Marc Faber : Investing in Emerging Economies

Marc Faber :"...In general, investors should one day have approximately 50% or more of their money in emerging economies. I have all my money in emerging economies for the money that they allocate to real estate and to equities. Of course I also have bonds in the developed world and also cash in on the developed world, but in general, I am very optimistic about the emerging economies. But that does not change the fact that over the last few months, in fact since April because I saw that April would be a high for the S&P at 1219, I have taken some money off the table because a correction is overdue. ..."

Marc Faber : the Fed is endangering emerging economies

Marc Faber :"...My principal criticism is that the Federal Reserve can drop dollar bills onto the United States from helicopters as Mr Bernanke says - not from helicopters but electronically they can print money. The criticism I have is that Fed can control the quantity of money quantity that it drops onto the United States. But they do not control where it will flow to and this money has flown through the American trade and current account deficit to emerging economies and this has boosted the growth rates in emerging economies and their currencies. So the benefit of expansionary monetary policies has not been felt in the United States, but in emerging economies and that is my main criticism.

Now what happens if so much money flows to emerging economies is that you get bubbles over time - currency bubbles, stock market bubbles, real estate bubbles. The question is then how do these emerging economies’ central banks react to that. The Brazilian Finance Minister has just said we are in the midst of a currency war, a foreign exchange war and the central banks of emerging economies have a choice to do nothing - then they have high domestic inflationary pressures with accompanying bubbles - or they tighten monetary policies and their currency becomes even stronger and you have a speculative bubble in the currency. So the Fed has put them actually in a very difficult position and I believe we are going to end up with bubbles in precious metals and to some extent in emerging economies’ real estate and equity markets and every bubble eventually bursts. It does not have to happen tomorrow. It could last another year, but the Fed is actually endangering emerging economies at the present time. ..."

Marc Faber : the Fed monetary policies lead to bubbles in emerging economies through capital flows.

Marc Faber : "...Yes I think the criticism arises because we have too much of a good thing, in other words the Fed's monetary policies now lead to some kind of bubbles in emerging economies through capital flows. Now this incoming liquidities they can be absorbed in 2 ways, either like the currency appreciate sharply or you have domestic very high asset inflation or combination of the two. The problem is, with all this, that once the speculators see that said the Thai Baht, or the Malaysian Ringitt appreciates and that asset prices in those countries go up, they pile in even more and then you have even larger speculative bubbles,and excess liquidity and dropping dollar bills on the United States from helicopters like Ben Bernanke suggested, the problem with that is he doesn’t know where the money will flow and in this case, excess liquidity flows, into emerging economies and into precious metals and new bubbles are building up, that at some point in future, will burst and then you have another problem on your hands the way you had the problem of the Nasdaq bubble burst and the housing bubble burst...." in moneycontrol.com

Marc Faber : I am not very keen to buy emerging economies at the present time

Marc Faber :....."...Basically I am not very keen to buy emerging economies at the present time and I would rather lighten up positions. As far as the equity allocation between equities, bonds, cash and precious metals, commodities and real estate is concerned, that depends on every individual. It is like if you go to the doctor and you tell him ‘oh, what kind of pills shall I take?’ That depends very much on the individual, on the status of his health, on his ailments and so you cannot generalise.

But for me, I like Asian real estate, I like equities in Asia, I still like precious metals and I like in particular physical precious metals. I also own gold shares because I am the chairman of several resource related companies, mining companies in the exploration domain and so I own them. But my preference is for physical gold and silver and then I own real estate and I have some bonds not because I particularly like bonds, but I look at corporate bonds as kind of an equity with a relatively high dividend. " in an interview with the economictimes.indiatimes.com dated 28 Sep, 2010

Marc Faber : when emerging economies go up, commodities also go up

Marc Faber :.... In general, when emerging economies go up, commodities also go up because the two are very closely related in the sense that most resources allocated in emerging economies have a very close correlation. Now, when commodity prices go up strongly in a country like India, it benefits some parts of the economy, some segments of the population. For example, if agricultural prices go up, then the rural sector does well. In India, the urbanization rate is just 30%. So if rice prices, sugar prices, cotton price and so forth go up, the rural sector benefits whereby the urban center is frequently squeezed by higher food prices.

So it’s a mixed picture. But in general I would say - if I look at rural areas in Asia , in Indonesia, Malaysia, Thailand, the Philippines and also India - the rural areas are doing very well. So it’s a plus for their economies because by and large the urbanisation rate in the case of India is still relatively low. ...
in economictimes.indiatimes.com

Marc Faber : The weight of the global economy is shifting to Emerging Economies.

The Global Economy: Gloom Boom or Doom? The Daily Reckoning's Interview with Dr. Marc Faber

The Daily Reckoning's Eric Fry sat down with the Gloom Boom and Doom Report's Dr. Marc Faber to get his opinion on where the global economy is headed



Marc Faber: Well,you know the world is in transition and you have some trends that are favorable and other trends that are no favorable. So I think it’s not a question to be ultra-bearish or ultra-bullish but to try to identify where there are opportunities. And I believe, in general, we live through very interesting times in the sense that the weight of the global economy is shifting to emerging economies....And we’ll have volatility in emerging economies, but in general I think that as a percent of world’s GDP, you will find in 10 20 years time countries like India, China, Vietnam, Latin America, Africa, the Middle East, Russia, Central Asia will have a much larger weight and also a much larger say in the global economic affairs and political affairs. And that will lead to a lot of tension and volatilities in asset markets....
Marc Faber : ...... if you really think through the deflation scenario then it would mean that the economy in the western world, notably in the US, is very weak.
So what happens if the economy is very weak under the Obama administration, the fiscal deficit goes up not down. The government tanks as a percent of economy expands. Monetary policies will have another huge easy move, or another extraordinary measure increasing the effects balance sheet. These are all factors that then lead eventually to more inflation.Even if you have an environment where GDP per capita in real terms, inflation adjustment goes down. The government will of course lie about it. They will make it look good with all statistical adjustments they can use. The rate will go down as it has for the last ten years, but asset markets can go up very strongly....etc....
via www.dailyreckoning.com

Marc Faber : Positive about economic growth in Emerging Economies

Watch the Interview Here >>>>

Marc Faber :"I am still positive about economic growth in the emerging world. But what disturbs me at the present time is that in late August, sentiment was very negative worldwide and people said that Dow will drop to 1000 and so forth and so on. Suddenly now, the consensus is that you have to be in equities, you have to be in gold, you have to be in assets because central banks around the world will print money. That is correct, they will print money. But sentiment has become so universally bullish that about all assets, including especially emerging economies - in US dollar terms - are up. The Indian market this year is already up 19%, Malaysia 28%, the Philippines, Indonesia and Thailand each over 40%.

We already have big moves and I see all the brokers upgrading the earnings estimates and so forth. So I become a little bit apprehensive about this universal bullishness. I would rather think that after a strong month of September - when everybody was expecting September to be a horrible month - October and November may be bad months. In the past, October has frequently been a disastrous month like we had the October 1987 crash, we had the late September-early October 1929 crisis. In 1976 and 1978, we had very bad months in October and November. So who knows, out of this present bullishness, we could have some kind of a sharp correction developing. ".....etc...

Marc Faber on The Emerging Economies

Marc Faber view on emerging economy

Marc Faber : The emerging markets with roughly 80% of world population is a powerful block it is larger than the developed countries , the oil consumption of the emerging markets just exceeded that of the developed world including japan , in the car sales they exceed the car sales in the industrialized world including japan , so as an economic block they are very very big and very powerful , and the days when western countries could look down on emerging economies and think that they are poor and stupid guys , is over says Marc Faber....

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, MARC FABER LIMITED which acts as an investment advisor and fund manager.
Dr Faber publishes a widely read monthly investment newsletter "The Gloom Boom & Doom Report" report which highlights unusual investment opportunities, and is the author of several books including “ TOMORROW'S GOLD – Asia's Age of Discovery” which was first published in 2002 and highlights future investment opportunities around the world. “ TOMORROW'S GOLD ” was for several weeks on Amazon's best seller list and is being translated into Japanese, Chinese, Korean, Thai and German. Dr. Faber is also a regular contributor to several leading financial publications around the world.
Dr. Marc Faber also known as Dr Doom is an investment adviser, investment analyst and fund manager author and publisher of the Gloom Boom & Doom Report ,and the author of "Tomorrows Gold" . Dr Faber is known for his contrarian investment approach. Dr Marc Faber is associated with a variety of funds and is a member of the Board of Directors of numerous companies.
In 1987 he warned his clients to cash out before Black Monday on Wall Street. He made them handsome profits by forecasting the burst in the Japanese Bubble in 1990. He correctly predicted the collapse in US gaming stocks in 1993; and he foresaw the Asia-Pacific financial crisis of 1997/98 and the resulting global volatility. Dr Doom motto is "Follow the course opposite to custom and you will almost be right"
Mr. Faber is also the author of several books, including Tomorrow’s Gold – Asia’s Age of Discovery, and is a director of Ivanhoe Mines Ltd. , a mining firm focused on the Asia Pacific region. He is also an adviser to a number of private investment funds.