Marc Faber: Take Your Money Out Of Stocks Now

[LaoPo]

Marc Faber: China Bubble Will Pop and U.S. Is Doomed

Mon, 18 Jan 2010 08:55 AM

By: Ellen Chang

The United States is “doomed” because it faces a large debt crisis, says Marc Faber*, the editor of The Gloom Boom & Doom Report.

He believes that the consensus is wrong and a correction could occur sooner, partly due to complacency.

Huge rising debt and interest will affect the United States in the next five to 10 years.

Investors should take their money out of stocks since the upside is “limited,” he told Yahoo Tech Ticker.

Investors who are affecting the market right now could "pull the trigger relatively quickly,” he said.

While bonds could rebound in 2010, investors need to be wary of Treasuries down the road because they will lose value.

Investment opportunities remain in Asia because they will demonstrate “favorable growth” in the future, he said.

India and Japan still have opportunities, he said.

Gold remains “attractive” for a longer-term perspective, Faber said.

He is also a fan of buying wheat.

Investors should stay away from wheat exchange traded funds, or ETFs, since they are expensive and should instead buy stock in companies with farm land or potash companies, he said.

Faber said oil prices will increase since demand from emerging countries will also rise, he said.

China could also see an end to their bubble from too much debt, but it will probably not occur in the near term, Faber said.

“It is very difficult to pinpoint a day when China will implode, I don’t think it will happen right way,” he said.

U.S. consumer spending is being affected by slow job growth, Bloomberg reports.

“We are going to have positive but moderate growth. We are gradually emerging from recession, said Zach Pandl, an economist at Nomura Securities International.

Moneynews: http://moneynews.com/StreetTalk/marc-faber...01/18/id/346642

* Swiss born Dr. Marc Faber lives in Chiang Mai and is married to a Thai Lady.

His "office" in Chiang Mai: http://www.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=5200

http://en.wikipedia.org/wiki/Marc_Faber#Marc_Faber_Ltd.

LaoPo

[Jingthing]

I can't take a guy who calls his report Gloom Boom & Doom terribly seriously.

[bankruatsteve]

According to those folks, the world's going to end this year anyway. So, what diff does it make where you put your money? For me, most of it will be in the US stock market. Cheers.

[Phuket Stan]

Marc Faber has made some really good calls in the past...he was right on the button about the baht in 1997...called the tech wreck in 2000 and was imploring people early 2007 to get out of the US and European markets ...I enjoy and always pay attention when he is on CNBC Asia

[LaoPo]

According to those folks, the world's going to end this year anyway. So, what diff does it make where you put your money? For me, most of it will be in the US stock market. Cheers.

Let's talk again, 19th July 2010; six months from now, OK?

LaoPo

[nakachalet]

Dr. Marc Faber:

China could also see an end to their bubble from too much debt,....

what does too much debt in the case of china mean?

one of our sister companies currently has a 5 yrs long term debt of 5mil usd.... it that too much debt?

it sure seems to be a huge burden of debt for some, for sure....

but for a company whose fixed assets exceed 50mil usd.... the huge debt of 5mil represents only a 10% medium term liability....

just curious about china's too much debt stuff.... LOL

[LaoPo]

Dr. Marc Faber:

China could also see an end to their bubble from too much debt,....

what does too much debt in the case of china mean?

one of our sister companies currently has a 5 yrs long term debt of 5mil usd.... it that too much debt?

it sure seems to be a huge burden of debt for some, for sure....

but for a company whose fixed assets exceed 50mil usd.... the huge debt of 5mil represents only a 10% medium term liability....

just curious about china's too much debt stuff.... LOL

That's a sentence which puzzled me also.

China's reserves grew to a staggering $ 2.399 Trillion so not much debt there.

LaoPo

[soap]

Marc Faber has made some really good calls in the past...he was right on the button about the baht in 1997...called the tech wreck in 2000 and was imploring people early 2007 to get out of the US and European markets ...I enjoy and always pay attention when he is on CNBC Asia

I agree 100% with this post

Marc Faber also PREACHED to buy Gold when it was about 350 usd a ounce

[Carmine6]

Dr. Marc Faber:

China could also see an end to their bubble from too much debt,....

what does too much debt in the case of china mean?

one of our sister companies currently has a 5 yrs long term debt of 5mil usd.... it that too much debt?

it sure seems to be a huge burden of debt for some, for sure....

but for a company whose fixed assets exceed 50mil usd.... the huge debt of 5mil represents only a 10% medium term liability....

just curious about china's too much debt stuff.... LOL

That's a sentence which puzzled me also.

China's reserves grew to a staggering $ 2.399 Trillion so not much debt there.

LaoPo

I think people have been referring to the use of debt to invest in houses and businesses in China The government surplus doesn't prevent individuals from overpaying or levering too much. I don't have an opinion, but that's my understanding of what some besides Marc Faber have been saying.

Last March, Marc Faber forecast the US market turning just a few days before it happened. He was on CNBC and said something like we'll see the bottom of the market in the next few days or by Thursday. Something like that. I'd never seen him make a timing call like that so it caught my attention.

I'm pretty sure he said it would be a generational low, which is almost 50% south of here, so could be painful even if we never got that low again. But he might also have said low for the year. Low for the year was definitely right. Generational low, I hope is right.

His long term view on Treasuries is almost guaranteed to be right, barring miracles. The 2009 US Government deficit was more than the prior 5 years combined (2004 through 2008, inclusive). 2010 is going to be lower at only 4 years worth (2005 through 2008 inclusive), but not for lack of trying as US Government spending will still be 20% higher than 2008, increasing thereafter. The rough numbers are about $3.7 trillion in spending and $2.5 trillion in tax receipts, maybe $2.8 if you believe tax rate increases increase tax receipts. With $1 trillion deficits and the US GDP around $14 to $15 trillion, how long will buyers keep showing up for 4.6% 30 year T Bonds?

[LaoPo]

I think people have been referring to the use of debt to invest in houses and businesses in China The government surplus doesn't prevent individuals from overpaying or levering too much. I don't have an opinion, but that's my understanding of what some besides Marc Faber have been saying.

I don't think so since the government has been tightening the rules for buying a first home in the past few months and even more strict in the past few weeks.

Mortgages always had to have a down payment already of at least, between 15-20% if not higher depending on the income.

People, willing to buy a second home have to make a down payment of at least 40% which caused a sharp fall in sales.

There are also very strict measures preventing buying-for-profit sales.

The latter rules didn't stop previous speculators of course, meaning there are real estate bubbles of course, depending which cities and provinces; some more than others.

Another -important- step, last week, by the government was that the Central Bank raised the deposit reserve requirement ratio for Banks by 0.5 percentage points, making it more difficult to lend out money for investments and mortgages.

They're also cracking down on present speculators in the realty sector now.

All in all they're on top of it, trying to prevent overheating.

LaoPo

Edited January 20, 2010 by LaoPo

[H2oDunc]

There's also this guy.

http://moneynews.com/StreetTalk/davidson-o...01/18/id/346656

I think something dodgy is going on as well. Just where is the business that has generated these vast profits the banks have suddenly made to justify paying out these huge bonuses ?

[LaoPo]

There's also this guy.

http://moneynews.com/StreetTalk/davidson-o...01/18/id/346656

I think something dodgy is going on as well. Just where is the business that has generated these vast profits the banks have suddenly made to justify paying out these huge bonuses ?

From your link:

"Author, investor and longtime Wall Street observer James Dale Davidson says our government is lying to us: There is no genuine economic recovery happening."

Well, to the defense of the White House, name me one government who has NOT been lying to it's citizens ?

Meaning: IF at any given moment in time, a(ny) government (or Central Bank) would tell the 100% truth, panic would break out and all markets would completely crash.

Sometimes, NOT telling the truth is better.

But, in this case (and I saw this article about Davidson earlier) I have to give him credit on many points but it's not fair to blame the Obama administration for the present problems; the causes are deeper than the past year alone, much deeper.

LaoPo

Edited January 20, 2010 by LaoPo

[flying]

There's also this guy.

http://moneynews.com/StreetTalk/davidson-o...01/18/id/346656

I think something dodgy is going on as well. Just where is the business that has generated these vast profits the banks have suddenly made to justify paying out these huge bonuses ?

Perhaps they went back to the casino/wall street....Or perhaps they were just looking good while holding all the free/bail out money?

http://www.bloomberg.com/apps/news?pid=206...X2PVA&pos=1

[LaoPo]

I think people have been referring to the use of debt to invest in houses and businesses in China The government surplus doesn't prevent individuals from overpaying or levering too much. I don't have an opinion, but that's my understanding of what some besides Marc Faber have been saying.

I don't think so since the government has been tightening the rules for buying a first home in the past few months and even more strict in the past few weeks.

Mortgages always had to have a down payment already of at least, between 15-20% if not higher depending on the income.

People, willing to buy a second home have to make a down payment of at least 40% which caused a sharp fall in sales.

There are also very strict measures preventing buying-for-profit sales.

The latter rules didn't stop previous speculators of course, meaning there are real estate bubbles of course, depending which cities and provinces; some more than others.

Another -important- step, last week, by the government was that the Central Bank raised the deposit reserve requirement ratio for Banks by 0.5 percentage points, making it more difficult to lend out money for investments and mortgages.

They're also cracking down on present speculators in the realty sector now.

All in all they're on top of it, trying to prevent overheating.

editing:

China Banks Told to Halt Loans in Rest of Month, Securities Says

By Bloomberg News

Jan. 20 (Bloomberg) -- Major Chinese commercial banks received verbal orders from authorities to halt new lending in the remainder of January, the China Securities Journal reported today, citing unidentified people in Beijing and Shanghai.

New bank lending in January may have already exceeded 1 trillion yuan ($146 billion) to date, the Beijing-based newspaper reported, citing unidentified banking industry analysts.

An unidentified Bank of China Ltd. official said the lender’s branch managers told sub-branches on Jan. 17 that they should in principle halt new lending, the newspaper reported.

http://www.bloomberg.com/apps/news?pid=206...id=as5McNhYelxM

LaoPo

[PeaceBlondie]

Shucks. I thought that was Marc Farber at the burger bar here in Chiang Mai this week, but it was some fat farang. My savings are currently in Euro equities.

[Xonax]

It may sound like a joke, but I always listen when Marc Farber speaks!

[crusader79]

I can't take a guy who calls his report Gloom Boom & Doom terribly seriously.

Faber's performance in 2009 (Barron's Roundtable, Jan 2009):

HIGH-QUALITY ASIAN STOCKS

Singapore

Fraser & Neave FNN.Singapore S$3.13 S$4.20 +34.20%

United Overseas Bank UOB.Singapore 13.38 19.7 +47.2

OCBC OCBC.Singapore 5.18 9.1 +75.7

Hong Kong

Swire Pacific 19.Hong Kong HKD 55.75 HKD 94 +68.6%

Sun Hung Kai Prop 16.Hong Kong 67.3 116.3 +72.8

Thailand

Bangkok Bank BBL.Thailand 69 baht 116 baht +68.1%

Glow Energy GLOW.Thailand 22.5 33 +46.7

India

Icici Bank IBN $20.61 $37.71 +83%

Infosys Technologies INFY 25.15 55.27 +119.8

RESOURCE STOCKS

Alcoa AA 12.11 16.12 +33.1%

Rio Tinto RTP 99.4 215.39 +116.7

BHP Billiton BHP 45.51 76.58 +68.3

Vale* VALE 13.19 29.03 +120.1

Freeport-McMoRan Copper & Gold FCX 26.74 80.29 +200.3

Xstrata XTA.UK 423.15 1121 pence +164.9

EMERGING MARKET ETFs

Morgan Stanley India Inv. IIF $13.16 $22.61 +71.80%

iShares MSCI Brazil Index EWZ 36.7 74.61 +103.3

Templeton Russia & East European TRF 10.15 18.2 +79.3

Greater China GCH 8.84 13.92 +57.5

iShares FTSE/Xinhua China 25 Index FXI 31.11 42.26 +35.8

Turkish Investment TKF 6.36 13.37 +110.2

BONDS

ProShares UltraShort 20+ Yr Treas ETF TBT 39 49.88 +27.9%

Nicholas-Applegate Conv. & Income NCV 5.05 9.27 +83.6

GOLD MINING

Gabriel Resources GBU.Canada C$1.64 C$4.37 +166.5%

TECHNOLOGY

Intel INTC $15.20 $20.40 +34.2%

Cisco Systems CSCO 16.96 23.94 +41.2

Yahoo! YHOO 12.85 16.78 +30.6

Oracle ORCL 18.41 24.53 +33.2

Microsoft MSFT 20.33 30.48 +49.9

[burgerqueen]

Approx. composition of my portfolio:

BONDS

Corporate Bonds 26%

Government Bonds 9%

Inflation linked Bonds 6%

Emerging local currency debt Bonds 5%

EQUITIES:

US Stocks 5%

Asian Stocks 4%

European Stocks 15%

Worldwide stocks contrarian approach 15% (mostly European)

Hedge against Euro depreciation 2%

[LaoPo]

I can't take a guy who calls his report Gloom Boom & Doom terribly seriously.

Faber's performance in 2009 (Barron's Roundtable, Jan 2009):

That's quite a performance...

Can you provide a link please, since the performance is for 2009 but the Barron's Round table was in Jan. 2009?

Here's a YouTube video interview with Dr. Marc Faber's Predictions for 2010 on January 13th, 2010 just one week ago :

http://www.youtube.com/watch?v=A8Bp6sP1a-g

"Dr. Faber's changed his mind after participating in this week's Barron's round-table discussion. "Everybody was looking for further gains in stocks," he tells Henry in this clip. That opinion is also reflected by Bloombergs latest investor survey, which registered its highest level of bullish sentiment since the survey began in 2007."

LaoPo

[Time Traveller]

I think people have been referring to the use of debt to invest in houses and businesses in China The government surplus doesn't prevent individuals from overpaying or levering too much. I don't have an opinion, but that's my understanding of what some besides Marc Faber have been saying.

I don't think so since the government has been tightening the rules for buying a first home in the past few months and even more strict in the past few weeks.

Mortgages always had to have a down payment already of at least, between 15-20% if not higher depending on the income.

They're also cracking down on present speculators in the realty sector now.

All in all they're on top of it, trying to prevent overheating.

LaoPo

Whatever way you want to look at it, it is still using leverage (borrowed) money to buy into property. The potential for a correction is still there.

And it is a little complacent to think that "they're" on top of it. That just the type of congratulatory praise that was dished out to the world's greatest central banker Al Greenspan, before runaway bank mortgage lending brought the stack of cards down.

Edited January 20, 2010 by Time Traveller

[Time Traveller]

I can't take a guy who calls his report Gloom Boom & Doom terribly seriously.

Why is that? Do you think it should be called "Everything's rosy because we're all Millionaires in the magical fairy land"?

[crusader79]

I can't take a guy who calls his report Gloom Boom & Doom terribly seriously.

Faber's performance in 2009 (Barron's Roundtable, Jan 2009):

That's quite a performance...

Can you provide a link please, since the performance is for 2009 but the Barron's Round table was in Jan. 2009?

Here's a YouTube video interview with Dr. Marc Faber's Predictions for 2010 on January 13th, 2010 just one week ago :

http://www.youtube.com/watch?v=A8Bp6sP1a-g

"Dr. Faber's changed his mind after participating in this week's Barron's round-table discussion. "Everybody was looking for further gains in stocks," he tells Henry in this clip. That opinion is also reflected by Bloombergs latest investor survey, which registered its highest level of bullish sentiment since the survey began in 2007."

LaoPo

Here's the article on the Jan 2010 Roundtable, click the link '2009 Roundtable Report Card' to see those results (the picks he made at the Jan 2009 Roundtable):

http://online.barrons.com/article/SB126359...nel_article%3D1

[Time Traveller]

There's also this guy.

http://moneynews.com/StreetTalk/davidson-o...01/18/id/346656

I think something dodgy is going on as well. Just where is the business that has generated these vast profits the banks have suddenly made to justify paying out these huge bonuses ?

From your link:

"Author, investor and longtime Wall Street observer James Dale Davidson says our government is lying to us: There is no genuine economic recovery happening."

Well, to the defense of the White House, name me one government who has NOT been lying to it's citizens ?

Meaning: IF at any given moment in time, a(ny) government (or Central Bank) would tell the 100% truth, panic would break out and all markets would completely crash.

Sometimes, NOT telling the truth is better.

But, in this case (and I saw this article about Davidson earlier) I have to give him credit on many points but it's not fair to blame the Obama administration for the present problems; the causes are deeper than the past year alone, much deeper.

LaoPo

So your reasoning is that since every other government is lying, then this means that the White House is telling the truth?

The difference with the "truth" being revealed to Americans (and probably UK also) is that Americans are about to learn that their future will be a lot less prosperous than it is now or at any time in the last 30 years. For the developing world (or non indebted world) the future is looking quite good.

[chiangmaibruce]

And since there's considerable mention of Marc Faber in this thread ... just on a personal note he's quite a gracious fellow. Although extremely busy, he kindly consented to allow me to interview him at his CNX office during the course of writing my book. Quite a place, as you can see from the photos in the linked web site. I thought I might be lucky to get 20 mins, but we ended up speaking for about 1.5 hours.

[Carmine6]

I think people have been referring to the use of debt to invest in houses and businesses in China The government surplus doesn't prevent individuals from overpaying or levering too much. I don't have an opinion, but that's my understanding of what some besides Marc Faber have been saying.

I don't think so since the government has been tightening the rules for buying a first home in the past few months and even more strict in the past few weeks.

Mortgages always had to have a down payment already of at least, between 15-20% if not higher depending on the income.

People, willing to buy a second home have to make a down payment of at least 40% which caused a sharp fall in sales.

There are also very strict measures preventing buying-for-profit sales.

The latter rules didn't stop previous speculators of course, meaning there are real estate bubbles of course, depending which cities and provinces; some more than others.

Another -important- step, last week, by the government was that the Central Bank raised the deposit reserve requirement ratio for Banks by 0.5 percentage points, making it more difficult to lend out money for investments and mortgages.

They're also cracking down on present speculators in the realty sector now.

All in all they're on top of it, trying to prevent overheating.

editing:

China Banks Told to Halt Loans in Rest of Month, Securities Says

By Bloomberg News

Jan. 20 (Bloomberg) -- Major Chinese commercial banks received verbal orders from authorities to halt new lending in the remainder of January, the China Securities Journal reported today, citing unidentified people in Beijing and Shanghai.

New bank lending in January may have already exceeded 1 trillion yuan ($146 billion) to date, the Beijing-based newspaper reported, citing unidentified banking industry analysts.

An unidentified Bank of China Ltd. official said the lender’s branch managers told sub-branches on Jan. 17 that they should in principle halt new lending, the newspaper reported.

http://www.bloomberg.com/apps/news?pid=206...id=as5McNhYelxM

LaoPo

That's the thing. They're not trying to slow things down because someone just felt like it, they're worried about something.

What else is Faber talking about if not the area the Chinese are trying to trip up? Unless someone can drive by his house and ask, we'll just have to speculate.

[Alwaysright]

I can't take a guy who calls his report Gloom Boom & Doom terribly seriously.

He should get a haircut

[Trickcyclist]

you'll make money on individual stocks if you are fast on your feet and know what you are buying..

opportunities in battery development at present .. lithium ion and related and selected electric automotive..

he is probably right about passive investment in mainstream stocks.

Look around for non correlated investments that have an element of capital protection, those that avoid the 4 horsemen of the apocalypse: mainstream stocks, bonds and property

you don't have to be a genius to predict downturns across the board, its pin pointing the precise time is the trick.

He could be wrong about China, other gurus are expecting China stocks to go through the roof and have said that China is at the stage that the US was at in the 1890.s.

The problem is will America drag every other economy down if/when the current repair package aborts or, will China, India and the rest of the East drag the West out its slumber?

It seems that its business as usual for the big US institutions and the fat cats running them who created the recent economic problems and Obama seems to have let them off the hook,

Who IS running the show over there?

[hhgz]

"I agree 100% with this post. Marc Faber also PREACHED to buy Gold when it was about 350 usd a ounce"

Then you must have made millions of dollars following Marc's sage advice.

[mnbcm]

What's he say about the Baht this year? I'm about to transfer a large sum of money into Thailand and would love to see the exchange rate better.

[LaoPo]

Here's the article on the Jan 2010 Roundtable, click the link '2009 Roundtable Report Card' to see those results (the picks he made at the Jan 2009 Roundtable):

http://online.barrons.com/article/SB126359...nel_article%3D1

Maybe I'm doing something wrong but I can't find it.

LaoPo