Monday, August 13, 2012
MARC FABER on Current and Future Asset Bubbles
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
Dr. Marc Faber Tomorrow's Gold
Dr Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude. Between 1970 and 1978, Dr Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, which acts as an investment advisor and fund manager.
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