to lower interest rate. Since then they have doubled.

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

It is annoying the way the Fed thinks

Marc Faber : Rates have doubled since QE3 began. It is annoying the way the Fed thinks. Some Fed members believe the Fed didn't buy enough. (they buy $85 a month - almost the entire issuance of the US government).

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

US economy is weakening

I believe the US economy is weakening, and if it gets worse they will have to even increase the purchases, maybe even to $150 billion a month. p> Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

India Faces Sovereign Rating Downgrade Threat

Marc Faber, editor and publisher of 'The Gloom, Boom and Doom' report, says he fears that India faces a real threat of a sovereign downgrade given the worsening macro environment accentuated by a weakening rupee. He, however, says the current situation should not be equated to the 1997-98 Asian financial 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.

Nothing is safe anymore

In terms of investment, there is nothing safe any more. The US money-printing has distorted all asset prices while cash in the bank has not given you any return when inflation is adjusted. Inflation in Thailand is running at 10 per cent per annum. I don't look at the government's statistics. All governments around the world lie.

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

My Investment Strategy at the moment is Diversification

My investment strategy during this time is that you have to diversify and minimize your risks from economic, political, geopolitical and other factors. Your portfolio should include properties, stocks and equities, corporate bonds, gold and silver, plus cash. It should be 25 per cent of each, or 125 per cent - just to mimic the US accounting standard where things now do not add up.

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

Thai Stocks topping

Thai stocks are now not cheap, but the economic cycle has seen expansion topping four years. I own a lot of Thai shares but I don't think Thai stocks will go up much [from the current SET Index of around 1,400]. Good stocks like Kiatnakin Bank and CP Food have fallen by more than 50 per cent. On properties, we have seen tremendous speculation on Thai real estate as prices have gone up significantly in Chiang Mai, or areas bordering Laos, Cambodia and other countries, but if you look at Hong Kong, Singapore, London, or New York's Manhattan, they are extremely expensive compared to Bangkok's high-end condos, which are now not cheap either by local standards.

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 makes case to invest in emerging markets

Many emerging markets are down 50% from their highs post recovery 2009. Where do you invest ? The case can be made to should one want to invest in equities he will choose the depressed markets.

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

We are in QE Unlimited

 My view was that they would taper by about $10 billion to $15 billion, but I'm not surprised that they don't do it for the simple reason that I think we are in QE unlimited.The people at the Fed are professors, academics. They never worked a single life in the business of ordinary people. And they don't understand that if you print money, it benefits basically a handful of people maybe--not even 5% of the population, 3% of the population. And when you look today at the market action, ok, stocks are up 1%. Silver is up more than 6%, gold up more than 4%, copper 2.9%, crude oil 2.68%, and so forth. Crude oil, gasoline are things people need, ordinary people buy everyday. Thank you very much, the Fed boosts these items that people need to go to their work, to heat their homes, and so forth and at the same time, asset prices go up, but the majority of people do not own stocks. Only 11% of Americans own directly shares."

- in Bloomberg 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.

Marc Faber on the FED Not Tapering

"My view was that they would taper by about $10 billion to $15 billion, but I'm not surprised that they don't do it for the simple reason that I think we are in QE unlimited.The people at the Fed are professors, academics. They never worked a single life in the business of ordinary people. And they don't understand that if you print money, it benefits basically a handful of people maybe--not even 5% of the population, 3% of the population. And when you look today at the market action, ok, stocks are up 1%. Silver is up more than 6%, gold up more than 4%, copper 2.9%, crude oil 2.68%, and so forth. Crude oil, gasoline are things people need, ordinary people buy everyday. Thank you very much, the Fed boosts these items that people need to go to their work, to heat their homes, and so forth and at the same time, asset prices go up, but the majority of people do not own stocks. Only 11% of Americans own directly shares." - via Bloomberg 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.

I like Bonds from Russia, Kazakhstan, India with yields of 5-6 per cent

On corporate bonds, I like issues from Russia, Kazakhstan and India with yields of 5-6 per cent, but they are not 100 per cent safe unless they are triple-A. Corporate bonds have an equity character. They don't move much when stock markets crash. When things go bad, government bonds on the other hand tend to go up in value because of flight to safe havens.

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

Higher Education is Almost Always Useless

If you look to hire anybody today you will find thousands of people with MBAs and they all want to work for you. The question is, how much can they produce for you. I do not know the answer. If on the other hand, I look for a reliable electrician, carpenter, or plumber, it is very difficult to find. So I think that the generation that grew up say during the depression and in the 1950s, when a worker in America had a very high social standing and could travel to Europe, and with the prevailing exchange rate spend a lot of money in Europe. The view then became, whether it came from the government, the media, or from the workers themselves, was that a workman’s job is a lower class job. We want our children to be academics. A lot of people are not suited to be academics or they do not know how to apply the knowledge they acquired in universities, if anything is acquired, and that is a very big question. So you now have an army of people that came out of universities, and I tell you, a lot of these people I would not dream of hiring. They are completely useless. I am not saying that everybody is useless, some have a very good education and a very good personality. But the ones that I would hire I would hire them with or without a university degree. I would look at them and say, “Can they do something? Are they effective? Can they accomplish something or not?” I would not even ask them if they have a university degree, I am not interested in that.

In general, if you want to be a medical doctor, I can understand that you need to go to medical school. If you want to be an engineer or an architect, I can understand you need to go to a technical college. If you want to be a teacher, then maybe it is useful to know something and go to a university. But for most people, I do not think that education is that important. It is probably important in that, at least when I studied, you were given a job to do or a paper to do, maybe on a subject that you had no idea about. Then you had to go and study and learn about this subject. Through this you may learn how to learn and how to talk about things about which you have no clue, which is very important in business.

- in The Prospect Group


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

Own physical gold, not gold papers.

On gold and silver, I think people should have 20 per cent of their money in physical gold, not gold papers. I would put the gold bars into deposit boxes at banks. Don't speculate but buy regularly and keep them safe. We live in a volatile period. Gold is not like other commodities, it's the only honest currency when paper currencies are not.

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

India could outperform S&P 500

I would rather buy Indian equities than the S&P 500. However, I do not think Indian equities will rally substantially in the near future. We may still go lower in sync with other markets in the world because India is not an isolated market. If the S&P drops 100 or 200 points, India is not likely to rally. It may outperform the S&P, but it is not likely to go up when S&P goes 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.

India has a structural current account deficit and so the currency is more likely to weaken

Marc Faber: Basically countries with large trade and current account deficits tend to have a weakening currency. On that score, India has a structural current account deficit and so the currency is more likely to weaken in future than to strengthen.
Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

FOMC will taper 5 to 20 Billion Dollars

Regarding the September 17-18 meeting of the Federal Open Market Committee on QE tapering, "I think maybe they will taper 5 or 10 or 20 billion dollars off the current $85-billion monthly purchase of assets, and they would say they will reassess the situation depending on economic and market conditions.

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

maybe central banks don’t have all the gold they claim they have

I'm aware of some people, including Eric Sprott, that believe that there is manipulation in the system. Where I tend to agree with him is that maybe central banks don’t have all the gold they claim they have, because something must be funny. The Germans have asked for the gold to be returned to Germany. Why would it take eight years to do that? There’s no reason. You can do it in three months.

As I said, I don’t know, but one of the reasons I would be inclined to believe in some manipulation would be, let’s say you’re a central bank, like the Fed. You don’t have the gold that you declared and you know that you have to buy it back at some point. Then, you may wish to manipulate the price down until you can cover your short position in gold at a reasonable cost. There will still be losses, but you can cover them at a reasonable cost. That is really the only reason I could see why a central bank would want to depress the price of gold.

- in, Sprott Money Ask the Expert:

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

You shouldn't believe Governments, period

Worldwide, you shouldn't believe governments, period. I think you should believe market action. When markets go up, they give you a message, and when the markets go down, they give you a message. The only problem nowadays is that the messages from markets have been distorted by very significant government intervention into the free market, so you can’t rely on the information provided by the market participants any longer.
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 can be replacement for bank deposits

We have to be aware that over longer periods of time, gold has not been a very good investment, since it does not generate new businesses, it does not generate dividends or cash flow. I would suggest some money ought to be in gold, as a replacement for having money on deposits with banks, for the risks in the banking system.

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

India currency weakness

India has pursued poor economic policies and one cannot really accuse the Reserve Bank of India. The entire political elite has mismanaged the Indian economy for the last 50 years. You cannot solve a crisis that is borne as a symptom of mismanagement in just five minutes or in a week. It will involve significant sacrifices and pain and I doubt that in India there is the political will to face the music. When I went to India for the first time in 1973, one US dollar was about Rs 7 and now it is close to 70. The oil price increase has happened in the world, but of course it is magnified in India by the currency weakness.

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

War in Syria could cause Price of Oil to rise quite substantially

Oil price has already been rising. but could rise further depending on the expansion of the hostilities. Do not forget that Assad, though not a close ally, is aligned with Iran's policy. Therefore, if he is attacked, Iran may perceive this as an attack on Iran and may counter react. The hostilities could escalate and that may mean that the price of oil could rise quite substantially.

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 has made a major low

The impact[geopolitical risks] will be more severe on financial assets. The price of gold has recovered sharply from $1180 to around $1400. On further hostilities, we will have some profit taking in gold, but we have made a major low at $1180.

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: There will be No tapering of bond buying

The US economy is still weak, otherwise McDonalds and Walmart would have reported much favourable results. Given the weakness in the economy and employment, and given the frame of mind of Fed members, most of them are extremely dovish. I think there will be no tapering of bond-buying program. And I won't be surprised if in a year's time the Fed increases asset purchases.

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

Indian Stocks Coming into Buying range

In my view, there has been a huge correction in Indonesia and Thailand from the recent highs. The market is down by around 30-35% from the April-May high, but following a rebound, we will see further weakness. Indian stocks, because of the currency weakness, have already experienced a very substantial bear market. It may last a little longer, but we surely are coming into a buying range.

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

some very good companies in India

I have very substantial positioning in India. There are some very good companies in India, though the macro economic conditions are not very favourable. A very desirable and attractive sector is the consumption sector. The largest weight of India Capital Fund is in banks and financials, as they are very cheap and inexpensive; however, they are likely to remain inexpensive for quite some time.

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

Asset purchase program has been a complete disaster

I think capital flows have moved out of emerging economies because the US equity markets have started performing well over the last one year. Investors must realize that the yield on US 10-year treasury notes bottomed in July 2012 at 1.43%, and after that it moved to 2.88%. In my view, the asset purchase program of the Fed has been a complete disaster.

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

invest in gold disciplined approach

I have a disciplined approach to my asset allocation, whereby I would not invest more than 20-25% in gold. I have repeatedly stated that I will buy gold. I expected this correction and I would buy gold at $1300 an ounce and then at $1200 an ounce and then at $1100 an ounce. But

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: China Puts Global Markets at Risk

Marc Faber, managing director of Marc Faber Limited and the author of the widely read monthly investment newsletter “Gloom, Boom & Doom” report, said weakness in China’s economy could spell big trouble global markets.

Faber said that if the Chinese economy grows at 3 or 4 percent—or even not at all, which he sees as a possibility—it will have a huge, negative affect on industrial commodities and the incomes of countries that produce them. In turn, he said, if countries such as Russia, Brazil or nations in Africa, Central Asia or the Middle East have less income, they’ll buy less from China, Western Europe and America, leading to very little earnings growth or an earnings contraction for those more prosperous economies.

China preferably would show trend line growth of 10 percent, as it has done for the past 20 years, Faber said. - in Yahoo Finance

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

negative about the rupee

The falling [Indian] currency is not the problem; it is the symptom of the problem. It is like fever, which is just a symptom of a disease and not the disease itself. The currency depreciation is the symptom of poor balance budget and excessive consumption, which is reflected in the trade and current account deficit. If there is an increase in the short-term interest rates, where there is real return of rupee deposits, then the rupee will bottom out in the near term. However, over the long term, I am negative about the rupee.

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

if you print money, then the currency collapses and then you have import inflation

Marc Faber : I think that’s an issue. I am not convinced that someone in the US really sits and thinks, “What if we lose reserve currency status?” Clearly the US has a huge advantage in the sense that they can print money. Let’s say they go to war in Afghanistan, they actually do not pay for it, they just print the money. They go to war in Iraq, for now, they do not pay for it. The government prints money, creates large deficits, and the Fed buys this. It will have unintended consequences in the future, but for now it is OK. Other countries cannot do that. If you are a member of the EU, let’s say you are Greece or Spain, you cannot do that. If you wanted to do that you would have to leave the EU. In emerging economies if you print money, then the currency collapses and then you have import inflation. So the US has an advantage from the US dollar being a reserve currency. My view is that the dollar will stay as the reserve currency for a while, but I mentioned that in my view that eventually the financial system will collapse and we will move towards a new kind of arrangement with, most likely, the backing of some precious metals for currencies or with automatic stabilizers so that you have countries that are forced to essentially have a contraction if they have trade deficits and an expansion if they have trade surpluses to balance the trade surpluses and deficits. Today we have a huge imbalance in the world with the US having huge deficits externally and the rest of the world with surpluses.

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