Tuesday, May 22, 2007

Marc Faber is Interviewed

on Bloomberg today (05.22.07). I highly recommend your listening. I made a few notes which may be cryptic, but I'll share them with you:

  • Bubble in all assets classes
  • Credit bubble in US
  • US stock market is rising largely due to a falling dollar (more later)
  • Though in a bubble, prices could increase more
  • If all bubbles burst, and he thinks that we are in the final stage, it will affect the world economy
    • He thinks the US will be hit more because it's wealth is based on asset appreciation rather than real industrial production (more later)
  • Asian currencies will appreciate with the rembi, and those currencies are undervalued in relative terms. He would not play that, though.
    • Distressed assets in Middle East stock market, down 50-70%--some value there
    • Distressed assets in Detroit real estate.
  • Yen is undervaled--it will strengthen when US stock market decreases
  • Euro v. USD--makes US assets relatively inexpensive (though not cheap)--I'm beginning to believe, though I did not believe it before, that this dynamic may continue to drive our markets higher.
  • Interest rates are below the "natural" (think real interest rates). Thinks the rate is ~10%
  • No real safe place as he feels all assets are correlated.
  • All CB's are willing to print money
  • Hard to know what the catalyst (to a market decline) might be. Cannot really know the "what" or "when" but rather that there generally is one.
  • Thinks that there is illiquidity in the housing market now.
  • He likes Vietname. Does not see many opportunities elsewhere.
  • One asset class that is 'cheap' is farmland. He said, "Perhaps your Bloomberg readers and portfolio managers should learn to drive a tractor." [I thought that was quite funny]. Should consider owning farmland in
    • Argentina
    • Brazil
    • S. Africa (though not as safe as Brazil)
    • N. Zealand
    • Australia (NZ and Aus due to proximity to China).
I'm sure that I left some stuff out. I hope that you will take time to listen.

2 comments:

Anonymous said...

Hi Leisa, I just listened to the interview. Your notes cover all of the key points.

I highly recommend Marc Faber's book "Tomorrow's Gold". i enjoyed reading it immensely. I think it is the best economic/investment book that I have ever read. Faber not only did a tremendous job in explaining the U.S. and the world's economies but also forecast where they are going. The writing is full of insights and humor. It is essential for investors, and anyone who likes to understand global affairs benearth the surface.

Take Care,

Alice

Anonymous said...

Thanks for the recommendation, Alice. I'll look for the book.