The unprecedented central bank debt bonanza has created bubbles in just about every corner of the market, warns influential investor Marc Faber. The Swiss, known for his dark stock market forecasts, advises sheltering in growth markets, precious metals and agricultural commodities.
Central banks have created immense wealth for a small elite, but have dashed the prospects for young people.
Of pen name Marc Faber’s was rarely more appropriate than now. The Swiss investor achieved world fame when he advised his clients to sell all their shares a week before the stock market crash in 1987. Also today, Dr. Doom, who spoke to Belgian fund managers on Tuesday at the Fund Insider Forum of De Tijd and L’Echo, lives up to his reputation as a prophet of doom. ‘The stock market is completely decoupled from the economy and has been living exclusively on printed money from the central banks since 2008,’ warns Faber. At some point in the not too distant future that spring will burst. Investors are on a sinking cruise ship. The question is whether you are already running to the lifeboat or whether you wait a while because the best whiskey may still have to be served. ‘
In socialism everyone shares the same misery. In capitalism, everyone shares unequally in prosperity.
Faber did not paint an uplifting picture of the world economy. “Central banks have created enormous wealth for a small elite, but have undermined the prospects for young people,” says the super investor. Today’s twenties and thirties are the first in the history of capitalism to be worse off than their parents. That in itself is unseen. ‘ Despite its flaws, capitalism remains the desirable economic system, Faber believes. ‘In socialism everyone shares the same misery. In capitalism, everyone shares prosperity unequally. The average person is still better off with that. ‘
Who is Marc Faber?
Born in Geneva on February 28, 1946.
Graduated cum laude as an economist from the University of Zurich.
Known for his ominous and contrarian investment approach, earning him the nickname Dr. Doom.
Publisher of the monthly Gloom, Boom & Doom newsletter and director of the fund management firm Marc Faber Ltd, who also acts as an investment advisor.
Shareholder of a number of emerging markets investment funds, including the AFC Asia Frontier Fund of Asia Frontier Capital Ltd.
Lives and works in Chiang Mai, Thailand with an office in Hong Kong.
The Robinhoods are rolled in front of them. They may occasionally win the lottery, but in the long run they lose.
Faber is just as dismal as his nickname about the phenomenon of young people becoming more active on stock markets and thereby sharing in the stock market boom. “The Robinhoods are rolled in front of them,” says the investor, who despite his grim message always appears smiling. ‘Their trading platforms trade their orders in block to liquidity providers such as Citadel and Flow Traders. They in turn take a head start on those orders, which means that the Robinhoods are by definition lagging behind, ‘says the influential investor. ‘They may occasionally win the lottery, but in the long run they lose. Two years ago they were all in cannabis stocks, which have since plummeted by 90 percent. More recent examples are Nikola and Kodak, where they stepped in like lambs and whose stock market value subsequently went up in smoke. ‘
Faber predicts that we will only get real economic growth if a political and monetary reset takes place worldwide. He does not rule out revolutions and violence. The elections in the US will be a first manifestation of this, thinks the economist, who is a supporter of Milton Friedman and the Austrian economists Von Mises and Hayek. “Actually, both presidential candidates are undesirable and incapable,” says Faber, who is never short of a strong quote and was discredited several years ago for racist statements. Whichever of the two candidates makes it, the election results will in any case be disputed by the other. I see a lot because of that rocky road for US equities in the near future. ”
That period will go hand in hand with a longer period of dollar weakness, according to Faber. “If dollars are printed by the Federal Reserve at a rate of $ 120 billion a month, you will end up with a massive oversupply of dollars in an already overrun market,” fears the investor.
When you see that a single malt whiskey from India was voted third best whiskey in the world last week, you know where the winners are in the new world order.
Both the euro and the dollar will score weaker than precious metals, Faber predicts. Agricultural commodities and industrial metals are now very cheap and therefore a smart diversification, says the influential investor. And whether you want it or not, you have to buy a piece of China and India, Faber decides. ‘When you see that a single malt whiskey from India was voted third best whiskey in the world last week, you know where the winners are in the new world order.’
Watch the interview with Marc Faber via this link.
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