Marc Faber, who is famous for advising his clients to get out of the stock market one week before the October 1987 crash, is attending the International Real Estate Investment and Development Conference in Dubai as I write this. Amy Glass of ArabianBusiness.com reported that Dr. Faber, who is serving as a guest speaker, warned attendees of impending doom for the U.S. currency. She wrote today:

Meanwhile, economics author Marc Faber told the conference the US recession would plunge the world into synchronised global financial chaos, and predicted the US dollar would be worthless within 30 years.

Source:

“Global real estate market slump until 2011”
Amy Glass
ArabianBusiness.com, October 6, 2008

On Wednesday, Newsmax talked about investment legend Marc Faber and what investors should do once the bailout is passed by the U.S. government. From the piece:

Rescuing the U.S. financial system won’t stave off a recession, and if equity prices rebound after Congress passes a rescue package, investors should sell.

So says Marc Faber, a Swiss fund manager and publisher of the Gloom Boom & Doom Report.

“A bailout will not buy the U.S. a way out,” Faber told Business Intelligence. “The government is less powerful than markets in fixing this mess.”

Faber says a post-bill rebound will not lead to “new highs” for stock markets.

“We live in very uncertain times and nobody knows the extent of the damage from the slowdown of credit growth,” Faber says. “It will be good to diversify.”

The Swiss-born fund manager believes that investors should pay attention to the U.S. dollar and physical gold. According to Newsmax:

Faber believes that the U.S. dollar will continue to find support as investors continue to depart equity markets. He considers gold to be “a relatively good investment under any kind of scenario until the U.S. government stops its citizens from buying and owning it.

Investors should make sure to buy the precious metal in physical form, Faber says, not through gold funds.

Source:

“Faber: If Market Rallies After Bailout, Sell”
Newsmax, October 1, 2008

Marc Faber, also known as “Dr. Doom” by the press, lived up to his name while talking to CNBC this morning about what’s in store for the U.S. economy. From the CNBC website:

Liquidity will dry up even more, volatility will stay high and financial assets are going to suffer as the crisis continues to unfold. The bailout plan is unlikely to work and the global economy will take the hit, he predicted.

“People rely on the people in Congress, at the Fed, at the Treasury, people that brought us into this trouble, to take us out of trouble. I don’t think they will succeed,” Faber said. “We can have recovery rallies but a new high on the S&P is practically out of the question for a very long time. In real terms, equities are still very high and economically, I think the world will go into a slump.”

Dr. Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report and is the author of several books, talked more about where he sees financial assets going. From the piece:

“Next year, if the economy in the U.S. is as weak as I think it would be, the trade and the current account deficit will continue to contract,” Faber said. “When global liquidity contracts, it’s not a good time for financial assets.”

Other sources of funding, such as foreign reserves of resources-rich countries, are also likely to dry up, Faber said. “I think sovereign wealth funds are going to be very busy supporting their own markets, they won’t have much money to buy assets around the world.”

The head of Marc Faber Limited also shared a disturbing prediction with CNBC viewers. The Swiss-born investor said:

The next emergency measure will be that Americans are not allowed to buy foreign currency and transfer money overseas, and the next measure will be not permitting Americans to buy gold and so on and so forth… It creates even more uncertainty in the market place when you continually change the rules.

Evangelos Vlasopoulos, stock.xchng

Source:

“Fed Acted Like a Liquidity Drug Dealer: Economist”
CNBC, September 23, 2008

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FREE 5-MINUTE VIDEO FOR TRADERS: “Where gold is headed in the next 6 months”

In response to the tumultuous conditions on Wall Street, The Straits Times of Singapore asked a number of financial experts about the risks for investors. Times reporter Gabriel Chen spoke to one of these experts, Marc Faber, and wrote:

Q: Should I leap into the plummeting market to grab a cheaper blue chip stock or two?

It depends on who you ask. For instance, if you’re a trader, you could buy at these levels and sell them at 10 per cent higher.

Dr Marc Faber, who told investors to bail out of US stocks before the 1987 so- called Black Monday crash, said that if investors are holding 100 per cent in cash, then they should be putting 10 per cent of that cash in equities now.

‘But if someone’s fully invested in equities, I would tell him to sell on the rally because he’s overly exposed and the economic downturn could be worse than expected,’ he said.

Source:

“Will my money be safe?”
Gabriel Chen
The Straits Times (Singapore), September 17, 2008

A number of legendary investors, including Marc Faber, Bill Gross, and Mark Mobius, have been talking to the financial news media about the crisis that is taking place in the markets. Here is what they’re saying:

Marc Faber

CNBC, September 15
You can access the 4 minute 41 second interview here.

Bloomberg, September 15
You can access the 7 minute 28 second interview here.

Bloomberg, September 15
You can access the 3 minute 30 second interview here.

Bill Gross

CNBC, September 15
You can access the 6 minute 5 second interview here.

Bloomberg, September 15, 2008
You can access the 24 minute 40 second interview here.

Mark Mobius

Bloomberg, September 15
You can access the 5 minute 6 second interview here.

Dr. Doom, Marc Faber, spoke to India’s CNBC-TV18 this morning. Here are some notable excerpts from the exchange:

CNBC: Do you expect a bigger slide in commodities from here after what has happened already?
FABER: Over the last six weeks or so, the dollar has been very strong and commodities have been weakening including gold. Some foreign currencies have been very weak like the New Zealand dollar, Australian dollar, euro, pound sterling. Now the dollar is overbought, the S&P 500 and commodities are oversold and we can have a counter trend rally. In other words, the S&P 500 can recover 100-points or so and the dollar could correct here from 1.40 against the euro to 1.50. The pound could rebound the Australian dollar, New Zealand dollar. At the same time, we can have rally in commodities but new highs in commodities won’t happen anytime soon.

The contraction of liquidity in the world will continue. We will need a base building period around this level before we start recovering in asset markets or at worst we will have another major slide in 2009, 2010.

CNBC: In the past few weeks and months there have been a lot of growth concerns. What is the likelihood that both equities and commodities underperform over the next few months?
FABER: Most countries I visit are in recession. In other words, growth is still there but it is not as strong as it was a year ago. A lot of countries have negative growth rates at the present time. But, the markets are already down very substantially. India is down from 21,000 to 14,300 or so. So to some extent, the markets have already discounted slower economic growth or a recession. The question is to what extent have they discounted profits that are not going to recover for several years and the market has not discounted that. Having said that when I look at markets in the US and also in Asia, we have reached a relatively oversold condition right now and sentiment is quite negative and the news coming out of the US is very negative. So in general, when the news is very negative, markets can temporary bottom out and rebound.

CNBC: When you say that we may not see new highs for commodities in a hurry, is it crude that you are referring to?
FABER: You may not see a new high for many asset classes including the Indian Sensex for many years. The oil price is unlikely to go up very substantially unless you have a geopolitical confrontation, which is really possible once Mr. McCain is elected in US.

CNBC: The earlier feeling was that if commodities get into a bear market then equities will get out of theirs. Is it possible that both these markets remain in bear phases?
FABER: If you look at the direction of asset classes since 2001 and October 2002 then equities and commodities have moved in the same direction. All other asset classes like real estate in developed markets, emerging markets and even bond prices have moved up and that is the very famous Bernanke bubble. You can say Thank You to Bernanke, he has created the greatest bubble in the history of mankind. Now the consequences will be felt and they will be felt for quite some time because credit growth has de-accelerated in an unprecedented fashion and that leads to falling asset prices and recession.

CNBC: What commodity looks most likely to rebound form here between precious metals, base metals and even what’s been happening with crude?
FABER: A lot of commodities have become oversold because they are down 50% or more in some cases but I don’t think a new bull market is getting underway any time soon. Commodity prices will be higher in 2015 because all Central Banks are money printers and they do nothing else but print money. When their economies don’t do well, they just go out and print more money and cut interest rates which leads to competitive devaluations. So, if the US dollar is strong then the likelihood is that the Fed will cut interest rates increases and if the US dollar is weak, their hands are tight. If the Australian dollar or the pound sterling is very strong, then the tendency for these Central Banks is to cut interest rates.

At the end of the day, the whole world will end up with interest rates around zero and we will get into a very highly inflationary environment. When everything goes up, the price of TV, bread, and stocks but in real terms the stocks will go down.

Source:

“Sensex may not see a new high for many yrs: Marc Faber”
Moneycontrol.com (India), September 12, 2008

Gwen Robinson of the website FT Alphaville (UK) talked about the latest client newsletter from legendary investment adviser Marc Faber this past Monday. Robinson wrote:

Investment guru Marc Faber is living up to his “Dr Doom” moniker with a client newsletter this week that seems to be as cheery as the English weather.

“The global economy is decelerating rapidly, corporate profits are declining and the weakness in financial stocks is now spreading through all asset markets,” he notes. Oh happy days.

There’s a small spot of relief though - if Faber is correct in his prognosis that stocks and commodities are near-term oversold while the US dollar is short-term overbought. A temporary reversal is possible but then, he warns, as the credit crisis spreads into the real economy, be prepared for a slump in all asset classes.

Ultimately, just like in the 1970s, we are currently in “a stock and asset picker’s market”. Volatility will stay relatively high and there will be large moves in individual stocks, sectors and asset classes (up and down).

Robinson also spoke of Dr. Faber’s near-term investment outlook. She wrote:

In conclusion, then, what could happen in the next few weeks in Faber’s view is a rebound in the euro, “which is oversold near-term”, and a rebound in equities and selected commodities. However, he cautions, from a longer term viewpoint, stocks remain high and given the decline in corporate profits they are also far from inexpensive.

Furthermore, judging by the course of asset markets and individual stocks, the downside risks remain rather significant.

On commodities, “we have reached a top in the CRB Index”, says Faber, although it is unclear whether this top turns out to be an intermediate top or a longer-term top.

At some point, he says, money-printing by all the world’s governments will lead to higher inflation and commodity prices (this assumption would also be consistent with the Kondratieff Cycle).

However, we should not forget that the current financial crisis and credit growth slowdown is unprecedented in the last 30 years or so and that the through of the Kondratieff down-wave, which lasted in real terms from 1974 to 2001, was incomplete because it was not accompanied by a massive debt-liquidation.

As a result, a deflationary bust originating from debt liquidation should not be ruled out entirely before highly inflationary monetary and fiscal policies around the world bring about very high inflation rates. But that may only happen after 2012 and in the meantime, “all asset markets could continue to suffer badly as credit contracts and liquidity evaporates”.

In this scenario, gold is likely to shine again at some point. As indicated above, asset markets and non-US currencies have become near term oversold and could rebound shortly.

So, he concludes: use rebounds to lighten positions and to increase US dollar positions.

In particular, use any rebound in stocks like IBM, Apple, Amazon.com and Research in Motion as a shorting opportunity (with tight stops). For individuals the purchase of put options may be a less risky alternative.

Source:

“Dr Doom: More gloom, the Kondratieff wave and what comes next”
Gwen Robinson
FT Alphaville (UK), September 8, 2008

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“How To Trade Gold In 90 Seconds”- Free Lesson

Marc Faber, known as “Dr. Doom” by the media, appeared on Bloomberg Television this morning from Bangkok and shared his short-term outlook for stocks and commodities. The editor of The Gloom Boom & Doom Report told Bloomberg viewers:

Global Economy:

For everyone, business is down. And in the U.S., if the statistics were compiled properly, the economy would be in recession also. The same in Europe. I travel extensively around the world. Compared to a year ago, all businesses are down.

Stocks:

I can see that stocks can rally because of psychological reasons. They’ve been oversold.

Crude Oil:

The oil price coming down is precisely a symptom of economic weakness. Not a symptom of strength.

Airlines:

Maybe there is a recovery going. I think one, in investing money, you should not look only at your personal experience. You can buy stocks of companies that are of poor quality. If they’re low enough, they can rebound. It’s like now the financial stocks. They have been hit very hard. Maybe they stabilize around this level and maybe they even rebound by 30 to 40 percent. I don’t think that they’re attractive from a longer-term perspective. I don’t think that stocks are attractive in real terms from a longer-term perspective. But I think that they can rebound somewhat.

U.S. Economy:

We have a tightening of global liquidity, and that tightening comes essentially from a diminishing U.S. trade and current account deficit. And I think that if the oil price continues to go down, as I think it’s very likely in the near-term for the next three to six months, as well as other commodities, then the trade and current account deficit of the U.S. could decline more than is perceived. And that would strengthen the dollar further, and in my opinion, if there is a contraction in consumption in the U.S., it is not a disaster for the U.S. because they don’t produce much anymore, but it would be very bad for the producing countries, the manufacturing centers of the world, that are mostly emerging economies.

Commodities:

The second half of 2008 of this year would not be favorable for commodity prices… As far as I’m concerned, we peaked out in commodity prices, and later on we will have to see whether it’s a longer-term peak or a short-term peak. But we don’t know yet.

You can view 9 minute 14 second Faber segment here.

Source:

Marc Faber Interview
Bloomberg, September 2, 2008

Earlier today, legendary investors Marc Faber and Mark Mobius talked about Thailand as the Southeast Asian country wrestles with political instability. Thailand’s SET Index dropped to a 19-month low Tuesday after Prime Minister Samak Sundaravej declared a state of emergency following clashes between pro and anti-government demonstrators.

Marc Faber, the famous Swiss-born investor who resides in Thailand, appeared on Bloomberg Television this morning from Bangkok and talked about the political crisis, the economy, and the investment outlook for Thailand. The editor of The Gloom Boom & Doom Report said:

Thailand is essentially a political mess. The economy is not very dynamic, and it will continue to kind of move ahead slowly…

But at the same time, these people look for a strong stock market. I think that will be misplaced. At the same time, Thai shares are inexpensive. You can buy lots of Thai companies at a dividend yield of between 5 and 8 percent. So, that will give some support to the market.

Templeton Asset Management’s Mark Mobius also addressed the Thailand situation when he appeared on CNBC this morning. The emerging markets veteran said:

We are bullish on Thailand long-term. And we have been for quite some time because we think that these political disturbances sort of refresh the political climate and pushes for reform. So, we think after this is over, things will be good…

Based on our experience, from many, many years in Thailand, things will get better. There’s no question about that. You may have to wait for a while. But the interesting thing about the market is it hasn’t come down very much in the face of these demonstrations. So, I would like to see some further correction in the market before going back in.

(CNBC: How much of a correction?)

20, 30 percent like that.

You can view 9 minute 14 second Faber segment here.

You can view the 3 minute 31 second Mobius segment here.

Sources:

Marc Faber Interview
Bloomberg, September 2, 2008

Mark Mobius Interview
CNBC, September 2, 2008

Bloomberg spoke to legendary investor Marc Faber by telephone earlier today. Dr. Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report, weighed in on the recent commodities slump. Bloomberg’s Chanyaporn Chanjaroen and Feiwen Rong wrote today:

Commodities, measured by the Standard & Poor’s GSCI index, have tumbled 22 percent from their record July 3, descending into a bear market…

“Prices have made a peak,” said investor Marc Faber, 62, who told investors to bail out of U.S. stocks before 1987’s so- called Black Monday crash. “Whether that is a final peak or an intermediate peak followed by higher prices, we don’t know yet. It could go lower,” he said by phone today from Chiang Mai, Thailand.

Source:

“Gold, Oil Slump, Leading Commodities Drop on Dollar, Growth”
Chanyaporn Chanjaroen, Feiwen Rong
Bloomberg, August 15, 2008