Monday, June 12, 2017

Faber's Market Predictions You Wont Hear This From The Mainstream Economists

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Excerpts from the interview
-We are dealing with manipulated markets by Central Banks so it is very hard to predict.
-Markets can go much much higher before it all blows up

-Diversifying assets - own some Equities, Real Estate, Cash & Bonds, Precious Metals, 

-European markets will outperform US this year and their valuations are much lower than US.

-Prices of Real Estate in good areas of Toronto are very high but two hours out are not very high.

-Real Estate in the country side are more attractive and does not have the downside risks of where the speculation is occurring such as the Condo flippers. 
-Real Estate safer to invest than Financial Assets. Real Estate will Not go to Zero where as financial assets could go to Zero.

-Consumers in USA and Canada are tapped out - too much debt.

Monday, June 5, 2017

Marc Faber recommends US Treasury bonds, European corporate bonds and Emerging markets

Marc Faber speaks to CNBC 
- Bubble in popular stocks and they are highly priced.
- Liquidity bubble
- I would invest Europe or Asia rather than US
- Car Sales and retail sales weakening show US economy is weaker than thought
- Millenials are earning less than their parents, and paying 50% of their income for rents in places like New York and San Francisco.
- The Fed has been successful in boosting asset prices but wages has not kept up.

Thursday, June 1, 2017

This bull market depends on FAANG stocks

I recently attended the annual Mauldin conference. What surprised me most is how bearish the attendees were. I can only explain this bearishness after an 8-year bull market as a result of most individual investors having lost so much money in the 2000 to 2003 and 2007 to 2009 bear markets. Consequently, they failed to capitalize on the subsequent huge bull market, which followed the March 2009 low.

Apple is one of the biggest companies in the world

In early May, Wolf Richter commented that, “Over the past 10 weeks – so since March 1, 2017 – five stocks in the S&P 500 index have gained a total of $260 billion in market value, the infamous FAANG stocks: Facebook, Apple, Amazon, Netflix, and Google (now Alphabet). 

By any measure, $260 billion is a massive surge in valuation for just five stocks, or 1% of the S&P 500, in just 10 weeks. And the rest of the S&P 500? On March 1, the index closed at 2,394. Today it closed at 2,397. In those 10 weeks, it went absolutely nowhere. Which means this: the remaining 495 stocks in the index lost as much in total market capitalization as the FAANG stocks gained.” 
I should add that this dichotomy has continued to this very day with the FAANG stocks having been joined by stocks such as Tesla and NVIDIA.

I need to emphasize that this kind of narrow leadership is symptomatic of an extremely mature bull market (after all the bull market is more than 8 years’ old by now), but as was the case of the NASDAQ bubble in 1999/2000, the investment mania in FAANG type of stocks (and Bitcoins) could last somewhat longer. We should not forget that between October 1999 and March 30, 2000, the NASDAQ 100 rose by more than 120%!

There is one issue investors should carefully consider. After the NASDAQ began to collapse post March 2000 a major shift in the stock market’s leadership occurred. NASDAQ stocks which had been the leaders during the bubble did not make new highs for years (most of them never) and it took the NASDAQ 100 until the end of 2016 to exceed the 2000 peak. However, the transition from the old leadership to the new leadership was not smooth and painless. Take as an example Newmont Mining (NEM). Along with the stock market, Newmont Mining rose until early 2000. Then, along with the NASDAQ slump the stock was also dragged down into October 2000 when it had declined from peak to through by 53%.

What I want to say is that once the FAANG stocks and their peers will break down it is likely that they will – at least initially - drag down the entire market and also the emerging new leadership.

Stress is caused by adversity and extreme stress by extreme adversity. Extreme adversity can be caused by a total loss of money (including divorce), the loss of a beloved one, the loss of one’s job, and a severe illness or accident. The extreme stress arising from loss of money can usually be avoided by disciplined diversification of one’s assets (stocks, bonds/cash, real estate, and precious metals). A geographical diversification is equally important.

via gloomboomdoom

Monday, May 22, 2017

They will print money until there is a credit collapse

One day there will be a credit collapse, but I think we aren’t yet there.  Before it happens they’re going to print. And when printing as it has done in the last 12 years in the U.S. leads to  discontent populations, because when you print money then only a few players in  the economy that benefit, not the majority of households.
Janet Yellen

Tuesday, May 16, 2017

Marc Faber on Canada Real Estate and More

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Many people have been bearish on Canadian Real Estate and for many years. They have also been bearish on Canadian Banks. And so far they haven't been proven to be right. One day they will be right, the markets will go down. As you've seen in Vancouver, the markets went down over the last two years and the last six months later it picked up again. So there is still a lot of money sloshing around in the world and in general international investors view Canada more favorably than the US.