Monday, December 30, 2019

Marc Faber interview with BigEye

Click here if the above video does not play

Tuesday, November 5, 2019

Marc Faber November 2019 interview on the state of markets

Click here if the above video does not play

Topics discussed in the video include the US Fed, Swiss Francs, MMT, US Dollar, Gold and MORE

Monday, October 7, 2019

October 2019 Interview with Jason Hartman

Click here if the above video does not play

Topics Discussed:
Minute 4:10 Asset inflation and monetary policies is helping the rich get richer at expense of the rest of the population.

Minute 10:18  millennials and finance

Minute 13:33 Investing in a world of declining asset prices

Minute 15:25 How central banks can create more money

Minute 19:57  Kicking the can down the road

Monday, September 30, 2019

Gold is still interesting as an asset to own

After a correction, the precious metals are still interesting because if you look at how the pension funds are invested, they own billions of dollars in Apple, in Amazon, in Netflix, in Google and the semi conductor stocks but billions, you ask them how much do you have in gold, most of them have not even 1% in gold. One day the trustees of these pension funds and endowment funds and family offices will ask the fund manager well gold shares are up 100% so far this year. 

Wednesday, September 25, 2019

Why some investors have been buying negative yielding bonds

I understand everybody is looking for the next big investment scene. As I said, you will make more money in emerging economies than in the US in the next few years but I would also like to introduce the thought and this thought is that 1980 to today we have had huge asset inflation; look at Mumbai real estate prices, 1980 and today, you look at Delhi real estate prices, you look at Chennai real estate prices, Bangalore, New York, London, Hong Kong, Singapore, you look at stock prices 1980 to today, you look at bond prices 1980 and today all asset prices had huge moves, huge moves and this asset inflation could come to an end. The question is not which group will do best in future but maybe the question should be how do I lose the least money over the next 10 years? 

A lot of people are wondering why someone would buy a bond with a negative yield, say you buy Swiss Franc bond you pay 105 and in 10 years it will pay you back say a 100. So it has a negative interest rate. Now the reason bonds in Europe trade at negative rates is that insurance companies and pension funds they are forced by government regulation to buy these bonds which is fraught to start with but in addition to that, if you are the salesman and you come to me say here is a bond, it has a negative yield, say 5% over 10 years. So, it is 0.5% per annum negative yield grossly. Then why should I buy it? But if you are a good salesman and say the whole world would likely collapse and stocks will be down 40%. Bonds will go down, a lot of currencies will collapse, the Euro may collapse, but maybe it is not all that bad to only lose 5% over 10 years on your money than to lose 40%! 

You understand the reasoning and there is a group of people that buy these bonds. If you had come to me and said buy these Austrian bond 100 years at 2.10%, I would not have bought it, but in two years, it has doubled in price. So, it was a great investment. 

via economictimes

Monday, September 23, 2019

Investors should not expect high return on stocks

I have to state that in my view if you are a prudent investor you are not going to make a lot of money in equities over the next three years. Maybe one company will go up 10 times and 900 companies would not. You have to take big risks if you really want to make a lot of money. My return expectations are very low. 

In Europe, in 2017, the Austrian government issued a 100-year bond. The coupon was 2.10%. It was issued at a 100, the interest the 2.10% which is not a lot but people buy these bonds and you are not going to make a lot of money out of these bonds. Now you made a lot of money by buying US treasuries over the last six months. The stock market in the US is not higher than it was in January 2018. In other words, 18 months ago we have been trading sideways and that maybe the pattern that we have to look for. So in terms of return expectations, investors have to really lower their long term expectations. 

via economictimes

Wednesday, September 18, 2019

Commodities can be viewed as another form of money

Most commodities do not have structural bull markets. They move from a situation of oversupply like we have in sugar and then the oversupply leads to inventory liquidation, the reduction of production and then prices go ballistic and as soon as prices go up strongly, new supplies come in. An individual can buy a stock and if the management is good, they will grow the company overtime. 

In the case of commodities, there is hardly anything as long term investing although and I do not consider precious metals to be commodities, I consider them more to be money. 

If you bought gold in 20 years ago in 2000, you have outperformed Berkshire Hathaway which is essentially controlled by Warren Buffett. Precious metals are from a longer term perspective relatively attractive but they do not perform as well as a stock market index over the long run. 

via economictimes

Monday, September 16, 2019

We might be nearing the end of the economic expansion and the stock market cycle

The conditions today are that investors are heavily invested in equities in the US. They are bullish, otherwise you would not have all these IPOs of companies that do not make any money and they immediately go up in the secondary market and you would not have the high valuations among FAANG stocks. There is a lot of optimism about US equities and cash levels are low. So, any disappointment could lead to a longer term decline in the market. 

I do not believe you will get the crash like in Argentina where essentially in dollar terms, the stock market performance was down 37% and the currency was down so altogether more than 50% in one day! That is a crash, 50% in one day. I do not think you will get that in the US. 

via economictimes

Wednesday, September 11, 2019

President Trump hopes to get re-elected in 2020

We have the election in a little more than a year and to be re-elected, he [Trump] has to show a strong economy and not a recession in the US. 

The US is an asset driven economy. We have an unusual situation in most western equity markets, .... where it is not the economy that drives the stock market but it is the stock market that drives the economy. If the stock market goes up, the economy has performed okay, if stocks drop 10-20%, we will have recession. We are not down 10% from the peak though we are down modestly. 

So Trump is very conscious about the stock market and he believes that the Federal Reserve by cutting rates could essentially boost equity prices. I am not so sure about that because the equity market nowadays looks at different factors than just monetary factors. If you just looked at monetary factors, the Japanese Nikkei should be the strongest stock market in the world and it is not or European markets that have had negative interest rates for a very long time, should be the strongest markets but they are not.

via economictimes

Monday, September 9, 2019

Emerging markets are probably a safer bet than US markets right now

The emerging markets overall, not India specifically, peaked in 2015 and since then, they have been in a bear market and have grossly under-performed the US. So regardless of what you think, I believe that an investor should rather look at emerging economies at the present time than at the US stock market which looks very expensive -- just the fundamentals of equities -- and the US dollar looks to be on the high side. 

Monday, August 19, 2019

Own some gold as an insurance policy

Click here if the above video does not play

Topics discussed include

- Modern Monetary Theory

- Markets in the 1970's were very small compared to the economy VS now.
- Gold prices breaking out to the upside
- New technologies disrupting old industries
- City centers may be disrupted.
- How to find undervalued assets.
- Favorite authors and books.

Investors should look at investing in Emerging Markets instead of the US market at the current time

Click here if the above video does not play

Tuesday, August 6, 2019

Many indicators suggest that the economy is weakening.

Click here if the above video does not play

Monday, July 15, 2019

The Fed's believe they are smarter than the market

Click here if the above video does not play

Thursday, July 11, 2019

Monthly Market commentary July 2019

Marc Faber's latest market commentary is out. See below for an excerpt via Gloomboomdoom

Already early in my career, I realized that one of the problems of technical analysis was the interpretation of charts. Nonetheless, I became attracted to the field because I observed that stock, bond and commodity prices would often suddenly move in a direction and investors would scratch their heads as to why these moves occurred. Only much later, would changing fundamentals confirm the validity of the earlier price moves. In other words, prices moved ahead of fundamentals and especially ahead of analysts' projections.

Therefore, I believe that investors can benefit from looking at long- and short-term charts. In particular, investors should pay attention to major up-side or down-side breakout points - especially, when these breakout moves occur against the majority of investors' expectations.

The reason I am discussing break-out moves (up- and down) is that in some cases they are more obvious and relevant because a confluence of both fundamental and technical factors confirm the breakout move. Furthermore, following a breakout move there will usually be a retracement (not always right away) but prices should not move beyond the breakout point in order to confirm the breakout.

Recently, we experienced some breakout moves whose significance we do not yet fully know. The first major upside breakout occurred in the cryptocurrency market when Bitcoin shot up at the beginning of April. 
The second important breakout move occurred in the gold market whereby gold must hold above $1370 for the breakout move to be confirmed. 
Importantly, we need to ask ourselves what the sudden huge upside move in Bitcoin and the upside breakout move in gold might mean?

My readers should remember in the current market context the words of legendary trader Larry Hite who opined that, "Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don’t take a hard look at risk, it will take you" as well as the words of deep value investor Howard Marks who observed that, "You should invest more when the tickets in the bowl are in your favor. You should invest less when they are against your favor and what determines the mix of the tickets in the bowl largely where we stand in the cycle.”

Thursday, June 27, 2019

Interview with Jason Hartman June 2019

Click here if the above video does not play

Topics discussed include

- We have grossly inflated Asset markets

- Asset inflation is making the rich richer and leaving the poor and middle class behind

 - Many millennial's depend on their parents.

 - Deflation scenario 

 - Central banks can buy Assets and also Stocks (in the case of Japan)

- MMT (Modern Monetary Theory)

- Economic problems can be postponed for a very long time. 

Monday, June 10, 2019

How Japan negotiated trade with the US decades ago

China economy still bullish longer term

“Nowadays in China, there is probably a bubble in real estate in some cities, but not necessarily everywhere. In my opinion, there is no bubble in stocks. In the larger scheme of things, China is still in the early stage of development.” 

Japan Trade Negotiations in the past

“In the case of Japan, in the 1970s, the US would send all these ambassadors and negotiators,” Faber recalled. “The Japanese would always bow three times and say ‘yes we’re going to do it’, and what happened was the trade deficit with Japan never really went down.”

via scmp

Tuesday, June 4, 2019

Politicians like to blame foreigners for their difficulties

Marc Faber June 2019 Market commentary via Gloom Boom Doom

Referring to China, Kyle Bass claimed at a recent investment conference that, “Right now, there is no trust and no rule of law. [The Chinese] government lies, cheats, and steals as a national ideology.”

I heard that the audience rewarded his candid statements with applause.

Blaming the Chinese for everything appeals to the Democrats and the Republicans alike, and that is what counts for President Trump ahead of the 2020 elections. In fact, I find the applause following Bass' accusations deeply disturbing given the relatively high social standing and knowledge of the conference attendees. It also reminds me of so many other occasions in history when leaders blamed other people (usually minority groups and foreigners, or whosoever is convenient at the time) for their own shortcomings and failures.

Not long ago, Elaine Chao (the current US Secretary of Transportation) opined that, "Smoot and Hawley ginned up the Tariff Act of 1930 to get America back to work after the Stock Market Crash of ’29. Instead, it destroyed trade so effectively that by 1932, American exports to Europe were just a third of what they had been in 1929. World trade fell two-thirds as other nations retaliated. Jobs evaporated."

I think it is fair to say that the Smoot–Hawley Tariff did not cause the depression (there were numerous other factors at play), but it certainly accelerated the downturn and prolonged the global economic slump as global trade collapsed. Currently, the global economy (including the US) is already weakening badly (many sectors are already in recession) and the trade war will aggravate the economic downturn. US economic weakness is indicated by strengthening US Treasuries. It is also confirmed by the decline in oil and lumber prices. Furthermore, the US Markit manufacturing PMI just dropped by 2 points to a near-recession 50.6 level.

In general, I believe that Wall Street strategists and economists grossly underestimate the downside risk of equities. I concede that the US stock market is becoming near-term oversold and, therefore, could rebound in June and July (traditional summer rally). The US stock market is, however, far from oversold from a longer-term perspective. My advice: Sell the rallies and reduce equity positions.

Finally, remember regarding the constant China bashing that, as Daniel Kahneman observed, “A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact.”

Monday, May 27, 2019

Finding excellent opportunities in Markets

Click here if the above video does not play

Wednesday, May 1, 2019

May 2019 Market Commentary

Marc Faber's latest market commentary is out. Read below about his thoughts via GloomBoomDoom

In the context of income and wealth inequality in the US, some of the new-rich billionaires (a large number of which made their money through the asset inflation, which the Fed created with its quantitative easing policies) now provide advice on how to reduce the inequality. Usually, the advice centers on higher taxes for the super-rich (except for their own taxes, which they hope to lower with even more loopholes), and education.

Specifically, these billionaires seem to know how the government should spend more money on education.

I find these proposals quite amusing except for the fact that the cost of education in the US may actually have contributed to growing wealth and income inequality.         

The US is already spending far more on education than any other OECD country. Unfortunately, the productivity of education (spending per student and academic achievement) seems to confirm that the US not only has an extremely expensive educational system but also one that produces poor results.          

According to Professor Richard Vedder, College Wouldn’t Cost So Much if Students and Faculty Worked Harder. Vedder further opines that, "One reason college is so costly and so little real learning occurs is that collegiate resources are vastly underused. Students don’t study much, professors teach little, few people read most of the obscure papers the professors write, and even the buildings are empty most of the time.” 

Monday, April 1, 2019

Bonds and Stocks giving conflicting messages

The S&P500 is up around 20 percent from its December 2018 lows. Are we in a new bull market ? Are we going to see higher highs ? Marc Faber on his April 2019 Market Commentary gives his opinion on Stock market and Bonds.

The Disagreement between Equities and Bonds Over the last twelve months or so, some analysts pointed out the low number of new issues as a sign that the US stock market was far from being overheated. However, I respond to this argument that instead of new public issues, privately held startup companies valued at over $1 billion - Unicorns - have proliferated at a rapid pace.

What is clear is that when privately funded companies finally list their shares on an exchange the insiders (people who funded the companies) perceive the timing and the valuation to be opportune.

The average age of a technology company before it goes public is now 11 years, as opposed to an average life of four years back in 1999. Furthermore, the number of loss-making companies that go public seems to have increased. Ride-hailing company Lyft, just tapped the public market and listed its shares at $72 giving it a market capitalisation of $23 billion. Last year Lyft posted a loss of $911 million, more than any U.S. start-up has ever lost in the 12 months leading to its IPO. The Wall Street Journal (March 25, 2019) noted sarcastically that, "Ride-hailing company Lyft Inc. is leading a parade of Silicon Valley companies to Wall Street that display an unusual quality with parallels to companies going public in the dot-com era: lots of red ink."

Investors are enjoying and discussing the strong first quarter stock returns, but seldom talk about the almost 13% gain of long-term US Treasuries since the November 2018 low. What does the March 22 upside breakout of Treasury bonds indicate? Recession dead ahead or interest cuts by the FED? 

The rally in long-dated Treasuries signals economic weakness. Therefore, stocks should begin to decline as corporate profits would come under meaningful pressure (sales declines and profit margin contraction). So far, this has not happened. Another mystery is the strong performance of junk and emerging market bonds.

In other words, we have US equities and high yield bonds (junk or lower quality bonds) saying that all is great while Treasuries scream "recession ahead." Something does not quite add up and unquestionably some investors or probably all investors will get hurt by adverse market movements.

In this context investors should remember the words of the late Leon Levy who said that, 
“For most people, the most dangerous self-delusion is that even a falling market will not affect their stocks, which they bought out of a canny understanding of value.” 

via gloomboomdoom

Monday, March 18, 2019

Marc Faber buys Bitcoin

After a conversation with @wences (CEO of @xapo), the most well-known Swiss financial market expert Marc Faber has invested in Bitcoin.

According to Dr Faber, “I was tempted to purchase Bitcoin when it was available for $200. But I held myself from purchasing something that I didn’t fully understand.”

One of his reasoning to buy Bitcoin is so he could try to better understand how it worked. Also Marc Faber says Bitcoin prices at $3000 is much more attractive than it was at $20,000.

Monday, March 4, 2019

US political situation is very bad

Marc Faber on disinformation during stock market downturns and on US politics.

Well, I think there is a lot of disinformation, and usually when stocks go down, some fraud comes to the surface. And I expect it to happen, and I mean in a major way. Whether the fraud is related to some corporation, which I think is quite likely, or whether it's related to the fraud that is going on in the pension fund system, where pension funds are grossly underfunded, and, in the future, will either have to increase contributions or reduce distributions. I think these are items that could happen. 

Secondly, the public may start to lose faith in the system because of the political situation. I think the political situation in the U.S. is very bad, and if you read about what has been happening at the FBI, the CIA in Washington, you have to scratch your head whether that is all possible in a system that is supposedly functioning. It's like Watergate, but actually magnified. So, I think there is a possibility that investing public loses interest in financial assets. 

Tuesday, February 19, 2019

Physical precious metals far superior to Cryptos as a Safe Haven

Marc Faber on whether Gold and Crypto currencies should be considered a safe haven....

I don't think that cryptos are safe. Now they may move up and they may move down but I, as an investor for the ultimate crisis, I prefer to be in physical precious metals, gold, silver, platinum.

I think, eventually, these precious metals will come back into the investment portfolios of major institutions and individuals. The major institutions of the world, they hold practically no gold. They have more money in Apple, they have more money in Amazon, than, say, in gold. And I think that will change over time, but I don't know whether it will be tomorrow or in three years’ time, but my view would be that if you really look at the financial situation, the unfunded liabilities, the government deficit, the inflated asset prices, the conclusion is central banks will have to continue to print money, otherwise the system collapses. That, in my opinion, will boost precious metals prices.

-Via Money Metals podcast

Tuesday, February 12, 2019

Both US and China will lose in a Trade War

Click here if the above video does not play

Wednesday, February 6, 2019

The most popular form of Taxation is ..............

Marc Faber is out with his February 2019 Monthly Commentary. He talks about the various taxation policies proposed in the US.  Via Gloomboomdoom

Thanks to expansionary monetary policies, US, household net worth has soared over the last twenty or so years.

However, if we look at which wealth group did well and which wealth group lagged behind, we find that the wealthiest of US households reaped all the gains in household wealth. Depressing is the fact that according to the Fed’s own statistics, the median net worth for the bottom 50% net worth group actually fell after 2006.

Given the rise in income and wealth inequality, which was caused mostly because of “money printing,” it is not surprising that the call by politicians for some kind of wealth tax for high income and high net-asset holders is gaining popularity.

I am bringing up these facts because it is quite evident that in future every democratic candidate will call for some tax on the wealthiest income recipients and asset holders. So even if wealthy Americans despise Mr. Trump they may have no other option but to vote for him if asset preservation is the objective.

Personally, I am certain that within a few years we shall have some sort of wealth tax for the highest wealth owners and income recipients in most, if not all Western democracies.

More so, if social-democratic candidates want to take your money and redistribute it to the people who keep them in power there will indeed be more government spending that they can’t afford and there will be more bureaucracy, which will depress economic growth and bring along even more central planning. Equally, a socialist could argue (and I would have to agree) that the elite took money from 90% of the population by having the Fed and other central banks pursue monetary policies that lifted most asset prices and increased wealth and income inequality grotesquely.

I suppose that from an investment strategy point of view, more socialistic US policies mean that investors should reduce positions in the US assets and specifically in US equities, which seem to have an extremely high valuation relative to the rest of the world.

With respect to taxes, I smile at Sir Thomas White’s words who opined that, “In such experience as I have had with taxation – and it has been considerable – there is only one tax that is popular, and that is the tax that is on the other fellow.”

Monday, January 28, 2019

Marc Faber's 10 year economic outlook

Click here if the above video does not play

Topics discussed
- It will end in a Debt default or debt forgiveness. It will end in a disaster.

- There is No such thing as a free lunch

- Asset prices have inflated. If you went to Toronto or Vancouver 50 years ago and bought a house, and you looked at the price now, you would say it is inflated.

- Affordability issues for young people to buy certain assets. 

- Wealth inequality and potential social issues.

Wednesday, January 9, 2019

January 2019 Monthly Market Commentary

Marc Faber has posted his January 2019 Monthly Market commentary. See below for the summary via GloomBoomDoom.

At the beginning of this report I am presenting two views of China: one is by China basher Patrick J. Buchanan and the other by my friend Jay Chen who provides us with pictures that contradict most of Buchanan's views.

Concerning asset markets (including stocks, corporate bonds and real estate) the BIG QUESTION that is on every investor’s mind is whether the headwinds for asset prices we saw in the last three months of 2018 will only be of short term duration (brief correction in an ongoing bull market for asset prices) or of a more serious nature, which would imply that what we saw recently was only the first phase of a prolonged asset price downturn that would also be accompanied by a global recession.

I am quoting the views of three friends of mine who share similar views.

Mark Whitmore, CEO of Whitmore Capital Management recently concluded his letter to investors by saying that, "I think the tumult we have seen in financial markets in the 4Q 2018 is but a preview of things to come. Yes, there will be violent countertrend rallies in which the market will attempt to lure investors back in. We saw that as the previous bubbles burst over the last couple of decades. But value-conscious investors who stood on the sidelines patiently waiting for markets to be rid of speculative excesses avoided being duped by these bear-market traps….. of far greater import, I remain convinced that it is all but inevitable that markets will be going much lower in the future."

Alan Newman who is the editor of Cross Currents noted on December 26 that, “Our Nasdaq Climax indicator is ….. shocking. Nasdaq has flipped from bull market to bear market (stocks were down close to 11% last week), yet we still do not see even the slightest sign of panic. Days in which Up/Down volume reach a ratio of 1:9 (or worse) have typically been thought to be solid evidence of capitulation. To date, there has not been any such instance since May 17, 2017."

Finally, Michael Lewitt who publishes the excellent The Credit Strategist comments about credit conditions and specifically about the recent sell-off in the leveraged loan market. Under The Unthinking Consensus he bemoans the fact that publications like Barron's and the Wall Street Journal offer less insight than the week before, something it shares with the rest of the mainstream financial media, "which is one reason why investors were so ill-prepared for the bear market unfolding before their eyes."

I wish my readers a Happy New Year. Remember that just because we had for close to 40 years "asset inflation" it is unlikely that things will stay the way they were. [Bertolt Brecht: "Because things are the way they are, things will not stay the way they are.”]

Friday, January 4, 2019

I wouldnt be surprised if S&P500 dropped to 1500 or so

Click here if the above video does not play