Seeking Alpha Article: It Will End in Disaster

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Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

China and Emerging Markets

China and other emerging markets offer value over the next two years as growth picks up, investor Marc Faber said.

Investors should buy stocks and other assets in China after the market falls to its 2008 low to profit from an expected recovery, Faber said in an interview with Bloomberg Television.

“Rapidly growing countries have setbacks from time to time,” Faber, the publisher of the Gloom, Boom & Doom report, said in Hong Kong. “I think we’re going to test the lows again, but over the next two years, it’s probably a good time to invest.”

This Stock Market Rally May Have More Legs

I think this stock market rally may have more legs, because if you print money, it liquefies the system for a while, and asset prices move up accordingly.

I think what the government is doing and its economic dream team of Ben Bernanke, Tim Geithner, and Larry Summers will be negative long term. It will all end in disaster, that I'm sure. But, in meantime we can have big moves in market.

It Will End in Disaster

I think what the government is doing and its economic "dream team" under Mr. Bernanke and Mr. Geithner and Mr. Summers are going to be, from a longer term point of view, rather negative.

But, you understand, we can all sit here and say it will all end in disaster. That I'm sure. But, in the meantime, we can have big moves in markets.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Markets Will be Extremely Volatile

Investors need to get used to the fact that when a market is manipulated by governments it becomes extremely volatile. Not just for equities but for everything. For the currencies, bonds and also for commodities.

We had some very strong rebounds in commodities that may also have further legs to go.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Rally may Continue, S&P can Reach 880

I think the markets became extremely oversold on March 6 when the S&P touched 666. That move was probably a false breakout on the downside. Because he have had reach 741 in the S&P 500 on November 21 and on March 6 most actually did not make new lows and the sentiment was extremely negative.

In my opinion the market wanted to go up anyway and we had a strong rally. We are up 23% from the lows. I think this rally may have some more legs for the simple reason that if you print money, let`s say we all add one zero to our bank accounts, asset prices will move up accordingly.

We can go to around 880 on the S&P.

Latest Video: Bloomberg Interview, March 24

"The US stock rally may have more legs"

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Bloomberg TV Interview, March 24

Marc Faber latest video interview to Bloomberg TV. Marc says that the S&P rally still has some legs. The S&P may rally further to 880.

VIDEO INTERVIEW LINK

00:00 Stock rally "may have some more legs."
01:26 Potential for S&P 500 at 880; volatility
02:21 Treasuries; U.S. response to crisis
04:10 Treasury's bank-rescue efforts

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Geithner Plan is Good In the Short Term

I think he's doing the right thing from a very short term perpective. If you have cracks in your walls and just put paint on it, it will hide them and then you sell your house. But it won't solve the problems of the cracks - it's the next owner and these are the children of the current taxpayer who will pay for it.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

It Will End in Disaster But in the Meantime We can Have Big Moves in the Markets

I think what the government is doing and its economic "dream team" under Mr. Bernanke and Mr. Geithner and Mr. Summers are going to be, from a longer term point of view, rather negative.

But, you understand, we can all sit here and say it will all end in disaster. That I'm sure. But, in the meantime, we can have big moves in markets.

Is Gold Expensive?

My stance towards gold is this. You should buy every month a little bit and become your own central bank because you can't trust central banks anymore to act responsibly and maintain the function of paper money as a store for value. So, you want your own reserve.

Can gold go down and revisit 700 dollars per ounce? Possible. We went down following March 2008 peak from over 1000 dollars per ounce to less than 700 dollars per ounce, and now we bounce back and will have a lot of volatility. Gold is relatively expensive compared to industrial commodities.

Asian Stock Markets

China has an overcapacity crisis, but rapidly growing economies have recessions from time to time. Long-term, I would use weakness in Chinese equities to buy.

I think we’ll test the lows again, but over the next two years, it’s probably time to buy again.

Japan is cheap, it’s at the level of 1981, Taiwan is at the level of 1987, South Korea is also at the level of 1987.

In some of these markets, dividend yields are three times bond yields, while that situation won’t last as companies cut dividends at least 50 percent, at least you get paid to wait.

If you start buying equities today, over the next 10 years you will make some money.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

We May Rally But Then...

I think we may still have a rally (in the S&P) until about the end of April and probably then a total collapse in the second half of the year sometimes, when it becomes clear that the economy is a total disaster

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

This Recession Might Be Far Worse than 1930`s

Economic conditions may turn out to be far worse than in previous recessions, including the Great Depression at the beginning of the 1930s. Everybody seems to think that, thanks to the government's monetary and fiscal interventions, this recession will come nowhere near the 1930s slump. However, I think it might be far worse – and precisely because of the interventions.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Investors Should Buy Stocks and Other Assets in China

Investors should buy stocks and other assets in China after the market falls to its 2008 low to profit from an expected recovery.

Rapidly growing countries have setbacks from time to time. I think we’re going to test the lows again, but over the next two years, it’s probably a good time to invest.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Gold Outlook

I’m not giving up on gold. I think we are in the early stages of a longer term upward move in gold simply because wherever you look in the world central banks will print money.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Video Interview: Commodities, Alcoa and Gold

Marc Faber on Commodities, Alcoa and Gold. He mentions Newmont Mining and Freeport McMoran in this video.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Commodity Prices and Rio Tinto

Rio Tinto has a large debt load but it has some very valuable assets and is a quite well run company.

Obviously nickel prices have collapsed, all these companies whether its Freeport McMoran, Rio Tinto, BHP or Xstrata in Switzerland, they have totally collapsed.

I am quite interested in looking at these companies. I bought some already. Here and there one company will fail and other will be sucessful. All I can tell you is whenever the global economy recovers, and who knows, this year, in 3, 5, or 10 years like I think, there will be a lot of pressure in commodity prices, inflation will accelarate and maybe to have a big debt load will be an advantage because as they print money the debt load will essentially diminish through inflation.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

There will be a lot of Price Pressure on the Upside for Commodities

Because of the financial crisis and because of the collapse in commodity prices a lot of exploration companies in the mining space, and also oil and gas exploration companies don`t have the money carry out explorationand therefore additional supply will be very limited.

So when the global economy recovers there will be a lot of price pressure on the upside for commodities.

Russia and Oil Companies

I think oil stocks are not terribly expensive and I think the russian market having declined in US dollars terms nearly 80%, may start to rebound. Maybe it will retest the lows again but I think it is quite good to make some investments in Russia and also in Central Asia. That would be something I would look at.

Commodities and Russia

Marc Faber on CNBC, March 17, 2009

"When the economy recovers there will be a lot of price pressures on commodities"

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

I think the US Government Bond Market is a disaster waiting to happen

Other central banks have done it already around the world but basically what it demands to is money printing and in fact I don`t think it will help the bond market at all in the long run.

Maybe when they start doing it the bond market may rebound a little bit but don`t forget the 30 Year Treasury has already dropped by 20% since December 21, when the yield on the 30 year touched 2.51%. Now we are at 3.77%. In other words yields have gone up substancially.

I think the US Government Bond Market is a disaster waiting to happen for the simple reason that the requirements of the government to coverits fiscal deficits will be very, very high.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Latest CNBC Video Interview

Latest Marc Faber video interview on CNBC, March 17 2009.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Gold is at a Record High versus CRB Index

The problem with gold is that gold has performed so well in the sense that it went up slightly where all the other assets tumbled. So gold, relative to the CRB index which is composed of inddustrial commodities is now at a record high. I would rather look at industrial commodities.

Recommended Books

Top six investment books recommended by Dr. Marc Faber,

The Economics of Inflation, by Constantino Bresciani Turroni, Bocconi 1931 (says Faber: "This book explains the impact of hyperinflation on real estate prices, wages, stock prices, etc and why hyperinflation does create life-time buying opportunities. This is the best book ever written about the mechanics of inflation and the problems and opportunities in hyperinflationary times.")

Works of Jules Vernes, by Jules Vernes (says Faber: "Jules Vernes did not just extrapolate past trends into the future, but made bold predictions, considered at the time to be fantasies of a lunatic. Yet, all his predictions were realized and, therefore, I consider Jules Vernes to be the greatest forecaster of all times.")

The Alchemist, by Paulo Coelho, Harper 1994 (says Faber: "It is a remarkable tale about the most magical of all journeys: The quest to fulfill one's own destiny. The shepherd's boy Santiago joins the ranks of Candid and Marco Polo by taking the reader on a adventures journey full of hardship, which he overcomes with perseverance and the conviction that in order to fulfill one's dream nothing is an obstacle. The book will make you understand more about yourself and the world of business and investments.")

A History of Interest Rates, by Sidney Homer, New Jersey 1977 (says Faber: "This book was edited by Henry Kaufman and is the bible of credit markets. Online traders will not find any "hot tips" in this monumental work, but the student of financial markets will use it as a reference for putting current trends into a historical perspective.")

Booms and Depressions, by Irving Fisher, Binghampton 1932 (says Faber: "In this book Fisher explains the causes of the stock market boom of the late 1920s and why the boom came to an abrupt end. Fisher's account of the events around the 1929 crash is particularly relevant to the present as there are so many similarities to the present economic environment.")

The Stock Market Crash and After, by Irving Fisher, New York 1930 (says Faber: "Written in November 1929, this book captures the mood of the time extremely well. The book's last sentence is particularly noteworthy: "For the immediate future, at least, the outlook is bright." A few months later this century's greatest depression got underway.")

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Federal Reserve will never be able to Rise Interest Rates above the Rate of Inflation

The massive money printing and the massive deficits we have now will make it difficult in the future when there will be some price pressures for the FED to actually increase rates above the rate of GDP growth and above the rate of inflation.

Yen Likely to Weaken Further

The yen is likely to weaken further from here against other Asian currencies.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Global GDP has contracted 10%

Global GDP ex-government has already contracted by at least 10%. The government sector is still expanding, but the private sector, everywhere you go business is down 10 to 40%. You look at exports, they are down.

Right now there are no inflationary pressures, although I would like to point out that healthcare costs and educational costs are still rising and food prices which rose sharply last year, they have eased a little bit but they did not go down to the 2005 level. So there is still dsome inflation in the system.

Faber on Gold Stocks

There are a lot of exploration companies that are not producing any gold unlike the Newmont Mining`s of the world and Freeport McMoran. The exploration companies have no cash flow.

So what you need to look for is companies with strong backers that have money to essentially develop the exploration result that they may or may not achieve. The one`s that are partially owned by the majors like Novagold, Ivanhoe Mining and Gabriel Resources.

Korea and Taiwan Stock Markets are Attractive

If america looked cheap the stock market would be at 1990 levels, the S&P 500 would be at 300. In Japan (Nikkei 225) we are at 1981 levels,in Taiwan and Korea we are at 1987 levels and I assure you that they have as much intellect per capita as in the United States.

These markets if I compare them to the US are very inexpensive and by the way this year Korea, Taiwan and Thailand haven`t really gone down, in some cases they actually rallied a bit, like 1 or 2%.

These markets are relatively attractive.

Buy Oil Services Stocks

I prefer Oil servicing companies, Fluor (FLR) and other oil services stocks as well. I think they are going to do ok. The oil exploration will slow down because of low prices, and eventually the low prices as exploration slows down will lead to higher pricesand again more exploration.

We should not forget that the oil has a huge geopolitical aftertone in the sense, a country like China, like the United States, they need oil, they need to become less dependent on oilfrom the middle eastand that should continue to stimulate exploration.

(CNBC, March 09 Transcript)

For Crude Oil Analysis and Projections visit the Oil Traders Blog.

Marc Faber on Bloomberg TV, Video - March 09, 2009

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Stock Market and Commodities Outlook

If I look at various asset classes obviously he had a boom from 2002 to 2007 and commodities kept on rising untilJuly 2008 and then everything totally collapsed.

The question is when will the money printing at the various central banks around the world lead to asset markets recovery, and which asset class, which market will go up the most.

If I look at equities in Asia, US and commodities, commodities are very cheap in real terms. The CRB went down to 200 the other day, now is around 210 and the low in 1999 after a 20 year bear market was 182.

So we are up 10% from the lows, but in real terms we are at new lows and compared to equities I would say that some resource related equities are very cheap and resources in general, industrial commodities too.

Latest Marc Faber Video: CNBC, March 2009

Resource related stocks are very cheap.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

US Stocks - S&P 500 will Bounce

Government spending will spur gains in the Standard & Poor’s 500 Index after it fell 56 percent from an October 2007 record. Equities could rally between here and the end of April. The government’s efforts will fail to boost economic activity. They can boost stocks. Stocks have adjusted meaningfully.

Transcript of a Bloomberg Interview, March 09, 2009
(Faber added also that although the S&P 500 may drop 27 percent to below 500 before the bear market ends, investors will make money over the next 10 years.)

Gold Stocks

“The mining stocks, especially exploration companies, are relatively attractive, but you have to buy the ones that have a strong backer. A lot of companies will run out of money. The ones that have a strong backer will be OK.” MARC FABER

Marc Faber, the investor who advised buying gold in 2001 before it tripled, said he owns Ivanhoe Mines Ltd., NovaGold Resources Inc. and Gabriel Resources Ltd. because explorers will gain the most as bullion rallies.

Commodities will be the first assets to rally when growth returns after a credit collapse led to the worldwide recession, Faber said.

Gold explorers backed by larger miners are less expensive than bigger firms and have the financial support to stay in business should the economy worsen, he added.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Faber Presentation at the PDAC Conference

Faber said the Fed created a giant asset bubble by pumping liquidity into the system every time there was some kind of crisis in the economy, be it the tech collapse or 9/11.

The result was that instead of having a bubble centred in housing prices or tech stocks, the Fed created a bubble in absolutely everything, he explained:

"We had a synchronized boom, and now we have a synchronized bust."

He expects the U.S. will keep printing money like crazy, and even joked that Fed Chairman Ben Bernanke appears to have Robert Mugabe as his mentor.

It gets worse. Faber thinks that geopolitical tensions, mainly over energy, will lead to a "dirty war" between the U.S. and a China/Russia faction that targets people living in cities.

He thinks many stocks will continue to crater and that the price of gold will eventually be higher than the Dow Jones Industrial Average.

But hey, at least he said commodity prices will do well once the economy recovers a bit. His advice:

"You want to own commodities in the ground, not derivatives at Citigroup."

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Buy and Hold is Dead

The Warren Buffett approach of buy and hold is dead and it's been dead for ten years and it's going to be dead for another ten years.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Global GDP has contracted at least 10% from the peak level

The recession in the United States began in October 2007 but it was kind of hidden by the way the US government compiles economic statistics until the fall of 2008.

Between September 2008 and February 2009 the global economy just fell of a cliff. AN unbelievable decline in economic activity. By now global GDP has contracted at least 10% from the peak level.

A Rebound in Asset Markets?

The news will continue to be bad but I think there will be a decelaration in bad news., in other words, we will still have bad news but the rate of change of bad news will improve somewhat and there can be a rebound in asset markets.

But overall the global economy will take a very, very long time to get back to the peak boom period of 2004 to 2007.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Stocks can have a Good Rally

I wouldn’t give up entirely on the theory that you can have some kind of rally develop soon, for one simple reason: The news on the economy has been horrific. Economic news will stay bad for quite some time, and the global economy will continue to deteriorate. But many financial markets already have discounted the bad news.

And the news over the next three months might not be quite as bad. There can be a rebound in housing starts or exports.

We are now more or less in an area where the market, after a final selloff, can have a reasonably good rally.