Marc Faber's thoughts for 2010
I always like to check out what people are saying early in the year and here is a Bloomberg interview with Marc Faber. No major actionable idea in this interview—at least for small investors. Faber seems cautious and thinks the market may decline when least expected. He hedges his thoughts a bit too much for my liking. Being an inflationist, I'm not really sure whether he sees a collapse in various assets (particularly in China.) His stance is that the US government will intervene if the American stock market declines but that remains to be seen. A lot of what was politically acceptable two years ago is not so now.
One of the things that I like about Faber is that he is truthful and says when he is quite uncertain and hedges his thoughts. It actually speaks to the complexity of the current situation in the world and the bogus predictions of most market forcasters who are quick to say "stocks will rise 15-20% with a correction of 10%" which is very easy to say. I believe that in this enviornment that anything can turn on a dime...for example the Fed stopping MBS purchases, mark to market coming back..raising rates in China..soverign defaults..etc. So basically it is incredibly tough to come out and make a call espically to investors that are long term and arent willing to get in and get out of the market. Like me for example I am long natural gas and agriculture but short emerging markets. This may seem very paradoxical but the problem is knowing basically when the stimulus will stop taking effect in the markets. Figuring out what is "overbought" is pretty tough as well with an unprecendend stimulus as well. To me, currently there are very few "value" oppurtunites if measured by low p/e's and low debt. And also previous earnings to me are not a good indicator of future earnings since we have experienced such a huge consumption and overproduction boom. So basically, in my opinion it is very difficult for value investors to find investments with low risk and steady earnings. Even Mr. Buffett has resorted to buying railroads which he said himself wasn't a great business.
ReplyDeleteThe thing about 'true' contrarians like Marc Faber is that they speak their mind. Some of the stuff they say is ridiculous, and probably more to get a reaction or driven by their ideological views (e.g. almost implying Ben Bernake is like Robert Mugage or literally saying the US$ is going to be worth exactly zero due to hyperinflation), but at least we know they are saying what they feel like saying. Same thing with Jim Rogers, Hugh Hendry, and so on.
ReplyDeleteIn contrast, many quoted in the mainstream media, who work on the Street, may have ulterior motives. For instance, I like listening to Jim Chanos but one can never be sure if there is something more to his views. Same thing with people like Seth Klarman, although Klarman doesn't seem to be in the public spotlight and rarely reveals anything.
I concur with your views, even though we take different stance--you are bullish on commodities and probably in the inflation camp, whereas I take the opposite view. Everything looks so much like 2006 or 2007 from a valuation point of view. Nothing seems cheap but at the same time, nothing appears excessively overvalued.