Marc Faber, also known as Dr. Doom by the media, has some good and bad news for stock investors in these turbulent times. Bloomberg’s Ian Sayson talked about the bad news earlier today:

Investor Marc Faber said a series of coordinated interest-rate cuts by central banks including the Federal Reserve to ease the economic effects of the global financial crisis won’t halt a worldwide slide in equities…

“The slashing of interest rates will not help very much,” Faber, who manages $300 million, said in an interview in Manila. “They may cushion somewhat the decline but make matters worse.”

The Swiss-born investor added:

Had central banks around the world kept interest rates that encourage saving we wouldn’t have these problems today.

However, Dr. Faber believes there still remains a glimmer of hope for investors in equities. From the CNBC website yesterday:

The stock market is as oversold as it has been since the crash of 1987 and the broader market could start to rebound until early next year, Marc Faber, editor and publisher of the Gloom Boom and Doom Report, said Tuesday.

The market is possibly in “the most oversold condition” since perhaps Oct. 19, 1987, Faber told CNBC’s “Squawk Box.”

“Usually there is some seasonal strength between October and March” so it is possible the S&P 500 index will create a low between now and the end of the month, he said.

He talked about some areas investors should be looking at:

Longer-term investors will have to position themselves in emerging country stock markets to play the global recovery, Faber advised.

Faber, who recommended buying gold at the start of its six-year rally, also pointed out:

For now, gold is still attractive, with central banks readying more rate cuts and printing money, he said.

Sources:

“Faber Says Rate Cuts Will Fail to Stem Equities Rout (Update2)”
Ian C. Sayson
Bloomberg, October 8, 2008

“Market Oversold, Short-Term Bottom Near: Dr. Doom”
CNBC, October 7, 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”

Jitendra Kumar Gupta from India’s Business Standard caught up with legendary investor Jim Rogers, who was in Mumbai for the launch of the Birla Sun Life Commodity Equities Fund. From the Standard’s website yesterday:

At the conference and in an interview with Jitendra Kumar Gupta, he shared his outlook on commodities and the world economy. Excerpts:

What is your view on global economy and inflation?
The world economy is in recession and the inflation is going to stay here, it is going to get worse. Some countries lie about it. But, inflation in all countries is going to get worse. The next decade is going to see lot more inflation, which is not good.

In this light, how can one beat inflation and generate higher inflation adjusted returns?
Commodities are the best inflation hedge, better than real estate better than anything else. Nothing can assure you better than commodities, but only if you are good at it. You have to pick the things that go up the most to make more money. Inflation does not cause prices to rise, price rise causes inflation.

Frequently, since the prices of the commodities go up before the inflation numbers, one can stay ahead of inflation. But, if you get it wrong you might do worse. So, investing in those commodities, which are going to go up first or selecting the right commodities, is the key to stay ahead of the inflation and make a lot of money…

Do you think Asian economies are decoupling from the rest of the world?
If you deal with the largest economy you are going to get affected by what is happening in America. If you are in the other sectors in Asia, such as water treatment and agriculture you have decoupled. You do not care what is happening in America.

But, if you sell to Wal-Mart, which is the largest retailer in America, you are going to suffer badly. So, some will decouple and some may not. Since India is such a closed economy, which is a negative as far as I am concerned, in this particular short term, India will suffer less probably than other countries which are more integrated with the world economy.

What is your view on the dollar?
Fundamentally, dollar is a terribly flawed currency. I am pessimistic about the future of the dollar; I expect it to continue to deteriorate over the next two or three decades.

The dollar is rallying at the movement because there are so many pessimists including me. But, I hope to use that rally some time in next year to get better of rest of my dollars. I do not want to own any US dollar. Also, I would not urge you to buy US dollar. Dollar is going to loose its status as world reserve currency.

Some of the OPEC countries have already started and no longer take dollar, like Venezuela no longer accepts dollar. Other countries, like Gulf, are already looking and may be taking a package of basket of currencies instead of dollar. I am not the only one who knows the dollar is in trouble. Anybody who watches the TV knows that the dollar is in trouble.

What is you assessment of the crude oil prices in the short and longer term?
I do not have idea as to where the oil prices are headed in the short to medium term. I do know over the course of the bull market, which perhaps has another 10 years to go, the crude oil price will be much higher.

Your bets in the commodity space?
Agriculture is one thing I will be looking for the next decade or so. Within commodities, I would not say these are the best, but may be sugar, coffee and cotton. I am also starting to look at some of the base metals they are down a lot; starting to look at some of these like silver, copper, zinc and gold.

Also, if you want to invest in Asia, commodities are the best way. Because, no matter what happens, the commodities have to be better, Asia has three billion people and is now involved in the world economy. Besides, in commodities you do not have to worry about corporate governance, central banks, unions, politicians or anything.

With gold prices correcting, do you still advocate buying gold?
I am trying and want to buy some gold. However, whether this is the low in the gold, I have no idea, but if gold goes lower, I will add some more. Gold is something I do not plan to sell. Gold is something I will gift to my children.

How will alternative fuels play?
Many politicians around the world are advocating bio fuel now. It is going to happen whether it is good or bad. There is going to be much more demand for the bio fuel going forward. This is also a reason that I am optimistic about the outlook of agriculture.

Your views on the water potential in Asia?
India and China have huge water problems. Water could be the next big investment. And, the best way is to invest in water companies which clean it, transport or pump it. Find the water companies that solve the water problem and you could be the richest person in India.

Source:

“’The US dollar is in trouble’”
Jitendra Kumar Gupta
Business Standard (India), September 15, 2008

India’s CNBC-TV18 spoke to well-known commodities investor Jim Rogers this morning. Rogers, the author of Hot Commodities, correctly predicted the rally in hard assets that began in 1999. Here are some notable excerpts from the exchange:

CNBC: We have seen commodities decline in the last couple of months, do you think it’s a moment to buy or there is more decline left in the market?
ROGERS: It is better to buy when things are going down rather than when they are going up but I have no idea whether this is the best time. Normally September and October in investment markets are weak months so you are at the right time to start investing in commodities if you have it.

CNBC: What would you buy? Would you buy commodities or funds or into mining companies, what seems best to you?
ROGERS: It depends on your ability. If you know a lot about commodities, you can invest in commodities and that’s difficult in India. If you are a good stock picker then you are much better investing in commodity companies or commodity funds. If you know a good stock picker who runs a fund buy that fund, you will make more money.

CNBC: What are you betting on the non-agro or the agricultural commodities?
ROGERS: I bought agricultural commodities recently. They have gone down and everything has been going down for the last couple of months. I would rather buy agriculture than most things these days.

CNBC: You have never liked US dollar but we have seen a resurge come in to that? How long do you think this would stay?
ROGERS: We are having a rally in the dollar because everybody is bearish on it including me and that always leads to a rally. I don’t know how long it’s going to last but I plan to sell this rally sometime in the next month or a year. I don’t know how long this is going to go but I know that US dollar is a terribly flawed currency and it has got terrible problems down the road.

CNBC: Gold prices have come down from USD 1,034/oz to USD 730/oz, do you think there is more downside left here or would you buy at these levels?
ROGERS: I am going to try to buy little bit of gold today here in India, not a major position. If it continues to go down, I hope I am smart enough to buy more. Gold could go to USD 500/oz and could have a big correction. All markets do that, they have big corrections and they scare everybody but a 50% correction is normal. If it goes down 50%, I hope I am smart enough to buy a lot more.

CNBC: What would you buy as of now?
ROGERS: I recently bought airline stocks, agriculture, Renminbi, Swiss Francs, and Japanese Yen.

CNBC: Do you still believe we are into a bull commodity market and we might see more highs going on from here?
ROGERS: Over the next decade, we are going to see more highs. The world is in a recession now; you may see lower prices for some commodities for a while just as you may see a lot lower prices for a lot of stocks. Of the two classes, I would rather own commodities than stocks because when the economies revive, commodities are going to revive first and go up the most.

Source:

“Invest in commodities now: Jim Rogers”
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

—

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

Dr. Mark Mobius, the executive chairman of Templeton Asset Management who is known for his emerging markets expertise, is all over the financial newsscape these days. The following are a battery of links to all things Mobius:

Mobius Recommends S. African, Turkish Stocks, Palladium: Video
Bloomberg, September 4, 2008

Mobius Says Templeton ‘Sitting Tight’ on Thailand Stocks: Video
Bloomberg, September 4, 2008

“Templeton May Add Thai Stocks on Losses, Mobius Says (Update1)”
Susan Li, Chen Shiyin
Bloomberg, September 4, 2008

“Mobius picks South Africa as most attractive market”
Drazen Jorgic
Citywire (UK), September 3, 2008

“FUND VIEW-Templeton’s Mobius sees S.Africa growth”
Peter Apps
Reuters (Africa), September 2, 2008

“China and Russia Are Still Great Investments: Mobius”
CNBC, September 1, 2008

“INTERVIEW: Mobius says all to play for in Turkey”
David O’Byrne
Business New Europe (Germany), September 1, 2008

“UPDATE 1-Templeton’s Mobius likes Russia despite Georgia”
Dan Burns, Herbert Lash
Reuters, August 29, 2008

Well-known commodities investor Jim Rogers is undeterred by the recent selloff in hard assets. Bloomberg’s Rattaphol Onsanit wrote this morning:

Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, said a tumble in commodities from records represented a temporary reverse in a long-term rally.

“I don’t see that it’s the end of the bull market,” the chairman of Rogers Holdings, said in an interview in Bangkok before speaking at an investor conference later today. “Until either a lot of supply comes on stream or the economy collapses, the bull market will continue,” he said.

The co-founder of the legendary Quantum Fund added:

“I am contemplating whether it’s time to get involved in base metals again,” Rogers, 65, said today. “I haven’t bought any for awhile.”

Onsanit pointed out other areas Rogers felt may have potential. He wrote:

Rogers, who moved to Singapore after selling his New York townhouse last year, said he was still optimistic about agricultural commodities and China’s economy, favoring the tourism, education, infrastructure, and power generation sectors.

Beijing Opera

George Iype of India’s CommodityOnline.com shed some more light on Jim Rogers’ latest investment outlook. Iype wrote earlier today:

The high oil prices and the pull back in some commodity prices on recession fears have not dampened Rogers’ enthusiasm for resources investments. “I am very bullish on metals and precious metals. Crude oil price will continue to rise, because there is a major demand-supply mismatch. Those who blame speculators for high oil prices do not know how the Futures market and oil market operate. Rogers is also upbeat on agricultural commodities. “I am bullish on opportunities in the agricultural commodities market. I am investing there now. The secular bull market in commodities will continue to go on now for some years,” he adds.

Sources:

“Jim Rogers Says Commodities Will Rebound After Drop (Update1)”
Rattaphol Onsanit
Bloomberg, August 21, 2008

“Why Jim Rogers is bullish on commodities”
George Iype
CommodityOnline (India), August 21, 2008

According to the mining investment news site Mineweb, billionaire investor and philanthropist George Soros was significantly active in the mining sector last quarter. Mineweb’s Dorothy Kosich wrote earlier today:

Über investor George Soros stocked up on potash mining shares during the second quarter, increased his Freeport-McMoRan Copper & Gold holdings by more than 1,600%, invested in the world’s largest uranium miner, Cameco, and dumped his holdings in Apex Silver, CVRD and Southern Copper.

Documents filed with the SEC revealed that among the gold companies in which Soros Fund Management maintained its holdings during the second quarter were AngloGold Ashanti, Barrick, and Newmont.

Soros Fund increased its holdings in Potash Corp. of Saskatchewan Inc. by 2568%… The fund also enhanced its Freeport-McMoRan Copper & Gold holdings by 1608%…

Among the fund’s new purchases was Canadian uranium miner Cameco… as well as CONSOL Energy Inc., the largest U.S. producer of high-Btu bituminous coal… The fund also initiated holdings in Intrepid Potash, the largest U.S. potash producer…

The Soros Fund reduced to its holdings in IAMGOLD Corp. by 23.3%… Soros reduced to his holdings in Alpha Natural Resources Inc., a Central Appalachian coal producer, by 46.95%…

Meanwhile, the fund sold out its holdings in the world’s largest iron miner, Brazil’s Vale (previously CVRD), as well as its holdings in U.S. silver producer Apex Silver Mines, and also in Southern Copper Corp.

Source:

“Soros increases potash and FCX holdings, drops Apex Silver, CVRD, Southern Copper”
Dorothy Kosich
Mineweb, August 19, 2008

Money managers from around the world gathered in Chicago last week for the CFA Institute’s annual investment seminar. Yesterday, the Chicago Tribune’s Gail MarksJarvis talked about two of the speakers- Jeremy Grantham and Marc Faber. The personal finance columnist wrote:

“I am officially scared,” GMO investment manager Jeremy Grantham told professionals from as far away as Abu Dhabi and Malaysia. “In 2000, we had a technology bubble. But this is massive, a massive credit crisis and a bubble in global housing, global equity and global land.”

Grantham, whose clients have included Vice President Dick Cheney and 2004 presidential candidate John Kerry, warned that the world is working its way through the “first truly global bubble.”

The British money manager shared his investment outlook with seminar participants. MarksJarvis wrote:

When asked by a money manager what he would buy now, Grantham said, “long mattresses” — jesting about the stereotypical nervous behavior of hoarding cash. He seriously suggested: “Put money into something incredibly safe, like a high-quality hedge fund.”

Grantham said rather than buying stocks for the long run now, he would only “short” them, or bet that they will decline in price. He sees “nothing interesting in quality corporate bonds,” and he has been shorting oil. “Commodities had a good run, but that’s over,” he said.

Although downtrodden mortgage-related bonds might be a good deal now because some are selling for 59 cents on the dollar, he said he wonders if the price will seem compelling if home prices fall another 20 percent or 25 percent.

He confessed to the group that “I bought my first gold last week, and I hate gold. It doesn’t pay a dividend. I would only do it if I was desperate.”

MarksJarvis noted:

Generally, when bubbles burst, the asset prices stay down for lengthy periods. Grantham isn’t expecting the stock market to hit its low until 2010.

The Tribune columnist also talked about Marc Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report. She quoted the Swiss-born investor as saying:

The Fed has created a bubble in everything — stocks in emerging market, real estate everywhere in the world, commodities, art. The only asset class that is down is the U.S. dollar…

It is quite likely that the current synchronized global economic boom and the universal, all-encompassing asset bubble will lead to a colossal bust.

MarksJarvis also noted:

And with commodity prices so inflated, he expects an “increase in international tensions” over resources.

Source:

“Even the pros may be stuffing the mattresses”
Gail MarksJarvis
Chicago Tribune, July 29, 2008