2024-08-31 09:11:31
New Delhi: Mark Faber is the author of ‘The Gloom, Boom and Doom Report’. He is counted among the world’s renowned economists. Faber believes that everything in the market right now is like a bubble. He said that a T-shirt of America’s famous baseball player Babe Ruth was sold for $24.1 million on Monday. This price is very high. The most expensive are America’s FAANG stocks, which are also called ‘Magnificent Seven’. The total value of these stocks is more than all the listed shares of China. Faber also says that if investors are able to maintain their purchasing power in the next 7 to 10 years, then they are doing well. He believes that investing in precious metals can be a good option. It may not be the best option, but it is relatively safe. FAANG stocks include Facebook (Meta), Amazon, Apple, Netflix and Google.
Don’t expect 40-50% returns in the next three years
When Marc Faber was asked what he would do if someone gave him $10 million to invest for the next three years, especially when the condition was that he would get a return of 40% to 50% in the next three years? To this Marc Faber said, ‘I will return that money to you because I don’t think you will be able to earn 40-50% returns in the next three years. I want to sleep peacefully at night. I don’t want to lose you as a friend. So I will return the money to you and tell you to please give it to someone else.’
When asked what would happen if the investment time horizon is extended from three years to five years, Faber said, “Even five years would be 10% per annum. I look at my money and I don’t think it’s easy to get 10% per annum returns if you are diversified. I like to be diversified. I have different currencies. I have gold. I have stocks. In some of the emerging markets I could see I could earn maybe 10% per annum including dividends. The dividend would be 5% per annum and the stock returns would be 5% to 10%.”
Something is not right with the global economy
Faber added, “But I’m not sure you can realistically earn 10% inflation adjusted. However, investors should move from believing that assets will make money to believing that something is not right with the global economy. The question should be how do I navigate negative returns in asset markets?”
He said, ‘My view would be that precious metals will probably go down less than other commodities. But, everything falls 50% and gold falls 20% then you are like a king. All your friends lost 50% and you lost only 20%. But, what I want to say is that people should change their views.
everything is in a bubble
Faber said, ‘To be honest, I think everything is in a bubble. On Monday, a T-shirt of famous American baseball player Babe Ruth sold for $24.1 million. You have to ask yourself, this is very exaggerated. But, we can discuss what is the most inflated and what is the least inflated. The most inflated are the FAANG stocks in America. The market capitalization of these amazing stocks is more than all Chinese listed stocks including Hong Kong.’
Faber was in India in 2001, just after the 9/11 attacks. At that time, Faber predicted that a big bull market in commodities was about to begin. In 2007, he was among the first to say that there was something wrong with the US real estate market, and six to seven months after he said so, the bubble burst.
Faber said that he has been saying for the last 20 or 30 years that investing in India will be more successful than investing in America. Now the Indian stock market is at its peak. It is not necessary to go out and invest in India. But, there is some value in commodity markets.