Monday, August 13, 2018

Marc Faber on the possibility of stock market prices adjusting downwards

Marc Faber reflects in his latest Gloomboomdoom post on the possibility of stock market prices adjusting downwards

"If in an economic system prices in one or several sectors increase over an extended period of time far more than the overall price level, a reversion to the mean will sooner or later take place. The adjustment in prices can take place in two different ways. Prices in the inflated sector can stagnate for a while or increase more slowly than the overall price level.

Another possibility which is more likely is that grossly inflated sectors and assets revert to the mean by crashing altogether.

I believe that stock markets around the world are at an important crossroad: Growth (represented by the NASDAQ 100) is out and Value (real estate, REITs, Telecoms, food, consumer staples, financials, and energy (as represented by the Russell 1000 Value ETF – IWD) is beginning to outperform."

Tuesday, August 7, 2018

A Trade War now would be a mistake. Global economy is slowing.

The US may be losing its importance in the Global economy according to Marc Faber who spoke to RT news.

"The US as an empire against the rest of the world peaked in 1950s or 1960s. Then, there have been other countries that have become more powerful, in particular China and now increasingly India. The US empire and its influence on the world is diminishing and has been diminishing for quite some time."

Who would benefit from a US Trade War.

“The winners in a real trade war would be everyone except the US. The Europeans would trade more with Asia, and the Asians would trade more with Europe than the US. There would be more trade between the emerging economies and China and vice versa."

Monday, July 30, 2018

Capitalism is a more fair system than Socialism - Latest Marc Faber interview

Click here if the above video does not play

Topics discussed include
-Trade Tarrifs are negative in a sense they will increase cost of living specially among the poor.

-I have to praise Trump that he is trying to reduce regulation. He has done so in a number of regulations. These excessive regulations make the US less competitive compared to other countries with less regulations.

- The whole Social Security system and transfer payments discourage people from working. Many people make a better living doing nothing than coming to work. I know from a number of friends in Switzerland where they get unemployment benefits but they have a side job somewhere where they are moonlighting. So they get the benefits and they get some pocket money from occupation. They dont pay any tax except for Sales tax when they spend the money. 

-Basic Income - Its a very controversial proposal. I am against all these programs because all these programs lead of colossal abuse. The moment the government runs it, there will be massive fraud. 

-Socialism - I have seen the misery and inequalities and injustice that socialism and communism brings along.[in 1968 Eastern Europe, 1978 China, 1980 Russia]

-Capitalism has many shortcomings but its a relatively fair system.

-Deeply concerned about the Chinese economy. Chinese economy has a huge influence on raw material prices around the world.

-Debt levels in China has expanded a lot.
-Emerging economies are highly indebted.  

-When Global liquidity tightens US Dollar gets stronger. Trump policies are indirectly tightening contracting global liquidity. 

-Outlook for Emerging Markets currently are not particularly good.

-Cash is probably the most dangerous thing to own.

-You should never stop learning. Good education is very important and it doesnt necessarily mean university education. Problem in the US is you have less of an apprentice system than we have in Europe. In Europe you have a lot of vocational schools where you specialize in say Carpentering or Electrical Engineering.

-I would diversify- Real Estate, Equities, Physical precious metals.

Tuesday, July 24, 2018

Investors have become more aware of India as an investment destination

India could face a 20 percent correction after its continued bull stock market run over the last few years according to Marc Faber's remarks in LiveMint.

"Let’s put it this way, when I travel around the world and I visit financial institutions, first time India is really a subject. For the first time, investors think that India has an experience and a meaningful fundamental improvement due to the Modi government. They are not sure if it is the right time to invest now in India. Over the next 10 years, we want to have some money in India, regardless."

"If you look at the S&P (500), and Indian stock market over the next 10 years, you will make more money in India than American shares. This has been my view for the last three years, and this remains my view."

"Of course, if the global stock markets are going down— all the major markets, except India are going down. When everything is weak, and India is still strong, I will be reluctant to buy the market which is strong. It (rally) may last a little bit longer but it doesn’t mean it is good value. Valuations are not attractive other than a few exceptions."

Monday, July 16, 2018

Trade War is a negative impact for the markets worldwide

The US led "Trade War" may have a negative impact on global equities according to Marc Faber.

"There is less or hardly any growth in Europe. The Chinese economy has been slowing down, as well as other Asian economies. The US stock market by any measure is highly priced. We have recessions in Argentina, Brazil and Turkey. We have currency weaknesses around the globe in dollar terms, which is a sign of monetary tightening, and now we have also this so-called trade war. Some people may suffer more, and some less but a trade war cannot be beneficial for anyone. In general, it is not a positive for the global economy or the financial markets."