Friday, January 31, 2014

US Dollar, Singapore Dollar, Malaysian Ringgit

I bought Treasury bonds and I have a lot of cash. It is mostly in U.S. dollars. I also have Singapore dollars, and Malaysian ringgit.

Thursday, January 30, 2014

Buy 10 Year treasury and short Rusell 2000

What I recommend to clients and what I do with my own portfolio aren't always the same. That said, my first recommendation is to short the Russell 2000. You can use the iShares Russell 2000 exchange-traded fund [IWM]. Small stocks have outperformed large stocks significantly in the past few years.

Next, I would buy 10-year Treasury notes, because I don't believe in this magnificent U.S. economic recovery. The U.S. is going to turn down, and bond yields are going to fall. 

Wednesday, January 29, 2014

Not positive on US Stocks, specially Rusell 2000

I am negative about U.S. stocks, and the Russell 2000 in particular. 

An analysis of Federal Reserve data suggests that half the U.S. population has seen a 40% decrease in wealth since 2007.

In Reminiscences of a Stock Operator [a fictionalized account of the trader Jesse Livermore that has become a Wall Street classic], Livermore said, "It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight." 

Here's another thought from John Hussmann of the Hussmann Funds: "The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There's no calling the top, and most of the signals that have been most historically useful for that purpose have been blaring red since late 2011."

Tuesday, January 28, 2014

Marc Faber reflects on bubbles and gold

Marc Faber speaks on the importance of the Chinese economy to emerging economies, and specially to its neighboring Asian countries:

"To clarify a point about the size of the U.S. economy and its importance in the world, China imported 12% of global metals consumed in 2000. Now it imports up to 47% a year. China's growth has a major impact on emerging economies. The U.S. has no impact because it is a service economy. China has gone from sending less than a million travelers overseas in the mid-1980s to 100 million now. You hardly see American tourists in Asia any more."

Marc Faber on finding investment ideas currently and why Gold could go higher:

"All asset prices are in the sky, whether it is Picassos or Warhols or the flat that Steve Cohen is trying to sell. We are in a bubble. We are the bubble. It is only a question of which asset is in a lesser bubble. The U.S. is expensive, compared to the European market and especially emerging economies. Based on the level of today's secular adjusted P/E, returns in the next seven to 10 years will be minor, if not meaningless. The Mexican stock market went up 343 times between 1984 and '87 because of money-printing. Then the currency collapsed. The dollar can't collapse, so gold will come to the forefront."

Monday, January 27, 2014

What could crash stocks in 2014

Its interesting that despite all the money printing bond yields didnt go down, they bottomed out on July 25th 2012 at 1.43 percent of the 10 year. We are now 2.85 percent. We are up substantially. This hasnt had an impact on stocks yet. Infact it pushed money into the stock market out of the bond market. 

But if they 10 years goes to three and half to four percent and the 30 year goes to close to five percent, the mortgage rates go 6 percent, that will hit the economy very hard. 

Friday, January 24, 2014

Dont just look at one thing

As an observer of markets - whenever everyone focuses on one thing - like Greece and Europe - maybe they miss issues that are far more important - such as a meaningful slowdown in India and China.

Thursday, January 23, 2014

Marc Faber buys 10 year Treasuries

Ten-year and 30-year yields eventually will be much higher. But I bought some 10-year Treasuries when the yield rose to 3%, because in the near term, yields could retreat to 2.5% or 2.2% or even 2%. 

The economic recovery is in its fifth year. On March 6, the bull market in stocks will be five years old. That's long, by historical standards. Sometime this year, the stock market could see a big tumble, as in 1987. Then the long bond will rally and reward Bill Gross.

Wednesday, January 22, 2014

Marc Faber wary of China government on a personal level

I was just telling my colleagues at the Barrons Round table that if I would say about China, what I'm saying about America, they wouldnt let me in the country[China]. But here in United States they hug me, they say 'Welcome to the United States'.

Tuesday, January 21, 2014

Bernanke used the wrong tools for economic recovery

 After World War II, Hong Kong was in a depression. But the economy developed rapidly thereafter under the leadership of John James Cowperthwaite, a British civil servant and financial secretary of Hong Kong from 1961 to 1971. Asked later what he did to achieve this economic miracle, he replied, "I didn't do anything. I just prevented others from taking bad measures."

Employment would have improved even more without the money-printing of the past few years. The Fed acted correctly to save the financial system during the financial crisis, which it created with its easy-money policies in the late 1990s and early 2000s. But Ms. Yellen could be sitting on a barrel of gunpowder, pouring gasoline on top of it, and lighting a cigarette, and she wouldn't know the danger of bubble creation.

Monday, January 20, 2014

Marc Faber on income inequality, and taxation on rich

Marc Faber says that money printing helps the rich by inflating their asset values. Even if cost of living goes up, it is a small portion of their income.

"We have to distinguish between the Financial economy, the economy of the well to do people that benefit from rising assets, painting, art, wine and high end properties in the Hamptons and the average typical household or working class people. The fed's policies have led to a lot of problems around the world. They are partly responsible for energy prices are where they are, from $10 from 1999 to now around $100 a barrel. Food prices are up."

Meanwhile when the basic cost of living goes up, it has a big impact on the non-wealthy

"For the poor people it has an impact. Some people in the Lower income groups spend say 30 percent of their income on transportation, gasoline, electricity. And the problem is people like Bill Deblasio say, 'you know whats the problem, all these rich guys... because of these rich guys, you are poor, they take advantage of you, so lets go and tax them'."

Marc remarks that once taxes are introduced it is hard to take them away

"IMF has come up with a paper in Europe that essentially the well to do people should pay a one time wealth tax of 10 percent. But I can assure you one time wealth tax will become a every year tax."

Thursday, January 16, 2014

Marc Faber dislikes Bitcoin, Facebook

Marc Faber on if he would invest in Bitcoin:
I prefer physical gold, silver, platinum to Bitcoin. Bitcoin can have a lot of competition. Gold, silver, platinum dont have any competition. How do you value a bitcoin ? I can value Gold to some extent to say Gold to the quantity of money floating around the world, the wealth increase, to the credit increase, to the production costs, so I have any idea of where Gold should be. I'm not sure because prices overshoot.

Dr Doom's opinion on the social media giant Facebook (FB)
I think it is a to a large extent a Fad and people they go on facebook. For most people what people do is, they put a picture on, and the only people that watch these pictures are themselves. They all want to be stars. Its a very distracting type of occupation. I cant imagine that this would have a lot of value. The question is how much use it is.

On what he would rather buy than FB:
I would rather own, I dont own it because its very highly priced, a company like Alibaba, Amazon, Google than Facebook personally. That is my view.

Wednesday, January 15, 2014

Marc Faber interviews with Trish Regan 2014

Click Play to watch the interview

Tuesday, January 14, 2014

Bubble could burst any day

It [bubble] can burst any day. We are very stretched, sentiment figures are very very bullish, everybody is bullish. The reality is they are bullish because they think the economy will accelerate to the upside. 

But my view is very different, the global economy is largely emerging economies nowadays, and they are slowing down. There is no growth at the moment in emerging economies, there is no growth in local economies. So I feel that the valuations are high, the corporate profits have been boosted largely by the fall in interest rates.

Marc Faber on US Government

If the U.S. Government was a company, the deficit would be $5 trillion because they would have to account by general accepted accounting principles. 

But actually they encourage government spending, reckless government spending, because the government can issue Treasury bills at extremely low interest rates.

Thursday, January 9, 2014

Monday, January 6, 2014

Rising stock prices dont benefit most people

According to a Gallup Poll, only 52 percent of Americans own directly or indirectly stocks. Of those 5 percent own 72 percent of financial assets. In other words rising stock prices have no impact on majority of americans.

Thursday, January 2, 2014

Faber Fox News interview on inflation, housing, gold and diversification

Invest in a quality financial planner for results

I seldom go to see doctors but when I do, I like to be ideally with a doctor who is a friend, understands my unhealthy lifestyle and in whose judgement I can trust. I have no doubt that trusting a doctor will significantly accelerate the healing process. 

In the world of investments people’s investment results would be better if instead of trading online day and night they would have a close relationship with a capable and honest financial planner who could provide them with advice and occasionally with a second opinion. 

What really amazes me is that people want to see the best and most expensive doctors (okay, the government or the insurance company pays), buy the highest quality products, but will use the cheapest possible way to transact and invest their funds. 

The journey along the investment road is an arduous one and it is very important that you have a good companion who comforts you when “bad luck” strikes and who is at the same time a reliable guide that helps you find the way. 

Less affluent investors will of course argue that the access to top financial advisors is only open to high-net- worth individuals. That is unfortunately the case and I wished I could change that because small investors need more help than already very well to do people. 

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