Monday, December 29, 2014

Oil prices decline is due to global economic weakness

There are many explanations for the weakness in Oil including some theories that Saudi Arabia wanted to weaken Russia, or the Shale oil production in the US or Iran and so forth. 

But my view is the sharp decline in Oil prices signals a weakening global economy. Now in the last few days I have received from brokerage firms, banks and so forth. They all think next years economy in the world will be stronger than 2014. This would not be my view given, (a) the low yields on government bonds, that would seem to suggest to me there are still some growth issues in the global economy and the sharp fall in the industrial commodity prices would also suggest to me the economy will be weaker than expected. And I'm living in Asia, I can see we are not in a recession but there is very little growth at the present time. 

Monday, December 22, 2014

Marc Faber upbeat on Hong Kong shares compared to US

I think that most stock markets in the world are correlated to the US market. I believe that if the US S&P500 drops 10 percent, 200 points for sure other markets will also go down. 

But is it possible that because of the weak economy in China the Chinese also print money which is a possibility. If they did that, the Yuan would weaken. [The Chinese Stocks] have been essentially under-performing the US since 2006 and so my belief is that if China decided to print money and currency weakened , money would flow into equities. 

The other reason I am reasonably positive is the valuations in Hong Kong is relatively depressed, because you can buy property companies that sell at a discount of 40 to 50 percent of Net Asset Value. Now the Net Asset value may not be correct as property prices in Hong Kong could decline as they have over the last 12 months. But still you have some cushion of security. Moreover Hong Kong shares have a relatively high dividend yield compared to other markets. 

So if someone says I'm very bullish on the US stock market, I would rather own Hong Kong shares instead of S&P because they have better value.

Thursday, December 18, 2014

Current generation not as fortunate as previous

These people [current generation] will not enjoy the compounding impact that I enjoyed having started to work in 1970 when bond yields were 6% and they went to 15% and so forth. 

So during that period of time wealth was accumulating very rapidly plus we had a huge boom in real estate and in equities and bonds between 1980 and 2007. That is not going to happen again.

Monday, December 15, 2014

Marc Faber on Christmas and humor

Christmas is a time for reflection. It must also be a time for humor and laughter. 

Bill Cosby opined that, “Through humor, you can soften some of the worst blows that life delivers. And once you find laughter, no matter how painful your situation might be, you can survive it,” 

Chamfort wrote that, “The most wasted day of all is that on which we have not laughed,” 

Seneca observed that, “It better befits a man to laugh at life than to lament it,” 

Ludwig Wittgenstein thought that, “Humor is not a mood but a way of looking at the world” whereas Ellen Glasgow pronounced that, “First I was an idealist (that was early - fools are born, not made...); next I was a realist; now I am a pessimist, and, by Jove! if things get much worse I'll become a humorist.”  

Wednesday, December 10, 2014

World being inflated by money printing

We are in a world that is driven by money printing and, in general, I believe the standards of living for many people in the Western world will continue to decline as they have declined over the last 20 years, if we look at median income in real terms. 

How the world will look in 5 or 10 you and I and nobody knows, although some people think they know. 

So my advice is to be diversified. Hold some real estate, stocks, bonds and gold and you have to also diversify your assets geographically – don't hold everything in the US. Hold some outside the US as well; hold some outside Germany, outside Switzerland. You have to be diversified. Then you have to hope for the best. 

Monday, December 8, 2014

Emerging economies vs Emerging Sectors of the economy

I believe that what I called in the late '70s and early '80s, along with other people like Barton Biggs and Antoine van Agtmael, what we call emerging markets now, many emerging markets are no longer emerging; they're advanced economies, like South Korea, Taiwan, Hong Kong, Singapore. Now we have new emerging economies like Kazakhstan, parts of the former Soviet Union, African countries, Mongolia, Myanmar, Cambodia, Laos and so forth. 

So I'm sure there is some merit of investing in these regions. There is also what I have experienced, a significant execution risk. In other words, people go in there and they buy stuff and then they don't take much money because they're being cheated out or promoters of the projects make the money and not the investors. But in general, the concept appeals to me.

I would also say, we have to broaden the concept of emerging markets to emerging industries. You make much more money in investing in biotech and in the Internet and social media stocks in the last few years. It's not a recommendation to do it at the current level of stock prices. But I'm saying in the last three or four years you made much more money in emerging sectors of the economy than investing in Laos and Cambodia and Mongolia.

Thursday, December 4, 2014

Negative employee vs Apathetic employee

Jeremy McCarthy who is Group Director of Spa at the Mandarin Oriental Group asks his students, “What is worse, a negative employee or an apathetic one?”
McCarthy explains: “Of course, there is no right or wrong answer to this question, and it invariably sparks an interesting discussion. Some will recognize that an apathetic employee can be a drain on the system as they collect a paycheck but contribute minimally to the goals of the organization. Most of my students will say the negative employee is worse, citing, ‘one bad apple can spoil the bunch’ or other fears of the contagious nature of negativity.

But in their new book, The Upside of Your Darkside, psychology researchers Todd Kashdan and Robert Biswas-Diener say, ‘you need an anxious person on your team,’ because they serve as the ‘canary in the mine shaft,’ alerting you to problems before your more optimistic team members even become aware of them. You need someone who will tell you when you are making a mistake.”
I really like McCarthy’s short essay because he displays a very positive attitude towards “negativity” instead of endorsing “negativity toward negativity.”  

Tuesday, December 2, 2014

Bank Muscat to host Marc Faber in Oman

Bank Muscat is hosting Dr Marc Faber, renowned economist and investment analyst on December 04, 2014.

Dr Faber will share his insights on the state of the world economy and financial markets at a series of seminars organised by the bank’s treasury and capital markets division.

The event will be attended by high-profile dignitaries from the government and top corporate clients.

Monday, December 1, 2014

Present system is not good enough

I believe that the idea of democracy that came up, say, more prevalently in the 18th century and then was implemented with the American Constitution and so forth.

I think that in 500 years or so people will look back and say, how could people have been so stupid to think that a democracy would work? Because everybody wants to take as much as he can from the cake and through the voting machine and through all kinds of tricks and so forth, the politicians always promise more than they can deliver. If they tell the people the truth they're not going to be elected. So I'm very pessimistic about the present system.