Wednesday, March 7, 2012

Gold Will Be Taken by the Government

Marc Faber still buys physical gold and warns that at one point the government will take the gold away from physical gold owner as it happened back in the 1970's.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

We Will See QE3

QE3 depends on the S&P, if the S&P drops 100-200 points, then yes, for sure we will have QE3 but if the S&P stays here or even goes up, the likelihood of QE3 diminishes

“The S&P went up from 666 on March 6 2009 to 1,370 [currently] so it has more than doubled and that has to do with QE1 and QE2,” he said.

Faber expects to see high volatility in all asset classes over the next few years, says the ideal asset allocation for the moment is 25 percent each in equities, real estate or real estate related equities, cash and gold. “I don’t think (investors) should be shooting for huge gains, but rather for preservation in capital,” he said.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Tuesday, March 6, 2012

Investors target property tax deadbeats - CNNMoney

Jean Norton's first foray into tax lien investing was hands-down a lucrative one.
Norton, who was a marketing director at a tech firm at the time, had bought and sold real estate for years. She had heard about investors who were making nice profits buying liens on homes with overdue property taxes. So in 2009, she attended a seminar to learn how to put her own skin in the game.

Soon afterward, she bought more than $20,000 in liens at auctions in foreclosure-riddled Florida that were promising to pay 17% to 18% in interest. Within two years, she got her entire investment back, plus double-digit returns.

"It was always a nice surprise to get a check in the mail," said Norton, now 55.
Now big institutional investors have joined individual investors. But like any investment offering tempting yields, the potential pitfalls of tax lien investing are pretty huge: Those who lose out could either end up saddled with a worthless property or with nothing at all.
Between $7 billion and $10 billion in property taxes go delinquent each year, according to Brad Westover, executive director for the National Tax Lien Association. For many state, county and local governments, the failure to collect on these debts weighs heavily on their already-overburdened budgets. In 29 states, plus the District of Columbia, they turn to investors for help.
In these states, investors buy tax lien certificates at auctions, effectively owning a claim against the property until the homeowner pays the county or municipality back or until they default on the debt entirely. In return, the county gets the money it needs to fund schools, pave roads and pay for other infrastructure and services.
Homeowners who pay back what they owe, pay the county, which then repays the investor the principal, plus whatever interest rate was set at auction.
The interest is where the real money can be made. States set rates that the counties can charge delinquent taxpayers on overdue taxes and they can range anywhere from 12% to 24%, according to Larry Loftis, an attorney, tax lien investor, and author of "Profit by Investing in Real Estate Tax Liens."
There are several different kinds of tax lien auctions. In one of the most common methods, the winning bidder is the one who will accept the lowest interest rate. That can lower the rate to far below what state laws allow, but it can still be much higher than other investments.
"I just [invested] $1 million last week and most of the liens I won were at 7%, with a handful at 8%, a few at 9%, two at 10%, and one at 11%," said Loftis.
The big gamble: Most homeowners pay off their back taxes within a year and nearly all of them pay what they owe eventually. According to local tax authorities in Colorado, about 95% of back taxes are paid off within two years, a rate that Donald Dinan, general counsel for the National Tax Lien Association, said generally holds true for the nation as a whole.
For the 5% of liens that don't get repaid, however, things can get pretty messy. Lien holders may have to pursue a foreclosure, and, if that doesn't get the homeowner to pay their taxes, then the investor will likely have to take possession of the property. That means going through a legal process that often includes getting a sheriff to evict the old occupants. If an investor fails to do either of those things, the lien will eventually expire and it will become worthless.
In a foreclosure, the tax lien holder usually has first claim on the property, even over the bank that holds the mortgage (should the homeowner still owe money on the home).
Foreclosures go through the county, which has to notify the delinquent taxpayer that a foreclosure sale is pending and advertise the sale, usually online and in local newspapers.
In many states, the tax lien holder can get full title free and clear on the property in a foreclosure: The bank gets nothing. However, to protect its interest, the bank will often pay off the back taxes, plus interest.
If there's no mortgage, the lien holder can repossess the home. That's not a bad deal if the home is worth more than the amount the lien buyer has already put into the deal. In fact, some investors look for that potential when they bid on the debt.
However, wading into tax lien foreclosures -- on purpose -- is a tricky and time-consuming business that can easily backfire.
"Risks come mainly from not knowing what you're doing," said Loftis. "The biggest risk is getting a lien on a worthless property. Contrary to what you see and hear on the 'Get rich quick' infomercials on tax lien investing, the county government does not guarantee your investment."
Almost all counties that sell liens sell hundreds of them on worthless properties each year. That's especially true in blighted inner-city neighborhoods where foreclosures have wrecked the housing market and many homes are selling for $10,000 or less. If the property owner doesn't pay, there's no way for investors to get back their money by foreclosing and selling the house.
Buyers have to make sure that the total amount of debt the house carries is less than its market value. You don't want it to total much more than 60% or so of the home's market value, said Westover, and, ideally, much less.
Other potential pitfalls include buying a lien on a home that also has an IRS lien on it (the agency also has a first claim on the assets), bankruptcy of the owner, which can delay a foreclosure even longer, and environmental hazards.
For intrepid investors, buying a tax lien can be a lucrative bet -- just be prepared for the fact that you may end up the unwitting owner of a home that could cost you your investment and then some.  To top of page

Monday, March 5, 2012

Market Still Suggesting That Investors Be Cautious, Though Not Bearish-

Some people can have a lot of experience and still have good judgment. Others can pull a great deal of value out of much less experience. That’s why some people have street smarts and others don’t. A person with street smarts is someone able to take strong action based on good judgment drawn from hard experience. For example, a novice trader once asked an old Wall Street pro why he had such good judgment. “Well,” said the pro,“Good judgment comes from experience.” “Then where does experience come from?” asked the novice. “Experience comes from bad judgment,” was the pro’s answer. So you can say that good judgment comes from experience that comes from bad judgment!-- Adapted from "Confessions of a Street Smart Manager” by David Mahoney
Years ago I read a book that a Wall Street professional told me would give me good stock market judgment by benefiting from the bad experience of others who had suffered various hard hits. The name of the book was One Way Pockets. It was first published in 1917. The author used the non de plume “Don Guyon” because he was associated with a brokerage firm having sizable business with wealthy retail investors and he had conducted analytical studies of orders executed for those investors.
The results were illuminating enough to afford corroborative evidence of general investing faults that persist to this day. The study detected “bad buying” and “bad selling,” especially among the active and speculative public. It documented that the public tends to “sell too soon” and subsequently repurchase stocks at higher prices by buying more stocks after the stock market has turned down, and finally liquidate all positions near the bottom -- a sequence true in all
similar periods.
For instance, the book shows that when a bull market started, the accounts under analysis would buy for value reasons; and buy well, albeit small. The stocks were originally bought for the long term, rather than for trading purposes, but as prices moved higher on the first bull-leg of the rally, investors were so scared by memories of the previous bear market and so worried they would lose their profits, they sold their stocks. At this stage the accounts showed multiple completed transactions yielding small profits liberally interspersed with big losses.

In the second phase of the rally, when accounts were convinced the bull market was for real, and a higher market level was established, stocks were repurchased at higher prices than they had previously been sold. At this stage larger profits were the rule. At this point the advance had become so extensive that attempts were being made to find the “top” of the market move such that the public was executing short-sales, which almost always ended badly.

Finally, in the mature stage of the bull market, the recently active and speculative accounts would tend not to overtrade or try to pick “tops” using short-sales, but would resolve to buy and hold. So many times previously they had sold only to see their stocks dance higher, leaving them frustrated and angry. The customer who months ago had been eager to take a few points profit on 100 shares of stock would, at this stage, not take a 30-point profit on 1,000 shares of the same stock now that it had doubled in price. In fact, when the stock market finally broke down, even below where the accounts bought their original stock positions, they would actually buy more shares. They would not sell; rather, the tendency at this mature stage of the bull market and the public’s mindset was to buy the breakdowns and look for bargains in stocks.

The book’s author concluded that the public’s investing methods had undergone a pronounced, and obvious, unintentional change with the progression of the bull market from one stage to another -- a psychological phenomena that causes the great majority of investors to do the exact opposite of what they should do! As stated in the book:
The collective operations of the active speculative accounts must be wrong in principal [such that] the method that would prove profitable in the long run must be reversed of that followed by the consistently unsuccessful.
Not much has changed from 1917 and 2012, just the players, not the emotions of fear, hope, and greed, or supply versus demand, as we potentially near the maturing stage of this current bull market. Of course stocks can still travel higher in a maturing bull market, but at this stage we should keep Don Guyon’s insight about maturing “bulls” in mind. Verily, this week celebrates the third year of the Bull Run, which began on March 9, 2009, and we were bullish. With the S&P 500 (SPX) up more than 100% since the March 2009 “lows,” this is one of the longest bull markets ever. As the invaluable Bespoke Investment Group writes: Going all the way back to 1928, the current bull market ranks as the ninth longest ever. Even more impressive is the fact that of the nine bull markets that lasted longer, none saw a gain of 100% during their first three years. Based on the history of prior bulls that have hit the three-year mark, year four has also been positive.
Now, recall those negative nabobs who told us late last year the first half of 2012 would be really bad? W-R-O-N-G, for the SPX is off to its ninth best start of the year, while the Nasdaq (COMPQ) is off to its best start ever!
In seven out of the past 10 “best starts,” the SPX was higher at year-end, which is why I keep chanting, “You can be cautious, but don’t get bearish.” Accompanying the rally has been improving economic statistics, and last week was no exception.

Indeed, of the 20 economic reports released last week, 15 were better than estimated. Meanwhile, earnings reports for fourth quarter 2011 have come in better than expected, causing the ratio of net earnings revisions for the S&P 1500 to improve. Then, too, the employment situation reports continued to improve. Of course, such an environment has led to increased consumer confidence, punctuated by the February Consumer Confidence report that came in ahead of estimates at 70.8, versus 63.0, for its best reading in a year. And that optimism makes me nervous.

Nervous indeed because the SPX has now had 42 trading sessions year-to-date without so much as a 1% Downside Day. Since 1928 the SPX has only had six other occasions where the SPX started the year with 42 or more trading sessions without a 1% Downside Day. Worth noting, however, is that in every one of those skeins, the index closed higher by year’s end.

Still, in addition to the often mentioned upside nonconfirmations from the Dow Jones Transportation Average (TRAN) and the Russell 2000 (^RUT), seven of the SPX’s 10 macro sectors are currently overbought, but the NYSE McClellan Oscillator is now oversold, Lowry’s Short Term trading Index has fallen 12 points since peaking on January 25 (which interestingly is the day before the Buying Stampede ended), and the Operating Company Only Advance/Decline Index (OCO) has nearly 1,000 fewer issues than where it was on February 1 -- suggesting the rally is narrowing.

The number of new highs confirms the OCO (last April the index had similar readings right before a correction), and sticking with the April 2011 comparison shows a striking similarity to the December 2010 – February 2011 trading pattern for the SPX, and we all remember how that ended.

Marc Faber States Gold Far From Bubble Phase - The Market Oracle

After Standard & Poor's (S&P) downgraded a cluster of Eurozone countries in January, you came out saying that downgrades should have been even deeper, depending on the country's credit-worthiness. S&P did give below-investment-grade ratings to Portugal and Cyprus—BB and BB+, respectively—but you indicated that some of these countries warrant CCC ratings. Do you anticipate additional downgrades?

Marc Faber: If you accounted for the unfunded liabilities of most European countries, as well as the U.S., the quality of the government debt would be significantly lower. In other words, yes, I do expect to see more and more downgrades over time.

TGR: Could that happen in 2012?

MF: Yes, and some thereafter.

TGR: Have the markets priced in further downgrades already or should we expect a bigger impact in the next round?

MF: I don't think the market has priced it in because the yield today on U.S. 10-year government bonds is 2%, and 3% on 30-year bonds. If the market were priced properly based on the quality of these bonds, the yields would be far higher.

TGR: Did yields change much with these recent downgrades?

MF: Yes, particularly in the U.S., where investors perceive U.S. government bonds as safe. The U.S. will pay the interest as long as it can print money. But suppose you buy a 10-year government bond that yields 2% and inflation is perceived to be 5–7%. To what extent would investors still buy these bonds? That question will arise one day.

TGR: You've discussed investors leaving the European markets in favor of a "safe haven" in the U.S. Would U.S. bonds continue with such low yields with the European downgrades?

MF: For a while, yes, but at some point people will wake up and realize that the U.S. will default through a depreciating currency—in other words, through printing money—or by not paying the interest on the bonds. I don't think the U.S. will stop paying the interest, but printing more money will weaken the currency and produce higher inflation in consumer prices, asset prices and commodity prices. So being in U.S. government bonds will result in losses to investors through currency depreciation.

TGR: You've pointed out that negative real interest rates force people to speculate, which creates enormous market volatility. That seems to be happening now, but apparently investors are keeping a great deal of money on the sidelines as well. If that comes in, would it make the markets even more volatile? Or would you say the smart money will stay on the sidelines and the speculative money is in play already?

MF: I think there is a lot of money on the sidelines. Some will stay there, because people who don't trust the system anymore will just keep it there. Some will be invested, but it may not go into equities. It could go into some other asset class, perhaps hard currencies such as gold and silver, or real estate, which is now relatively inexpensive in the U.S.

As for volatility, it increased sharply last year, but has diminished over the last three-months. I expect we'll see increasingly very high volatility in all asset classes in the next few years. The money in an environment of negative real interest rates will flow. It might flow into fewer and fewer stocks, or into fewer and fewer assets that could go ballistic on the upside.

TGR: Which asset classes would you expect on the speculative upside?

MF: We had the NASDAQ bubble 12 years ago, the housing market bubble probably five years ago, and I would say also a bubble in commodities in 2007–2008, when oil spiked to $147. What's next, I'm not so sure. I could imagine some stocks, maybe some precious metals, in a bubble stage—not the entire market necessarily.

TGR: Could you delineate characteristics of stocks that will appreciate versus those that will stagnate or lose value?

MF: If we look at the market, we have some stocks where the outlook is perceived to be particularly bright, and then there are others—for instance, Eastman Kodak Company (EKDKQ:OTBPK)—that are at the opposite end of the spectrum. It depends on the fundamentals and the imagination of investors. I wouldn't necessarily buy up, so I'm not saying it will go down. Maybe it will go up further. But in general if you buy the company with the largest market capitalization in the world you're not going to make a lot of money.

TGR: What captures the imagination of investors?

MF: Basically mania fed by excessive liquidity, with more and more people convinced that something is the Holy Grail. It was the NASDAQ in 2000, Asia before 1997, housing from 2000 to 2006–2007, or more recently China. Exactly what it is, I don't know. But when a market has been strong, the media write about it and people are attracted to it. Then some useless academics write books about why stocks, or real estate, always go up, and so forth. The media again write that up, and more people flow into that sector.

TGR: A couple of weeks ago James Turk told us that he thinks the low price for gold in 2012 was already established early in January. What makes you think it will pull back?

MF: The big rally into Sept. 6, 2011, took the gold price to $1,922/ounce (oz) and then it dropped until the end of the year, touching $1,522/oz on Dec. 29. It has rallied, and is now above $1,700 again, but I don't think the correction is entirely over. Corrections of 40% are nothing unusual in a bull market.

As an adviser, my duty is to always inform people of investment risk. I'm not saying I expect gold to collapse, but telling people the gold price will go up leads them to leverage up and speculate. If the gold price drops $50/oz, they're wiped out. All I'm saying is that, in my opinion, the gold price correction is not yet entirely completed. I see significant support around the $1,500/oz level, but it could drop lower. It depends on global liquidity and on money printing by central banks. We could have a big correction if global liquidity tightens or they stop printing money.

TGR: Over what timeframe are you looking at the correction?

MF: This year the gold price may not exceed the $1,922/oz high that we reached on Sept. 6. Maybe it will. I'm not a prophet. I'm just telling people that I'm buying gold and holding it. I don't speculate in gold. If you buy gold, you better understand that the price could always move to the downside. If you don't understand that, don't invest in gold—or in anything.

TGR: Investment show commentators have been talking about gold being in one of those mania bubbles you described because it's been increasing for 11–12 years. Do you agree?

MF: No, gold is not in a bubble. It wasn't in a bubble in 1973, either, but it still corrected by 40% then. I don't believe gold is anywhere near a bubble phase. A bubble phase is characterized by the majority of market participants being involved in a market space. I saw a gold bubble in 1979–1980, when the whole world was dealing—buying and selling gold 24-hours a day, globally.

TGR: But not since then?

MF: No. If you went to an investment conference in 1989, 90% of the people there would have told you they owned shares in Japanese companies. In 2000, 90% of them would have said they owned NASDAQ shares. Only about 5% of the participants at an investment conference today would tell you they own gold. Very few people in this world own gold.

I don't believe that we're in a bubble.

TGR: Should people who aren't yet in gold or want to add to their position wait for a correction?

MF: I have argued for the last 12 years that investors should buy a little bit of physical gold every month and put it aside without concerns about corrections. If you don't own any gold, I would start buying some right away, keeping in mind that it could go down.

For the last 40 years in my business I've seen people always lose money when they put too much money into something and then it goes down. They panic and sell, or they have a margin call to sell—and lose money. I own gold. It's my biggest position in my life. The possibility of the gold price going down doesn't disturb me. Every bull market has corrections.

TGR: What do you think about silver as an alternative precious metal to hold?

MF: Gold and silver will move in the same direction, up together or down together. At times, silver will be stronger relative to gold, and at other times gold will be stronger relative to silver. My friend Eric Sprott thinks that silver will go ballistic. I don't know. I own gold.

TGR: You're on record as recommending that investors maintain diversified portfolios, with 20% to 30% each in gold, real estate, equities and cash. Focusing on equities, as we've discussed, means tremendous volatility. What are your thoughts? High value? Large cap? Dividends? Something more speculative, perhaps gold mining shares?

MF: Because I live in Asia, I am quite familiar with the Asian markets and economies. I have a bias toward Asian equities, especially because I can find deals in places such as Malaysia, Thailand, Singapore and Hong Kong—stocks that give me 4–7% dividend yields. With yields at those levels, at least I'm paid to wait. Even if they're cut 5%, I'd still get better cash flow than I would from, say, U.S. government bonds. Consequently, I feel reasonably confident owning such shares.

Because I have allocated only 25% of my portfolio to equities, if the markets were to drop 50%, I would have funds elsewhere in my portfolio to buy more equities. That's not a prediction for a 50% market decline; it's just to say that I'm positioned in such a way that I could put more money in equities through a) my cash flow, b) my income and c) my cash position. And I do own some gold shares through stock options, because I'm a director of several exploration companies.

TGR: Given that you're satisfied to, in essence, being paid to wait with dividend-paying stocks, do you consider yourself a buy-and-hold investor?

MF: With my asset allocation of 25% in equities, I can afford to hold them. If I had 100% in equities, I would be more inclined to take profits from time to time.

TGR: Let's get back to Asia for a moment. Headlines in the U.S. have focused lately more on what's going on in Europe, with Asia basically relegated to page 2. What's your perception of the markets and economies there?

MF: We don't have recessions yet, although there have been slowdowns in economic activity and some corporate profit disappointments. The big question is whether we have a problem in six months to one year's time that results from a meaningful slowdown or even a crash in the Chinese economy. That may happen.

Second, it's not everywhere, but in some cases I see bubbles in the real estate market, as there are in everything that relates to luxury—luxury properties, paintings, collectibles, the luxury department stores and shops, the Swiss watch companies. They're all doing very good business. I think there's a bubble essentially in everything at the high end of the market. That concerns me a little bit. It may continue for another year or so but will not last forever, so I'm relatively cautious.

Having said that, lots of companies in Asia do not cater to the high-end consumers but to the rising middle class. I believe they are reasonably well positioned to weather even a recession.

TGR: If China's bubble in those luxury goods and real estate bursts, would the Asian markets go down in tandem?

MF: Yes, I think so. Last year the Chinese markets—by the way, also India—grossly underperformed the U.S., so maybe the market has already discounted a Chinese slowdown to some extent. But because I happen to think that it hasn't discounted the Chinese slowdown entirely, yes, I think the markets are still vulnerable.

TGR: Are your investments in the Asian markets focused on companies that are not catering to the high-end, like food and items that the middle class buys?

MF: Yes, I have a mixed portfolio of both industrial and residential real estate, healthcare companies, retailers, food companies, agricultural companies, finance companies and banks. So, it's fairly broad.

TGR: Are those financing companies and banks Asian-based or internationally based? That sector is certainly out of favor in North America.

MF: I have no Chinese banks, but I own banks in Singapore and Thailand and finance companies in Singapore, Thailand and Malaysia. Actually, I'm also positive about some financial stocks in Europe and America. Simply because of the money printing, these financial institutions are benefiting at the expense of honest people who have savings that yield nothing while their cost of living is progressing at 5–10% per annum.

I took a taxi the other day from New Jersey to Manhattan. The Lincoln Tunnel has raised its toll by 50%, from $8 to $12. But the government, brainwashed by incompetent academics at the Federal Reserve, will tell you that inflation is 2%.

TGR: You mentioned liking finance companies in Europe and America because of money printing. How does that benefit them?

MF: I don't like them. In investing, it's not a question whether you like or dislike something. It's a question of price. The best company or the worst sector may be overvalued at one price and undervalued at another. I happen to think that having weakened to around the 2009 lows last fall, when the S&P dropped to 1,074 on Oct. 4, the financial sector was very cheap. Since then, there have been big rallies for Citigroup Inc. (C:NYSE), Bank of America Corp. (BAC:NYSE) and other banks. I saw opportunities there, but with the market rallying so much, I believe it is now overbought and due for a correction. We will see whether it's just a correction or a resumption of a downtrend.

TGR: Which do you think it will be?

MF: I don't know. We haven't seen a correction yet. I think it's about to start. Then we will have to see the shape of the correction, which could last a month. After that, we'll have to look at the shape of the recovery—the number of stocks that will participate, the number of new highs and so forth.

TGR: You've indicated that your portfolio allocation includes real estate. Do you consider real estate a good value in North America now?

MF: I travel around the world all the time and I'm interested in the formation of prices so I have an idea about trends in prices. You have to consider real estate prices in the context of currency valuations. For example, five years ago, homes in Australia and Canada were inexpensive and now they aren't, but not necessarily because prices have gone up. Although prices don't necessarily track with whether a currency increases or decreases in value, in those two cases, the value of the currencies also has increased.

The U.S. does have areas where real estate is incredibly low relative to other parts of the world. I can buy homes in Atlanta and Phoenix for less than I'd pay in Thailand, and because the GDP per capita in the U.S. is of course much higher than in Thailand, on a relative basis, those homes in Atlanta and Phoenix would be attractive.

As a foreigner, I am not interested in investing in U.S. real estate for various reasons, including taxation, management and regulation. But if I were a U.S. citizen, I would say now is a relatively good time to buy real estate and rent it out and net a yield of maybe 6–8%. Many of my friends who own rental apartments do very well on rental income. Many of the people who no longer qualify for mortgages can rent.

TGR: In terms of asset diversification, to what extent ought the average U.S. investor focus on international equities or real estate?

MF: I think U.S. citizens should focus very much on diversifying their assets internationally. Only Americans still believe that America remains the most important economy in the world. Everybody else knows it has become relatively less significant over the last five years. Everybody, including Americans, should be global investors, and Americans should have at least 50% of their money outside the U.S. I would argue that a global investor should have maximum 40% in Europe and in the U.S., with the rest in Asia, Latin America, Africa, etc.

It's very difficult for Americans to open bank accounts overseas, but buying real estate overseas is one way to diversify, and that's not a problem. Maybe the U.S. will close this loophole one day, but for now U.S. citizens may buy real estate in South America, Europe or Asia—anywhere in the world. That's what I would do.

TGR: Do you consider investments in stocks that are based in international areas part of the diversification?

MF: Basically you want exposure to rapidly growing economies. This is best achieved by buying companies that have large exposure in the emerging economies rather than the U.S. and Europe. The Coca-Cola Company (KO:NYSE) is a U.S. company but the bulk of its business comes from outside the U.S.

TGR: You're scheduled to speak at the World MoneyShow, coming up in Vancouver March 27–29. We understand that in your presentation, entitled "The Causes and Investment Implications of Dishonest Money," you'll be discussing unintended consequences of large fiscal deficits and expansionary monetary policies. Would you give us some highlights of what you plan to cover?

MF: Basically I will try to explain that instead of smoothing out the business cycle, government interventions have created more economic and financial volatility and have had very negative consequences for the U.S. in particular. And as I pointed out earlier, these measures, such as some of the fiscal and monetary measures we've talked about, are based on erroneous economic sophism.

TGR: What do you think people will learn from listening to your presentation?

MF: That in this environment of money printing, cash and government bonds are not very safe and that you have to navigate through different asset classes. Under normal conditions, cash and government bonds are essentially the safest investments—not investments with the highest returns, but the safest. That is not the case today.

TGR: And we appreciate the pointers you've made about some of those different asset classes. Thank you very much.

Swiss-born Marc Faber, who at age 24 earned his Ph.D in economics magna ***** laude from the University of Zurich, has lived in Hong Kong nearly 40 years. He worked in New York, Zurich and Hong Kong for White Weld & Co., an investment bank historically managed by Boston Brahmins until its sale to Merrill Lynch in 1978. From 1978 to 1990, Faber served as managing director of Drexel Burnham Lambert (HK), setting up his own investment advisory and fund management firm, Marc Faber Ltd. in mid-1990. His widely read monthly investment newsletter,
Gloom Boom & Doom Report, highlights unusual investment opportunities. Faber is also the author of several books, including Tomorrow's Gold: Asia's Age of Discovery (2002), which spent several weeks on Amazon's best-seller list and is being translated into Japanese, Chinese, Korean, Thai and German. He also contributes regularly to leading financial publications around the world. Much also has been written about Faber. Nury Vittachi, one of Asia's most popular writers and speakers, published Riding the Millennial Storm: Marc Faber's Path to Profit in the Financial Markets (1998). The Financial Times of London described him as "something of an icon" and Fortune called him a "congenital contrarian and shrewd Swiss investment advisor."

Thursday, March 1, 2012

UAE investors look to hold assets -

Dubai: The number of UAE investors adopting a 10-year-plus strategy has significantly increased and that of investors choosing a short-term investment strategy continues to decline, according to the latest Friends Provident International (FPI) Investor Attitudes Report.
The study shows that UAE investors are adopting longer-term investment strategies, with the percentage of respondents opting for a ten-year-plus strategy almost doubling since the last survey conducted in the third quarter of 2011.
The trend suggests that consumers are taking responsibility for their future and saving over the longer term to achieve their financial goals, the study said.
Against the backdrop of the European sovereign debt crisis, and an unpredictable political landscape across the Middle East and North Africa (Mena), the latest FPI Investor Attitudes Report shows that the Friends Investor Attitudes Index for the UAE has fallen just two points and it now stands at 15 points.
Article continues below
This is the smallest decline across the three countries (Hong Kong, Singapore and the UAE) surveyed and the UAE still shows the most positive sentiment.
Cautious approach
UAE investors have demonstrated a cautious approach showing preference for ‘safe haven' investments such as gold, and a significantly increased preference towards risk-averse strategies.
"The slight fall in the Friends Investor Attitudes Index for the UAE is understandable given the continuing turmoil in global investment markets. However, the drop of just two index points reflects a growing maturity among UAE investors, who — it is clear from the report — are taking a longer-term approach to investing and consequently appear less concerned about short-term market fluctuations," said Matthew Waterfield, general manager, Middle East and Africa at Friends Provident International.
Compared with Hong Kong and Singapore, where the Investor Attitudes indices have dropped to new lows, the UAE index shows the most positive investor sentiment.
The index for Hong Kong, which was stable at 15 points in the previous two surveys, fell sharply to 11 points.
The sentiment in Sing-apore has continued its slide, with the index at 12 points having fallen from its highest level of 21 points and 16 points in the previous two surveys.
Interestingly, the preference for investing in collectables, such as works of art, classic/vintage cars etc has plummeted and this is now the least-preferred asset class in the UAE.
In the latest survey, only about 30 per cent of investors viewed the current market as improving, 11 per cent less than the previous survey.
Investors also view the prospects for the UAE investment market in six months' time less favourably, with 9 per cent more respondents having an unfavourable outlook than in the previous survey.
The report also shows that affluent respondents are more likely to invest outside of the Middle East to mitigate the impact of political changes in some countries in the region.
When choosing investment funds, 58 per cent of UAE respondents view past performance as the number one criteria for selecting a particular fund, followed by risk ratings (56 per cent) and fund charges.