EB: With more monetary easing by central banks around the world –
where do you think valuation will be skewed? Which stock markets are
going to be most prone to ‘bubble-like’ characteristics?
MARC FABER : Given that given that zero interest rates are in the US in
nominal terms and if I take say a more realistic view of cost of living
increases. Last week, NY taxi prices went up 19%. If I consider that, I
think that US stocks may for the time-being actually rally but I have
doubts that they will rally above the highs at 1422 we saw in April of
this year on the S&P.
I think that it’s possible that the US may rally as the whole world
thinks that the US has natural gas and there will be a
re-industrialisation in America. The mood amongst international
investors is that the US is the least bad choice.
I’ve always said if you give me the choice to buy a 10 year treasury
at the yield of 1.5% or Johnson&Johnson, I’d rather buy
Johnson&Johnson with a ten-year view. But as I said, if I look at
all the options that I now have, I can see that European stocks are now
terribly depressed.
I still own Asian shares and again the reason I own them is we have
next to zero deposit rates and my portfolio of Asian shares has an
average yield of say 5-6%. If I look at my investments, I think that
they might go down 30% but I don’t think there will be massive dividend
cuts – some here and there but not across the entire portfolio.
I still keep a lot of cash because if the markets drop another 30% -
which I hope they will do – I will then invest in equities. -
in citywire
