Saturday, January 31, 2009

Marc Faber's Outlook on 2009

Marc Faber's Interview to CNBC on January 19, 2008

The global financial environment:

Well, I think that the credit markets have improved somewhat. In general I think that the markets may rally somewhat more. Everybody expects the second half of 2009 to improve. I think there’s a very good chance that the second half of 2009 will be even worse than the first half of 2009.

If you talk about oversold markets, and major lows, I mean, commodities have been hit very, very hard. Exploration will come to a standstill. And not much new oil supplies will come on stream and not much new mining supplies will come on stream. So whenever the global economy recovers, and I hope it’s in our lifetime, then obviously commodities will again rise very substantially. And you can pick up now some quality names in the commodity sector that then should perform very well.

What Marc Faber is doing with his own money:

Well, I have to tell you. I think the markets became very oversold in November, and there can be a rebound. I'm still thinking that for the next couple of months the markets will stabilize and rebound somewhat. So I have some shares. I have some shares in Asia. I have some mining stocks, exploration companies, physical gold. And as far as the currency is concerned, I think the dollar is a disastrous currency, but the others are even worse. So, I have a basket of different currencies mostly euros and dollars. But I'm leaning more towards the view that the dollar could strengthen somewhat more.

Sunday, January 25, 2009

Marc Faber on Cash-in-Hand Rescue Package

As the Obama's cash-in-hand rescue package approaches, let's remember how Dr. Marc Faber concluded his monthly bulletin in June 2008:

The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer/Software it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part.

Bill Gross on Bond Investments and Inflation

The most important info I heard today on Bloomberg was the opinion of Bill Gross on bond investments. I invest in PIMCO Total Return Fund (PTTRX) managed by Bill Gross and follow Bill Gross' commentaries.

It's crucial to know when to decrease the bond investments because of creeping inflation. Bill Gross estimates that the US may start seeing the signs of inflation only in the end of 2010. The most important signs of inflation in his view are employment data and industrial capacity utilization.

Given the prospect of US government printing money to finance its projects, hearing that the inflation is not expected till the end of 2010 is reassuring.

Sunday, January 11, 2009

Away From The Mainstream

Let's step away from the mainstream equity market cheer leading. Robert Shiller is among the economists who had correctly analyzed our economy and predicted the burst of the 2000 market bubble and the housing bubble. His biographical sketch mentions that he writes a regular column "Finance in the 21st Century" for Project Syndicate, which publishes around the world, and "Economic View" for The New York Times. He is co-founder and chief economist of MacroMarkets LLC.

I am waiting to read his new book Animal Spirits: How Human Psychology Drives the Economy And Why It Matters for Global Capitalism