Wednesday, January 27, 2016

Emerging markets could be a buy middle of 2016

In general, considering the slowdown I'm expecting, there's no hurry to buy these emerging markets. You can wait for another six months or so.

If you said, "Marc, here's $1 million. You have to choose, and you can only choose one thing: You can buy the U.S. stock market or you can buy emerging market stocks." If this was an investment for the next five to 10 years, I would say to buy emerging market stocks.

Monday, January 25, 2016

US markets were showing hidden weakness long ago

Bear markets are characterized by very sharp rallies that can fade relatively quickly.

Basically the market in the US began to decline a long time ago if you look at the average stocks in the US. It is down over the last 12 months by 26 percent from their highs, the average stock but the indices held up very well until the end of December because the indices do not reflect what is happening in the market. 

For example, you have an index, you have 500 stocks, if three stocks are very strong, they can push up the index while 497 stocks go down. So we have to look at the market beneath the surface and beneath the surface there was already a bear market in the US for a long time, for a year or more but there are some stocks and maybe another 20 shares such as Facebook, Amazon, Google that were driving and keeping the index up. 

The interventions by the Central Banks have a numerous unintended consequences - they lead to rise in stock prices. But for many people, this is not favorable because particularly in real estate, the affordability becomes an issue, they don’t have the money to buy expensive homes and so the home ownership rate in the US has been way down. 

Wednesday, January 20, 2016

Faber on GoldSeek Radio January 2016

In my view, US will go into a recession in the next three months, if the US is not already in a recession........ 

[Watch the video above for Marc Faber's interview]

Monday, January 18, 2016

Fed will cut rates again once they realize the economy is weakening

The global economy isn't really affected by a 25 basis point increase in interest rates. But I believe the Fed will point to that as the reason for the coming recession.

They basically view money printing as good and tightening as bad. The economy is slowing down meaningfully. When the Fed realizes the economy is in recession, they will cut again.

Wednesday, January 13, 2016

Investment opportunities in selected real estate

Around the world, there is still opportunity in real estate. Not at the highest end. For example, in Los Angeles, some areas like Beverly Hills are very pricey. Young people can't go and live there; it's out of the question.

But they can go and live in East Los Angeles, which is developing very rapidly, having previously been a dilapidated area. That’s happening over in other cities such as Berlin, Frankfurt, Munich and Zurich. If I lived in those areas, I would probably invest some money in real estate.

In Asia, we have huge wealth in Japan, South Korea and Taiwan. We have developing countries with very low GDP per capita, as low as $1,000 per annum in Laos, Cambodia, Vietnam, Myanmar. These are regions that will also have rising real estate markets over time. It's is very regional and fragmented, but there are opportunities.

Monday, January 11, 2016

US Markets may have a recovery rally

Most stocks are already down substantially and have been in bear markets. I think we can have a recovery rally. There is resistance and stocks are unlikely to make new highs this year. 

It [US stock market weakness] has nothing to do at all with China. What it has to do with is the U.S. economy is weakening and is weakening much more than is perceived.

Thursday, January 7, 2016

US economy could have a hard landing

"With the exception of those that held Bitcoins, the performance of all asset classes has been poor. The Fed has created an atmosphere where the future return on assets whether it’s stocks or bonds or art will be poorer."

Wednesday, January 6, 2016

US Stocks will drop lower in 2016 | US entering recession

"Emerging markets are moving into a buying range."

"Ten-year U.S. Treasuries are quite attractive because of my outlook for a weakening economy."

Watch the video above for the full interview.

Monday, January 4, 2016

Marc Faber January 2016 market news

January 2016 Monthly Market Commentary

Technology changes nowadays at breakneck speed. Just remember that 90% of Americans had landlines 10 years ago. Now, only half do. RCA was between the 1920's and the 1960's a huge success story and this was also reflected in its stock price performance between 1925 and 1929. In the 1960s it began to fade away.

I do not wish to discuss here the merits of Apple as an investment. However, given the history of RCA (between the peak in 1929 and the low in 1932 the stock declined by more than 90%), and the stock price history of subsequent technology leaders, I would rather avoid the stock than be a shareholder.

Actually, Apple and also the FANG stocks (Facebook, Amazon, Netflix, Google), not only reminds me of RCA, but also of the nifty fifty stocks in the early 1970's about which I have written before. In the 1973/74 bear market, Polaroid, Eastman Kodak, Avon and Xerox cratered by between 70% and 90% (Polaroid and Eastman Kodak went bankrupt in recent years).

As Oded Galor and Omer Moave explained in the Quarterly Journal of Economics in 2002, “It is not the strongest who survive, nor the most intelligent, but the most responsive to change.” Facebook, Amazon, Netflix, Google and Apple are all great companies, however, investors should remember that for every big winner there are lots of companies which vanish or there are companies whose stocks perform poorly despite being successful (Yahoo, Yelp, Twitter are examples).

I read in Barron’s that none of Wall Street’s top strategists thought that the market could fall in 2016. According to Barron’s, based on these strategists’ mean forecast, the Standard & Poor’s 500 index will end next year at 2220. [The same strategists predicted that the S&P would close in December 2015 at between 2,200 and 2,350.]

I find this optimism quite remarkable for a number of reasons. Whereas the S&P 500 is basically flat for the year the average stock in the US - as represented by the Value Line Arithmetic Index - has performed poorly since early 2014 and it is down by 11% since the April 2015 high.

Fascinating is also the fact that the shares of some of the financial institutions these optimistic forecasters and cheerleaders work for have performed miserably Franklin Templeton (BEN) reached a high of $58 in December 2014. It is down 37% since then and the stock is no higher than it was in early 2011.

The bullishness among fund managers and strategists does not surprise me though. I know personally several strategists who were maximum bullish as the financial institutions they worked for went bankrupt or had to be bailed out. Moreover, most forecasters believe in the omnipotence of Miss Yellen and her great skills as an economist and forecaster (good luck to them). It is therefore natural that they will always be optimistic.

Most investors will think that 2015 was a waste of time because no asset class really worked well (actually most investments lost money). However, as August Rodin wrote, “Nothing is a waste of time if you use the experience wisely.”

Finally, as people wish you a Happy New Year remember that “people forget years and remember moments” (Ann Beattie) and that as La Rochefoucauld wrote, “A true friend is the most precious of all possessions and the one we take the least thought about acquiring” – sadly so, I might add.

I wish you all, my readers, incredible moments in 2016 with your families and friends, and I thank you for your continuous support and friendship. 

Yours sincerely

Marc Faber