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25 of 25 results found for - "Marc Faber"  
[Quote No.30097] Need Area: Money > Invest
"To rebuild economic health in the United States [in 2008], you need a serious recession that will last several years. The patient that got drunk on credit growth needs to go into rehabilitation. To give him more alcohol, the way the Fed and the Treasury propose to do, is the wrong medicine." - Marc Faber
Noted investor and publisher of 'The Gloom, Boom and Doom Report'.
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[Quote No.22840] Need Area: Money > Invest
"Basic economic theory suggests that demand falls as prices go up. But in the case of speculative markets, the opposite seems to be true. [And vice versa. So contrary to many economic theorists, all Humanity hasn't evolved into Homo Economicus who always acts rationally. The irrationality in fact even explains bull markets and busts. George Soros, the self-made hedge fund billionaire, uses this idea of irrationality in financial markets going to extremes of fear and greed when he invests, as does Warren Buffett, another incredibly successful self-made billionaire investor. George Soros, the former philosophy student, has even formalised his own understanding of this quirk of human nature, markets and investing into what he calls his 'Theory of Reflexivity'. Warren Buffett would, on the other hand, call his style of investing, Fundamental Value investing, that means he looks to buy when the market is irrationally fearful and undervaluing a good company's shares and sell when the situation is reversed.]" - Marc Faber
International investment commentator and highly successful investor.
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[Quote No.27216] Need Area: Money > Invest
"In the four great investment booms we have described, and also in previous investment manias, once the boom came to an end [and busted], most, if not all, of the price gains that occurred during the mania were given back. In 1992, silver prices were lower than they had been in 1974. In 2003, the Nikkei was lower than at its high in 1981. In 2002, in dollar terms, most Latin American markets were no higher than in 1990 and most Asian markets had declined to their mid- or late 1980s level. By 1998, the Russian stock market had given back its entire advance since 1994; and in 2002, most high-tech and telecommunication stocks were no higher than they had been in 1996 or 1997. And in those manias where prices didn't retreat in nominal terms to the level - or, as frequently happened, to below the level - from where the investment boom had begun (as was the case in 1932), prices retreated in inflation adjusted terms to those levels." - Marc Faber
Respected international investor and financial commentator. Quoted from his article, 'A Modern History of Investment Booms', published March 8th, 2007 in The Daily Reckoning Australia.
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[Quote No.27653] Need Area: Money > Invest
"Illusion is one of the most pervasive realities of life! [and it is found in the share market as irrational optimism in booms and unjustified pessimism in busts.]" - Marc Faber
celebrated contrarian investment guru who received his PHD in Economics aged 25, and publisher of 'The Gloom, Boom and Doom Report'.
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[Quote No.28896] Need Area: Money > Invest
"When a bubble bursts, you only hit bottom when people totally give up and vow they’ll never buy stocks again. [When] People are still more worried they’ll miss the next rally [then there are more falls to go before the bottom is reached]." - Marc Faber
Noted financial commentator and forecaster, who told investors to bail out of US stocks before 1987’s so-called Black Monday crash and correctly predicted in August, 2007 the US would enter a bear market, which it did in July, 2008.
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[Quote No.29703] Need Area: Money > Invest
"When the media and all the analysts follow one sector [of the share market], that sector is, by definition, no longer inexpensive." - Marc Faber
Noted value share investor
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[Quote No.29704] Need Area: Money > Invest
"Gamblers [including share investors] have to know when not to bet, as well as when to bet." - Marc Faber
Noted value share investor
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[Quote No.30850] Need Area: Money > Invest
"The Dow/Gold ratio has fluctuated over time between 1 and almost 45. When the Dow/Gold ratio was under five, gold was expensive and equities were cheap. Conversely, when the Dow/Gold ratio was over 20, stocks were expensive and gold relatively cheap." - Dr. Marc Faber
Famed investment advisor
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[Quote No.32166] Need Area: Money > Invest
"By keeping interest rates low the Fed [US Federal Reserve or any central bank dictating monetary policy in the form of interest rates and liquidity] is forcing people to speculate on something [...literally to take on more risk, whether it is speculating in the share market, real estate or commodities, to get a better return than an unacceptably low interest rate from saving. This will speed up the economy but runs the risk of eventually overheating the markets and resulting in an even worse situation than when the interest rates were lowered to stimulate the economy]." - Dr. Marc Faber
Economic commentator and financial advisor.
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[Quote No.32492] Need Area: Money > Invest
"You can boost any kind of asset by printing money. What then happens, you can print money whether physically with a printing press or electronically, what you don`t really control are the long term consequences of the money printing. In other words, the money then flows into the system and it can go into commodities, or into equities, or it can go into art prices, it can go into wages or into comsuption. And when we have large excess capacity and you have very high unemployment it doesn`t go into capital spending, into the construction of new factories, into the acquisition of equipment and machinery or R&D. It goes mostly into speculation." - Marc Faber
International investor known for his uncanny predictions of the stock market and futures markets around the world. Quoted in Bloomberg, September 14, 2009.
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[Quote No.35817] Need Area: Money > Invest
"...if the world had had no central banks over the last 20 years and monetary growth had been kept constant at, say, 3% per annum, it is likely that the wild swings we have experienced in the global economy since 1990 would have been avoided. Without central banks, market forces would have contained the speculative booms and the colossal busts that followed them far better than the central bankers have managed to do." - Marc Faber
Economic historian, investment advisor and author. Quote from his newsletter, 'The Gloom, Boom and Doom Report', Nov 23, 2001.
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[Quote No.35819] Need Area: Money > Invest
"In the course of the year, I meet numerous very well informed hedge fund and traditional fund managers, strategists, and economists. Naturally, most of these people have a business self-interest. They only reluctantly have their clients withdraw funds, even if market conditions or poor performance warrant such action. Moreover, no matter how large these financial institutions have become, they continually look for new clients in order to enlarge their assets under management [for which they get paid a percentage of so the more the better from their financial perspective]. So, what these financial people are saying publicly is often somewhat different from what they themselves really believe. In private, most of the fund managers and investment advisers I talk to express the view that the current imbalances in the global economy — and, in particular, the external imbalances of the United States — are not sustainable forever. With the exception of the incorrigible optimists, most financial observers know that at some point the excessive credit creation in the US will backfire and lead to some sort of a crisis. But that is where our knowledge stops. We don’t know what might be the catalyst for the crisis, when it might happen and in what form it will manifest itself. [Marc Faber wrote this in 2005. In 2007 the crash came as securitised sub-prime loans became worthless creating a chain of deflation so great it halved share markets around the world in a year and was described as second only to the Great Depression in financial damage.]" - Marc Faber
Financial historian, advisor and author. Quote from his newsletter, 'The Gloom, Boom and Doom Report', April 20, 2005.
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[Quote No.35820] Need Area: Money > Invest
"ARE CONTINUOUSLY RISING US ASSET PRICES SUSTAINABLE? ...on first sight, it would seem that easy money and credit can sustain asset inflation for a very long time, or at the very least prevent a serious asset deflation. A closer analysis, however, reveals that in the same way that corporate profits cannot grow in excess of nominal GDP in the long run, asset markets cannot appreciate at a higher rate than nominal GDP for very long. Let me explain. Money supply growth in excess of real economic growth leads to inflation, which may manifest itself in rising wages or in rising consumer prices, commodities, equities, or real estate. The beauty — or the viciousness — of inflation is that it doesn’t occur in all asset markets and in the prices for goods, services, and commodities at the same time. Very broadly speaking, we could argue that rising consumer good prices are bad for asset markets, whereas a declining rate of increase in consumer prices (disinflation, such as we had since 1981) or an absolute decline in consumer prices (deflation) tend to be favourable for asset markets. The reason for this diverging performance of inflation in consumer prices and asset prices is that declining commodity and consumer prices allow for interest rates to decline, which boosts the value of assets such as stocks, bonds, and real estate. Rising commodity and consumer prices, on the other hand, lead to rising interest rates [E/P expansion], which then depress asset markets (P/E contraction). Moreover, rising consumer rices lead to rising wages. It should be easy to understand that if consumer prices increase by 10% per annum, wages cannot increase for long by, say, only 3% per annum, since negative real wage gains would lead to a loss of purchasing power, diminished spending, and a recession [This would show up as reducing home affordability as measured by house price to income ratios rising above the historical norm and people out of the housing market complaining]. Similarly, wage increases in excess of productivity gains will lead to some inflation in the system (rising consumer prices, or rising asset prices)[as the profit margins of companies are squeezed until they pass on these costs by raising product and service prices]. This is the easy part to understand about inflation. Where inflation becomes tricky and vicious is at turning points. Obviously, consumer prices and wages cannot rise forever without at some point bringing some asset inflation into the equation. This is so, even if monetary conditions never become tight, as was the case under Fed chairman Volcker in the early 1980s, when tight money brought about disinflation for consumer prices after 1981. Similarly, asset prices cannot increase forever without consumer price inflation manifesting itself in some form or another, leading then also to rising wage inflation. Accelerating consumer price and wage inflation will inevitably lead to asset inflation, when people lose faith in paper money as a store of value. They will then switch from bonds and cash into hard assets such as real estate, precious metals, or equities, which benefit from rising prices (oil and mining companies in the 1970s). Similarly, it is inconceivable that asset prices could appreciate forever in excess of consumer prices, wages, and interest rates. Why? If asset prices rise for very long at a much faster clip than interest rates, people will, as in the case of accelerating consumer price inflation, lose faith in cash and bonds as a store of value. They will then, as in the case of consumer price inflation, shift their cash into real estate and commodities and all sorts of collectibles. As asset prices rise, more and more people will be drawn into the asset appreciation game. Jobs will migrate from productive industries such as manufacturing to jobs related to the asset appreciation game, where the annual capital gains far exceed the returns that can be achieved from the manufacturing of goods and the provision of productive services. Rising asset prices and the neglect of manufacturing will then lead to a loss of international competitiveness, which will be reflected in rising trade and current account deficits. Initially, these rising trade and current account deficits will not be perceived as negative by the investment community. Some smart economist will write an article for the Wall Street Journal in which he explains that the rising trade and current account deficits are a sign of economic strength and the appreciating asset values are some sort of savings. Eventually, however, the market will become concerned about the total loss of international competitiveness as a result of the inflated price level and reflected in ballooning trade and current account deficits. The currency of the country with the high asset inflation will then weaken. Commodities will increase in price [noticed in the PPI -Producer Price Inflation figures] — expressed in the depreciating currency of the country with high asset inflation — and put upward pressure on consumer prices [as producers pass on the additional costs in order to preserve their margins and return on assets/equity]. In countries with a stable currency, commodity prices will remain stable or rise far less than in the country with high asset inflation and the depreciating currency. Should the country with the high asset inflation happen to be a large net importer of commodities [for example industrial metals, food or oil], this situation of weak currency and rising commodity prices is likely to exacerbate the trade and current account deficits and lead to additional weakness in the exchange rate. And once the currency of the asset-inflating country falls in earnest, import prices will begin to increase rapidly and lead to consumer price inflation and rising interest rates [if the central bank's monetary policy is serious about meeting its mandatory inflation target over the cycle and doesn't have a dual mandate of maximising employment which can contradict the necessary tightening required to ensure stable prices and low inflation]. At this point, the asset inflation is gradually replaced by commodity, consumer and wage inflation, for two principal reasons. Rising interest rates affect the inflated value of equities, bonds, and real estate negatively, since a huge credit expansion was responsible for the asset inflation in the first place. Therefore, some leveraged players faced with rising interest rates default and the supply of assets increases [This additional supply reduces demand and therefore prices]. But probably more importantly, while the public is brainwashed into believing that the asset inflation is based on sound economic fundamentals, the smart money notices that the asset inflation in local currency does not offset the depreciation of the currency. The result is that the smart money, which became immensely rich as a result of the asset inflation, bails out of local assets and shifts its funds overseas into assets that are relatively inexpensive compared to the inflated domestic assets. The result is additional currency weakness [as the domestic currency is sold and the foreign currency bought] and consumer price increases brought about by rising import prices [due to the lower currency], which begin to exceed the rate of increase of the appreciating assets. The leveraged consumer faced with rising interest rates, and wages that initially will lag behind the consumer price inflation because of international competition, is squeezed, and the accelerating consumer price inflation is likely to be accompanied by a very nasty recession. Because of rising interest rates, asset price inflation, which may still continue but at a lower rate than consumer price increases, will no longer support increasing consumption, which the asset inflation did for as long as it was higher than consumer price increases. At the same time, negative real wage growth will bring about a decline in aggregate demand. So far, I have tried to explain that there is only one type of inflation, and that this is an increase in the quantity of money in excess of real economic growth, but that this inflation can manifest itself in one of two ways: rising consumer prices or rising asset prices. Of the two types of inflation, rising consumer prices is far less dangerous. When consumer prices increase rapidly, the public at large will support the monetary authorities’ attempt to bring down the rate of price increases through tight monetary measures since the majority of the population, notably the housewives, will suffer from rising consumer prices [and reduce spending on discretionaries to continue to meet non-discretionary spending needs]. In asset inflation, however, the illusion of wealth keeps the public happy [and spending the paper profits -wealth effect spending especially on discretionary items - conspicuous consumption] for quite some time. How much more enjoyable is it to see one’s stock portfolio or home equity appreciate by between $50,000 and $100,000 — or, for the rich, by millions of dollars — every year, than to work hard in a manufacturing plant or in one’s own business? So, for a very long time the public — and especially the smart money, which benefits the most from the asset inflation — will support accommodating monetary policies by the central bank. THE FOUR PHASES OF ASSET INFLATION [The Business Cycle]: The first of the four phases of asset inflation is the soundest one. Once the monetary authorities move to curtail the accelerating commodity, wage, and consumer price inflation with tight monetary and credit policies (high real interest rates), commodity prices begin to decline and consumer price inflation to decelerate disinflation). Usually, a recession will accompany the tight monetary policies. Once recovery gets under way, asset values — in particular, bonds and equities, which became very depressed as a result of the earlier high consumer price inflation, which was followed by tight monetary policies and a recession — begin to rally sharply as interest rates begin to decline and corporate profits to expand, thanks to the ongoing disinflation. In the United States, I would put the beginning of this phase in 1981/1982. We can say that in the first asset inflation phase, financial assets recover from very depressed levels in celebration of the economic policymakers’ victory over consumer price inflation. It is not unusual to have heavy foreign participation in this phase [with the currency rising due to foreign demand for it to use it to buy assets especially rising equities], since, at its onset, assets were extremely depressed — especially in foreign currency terms, since the exchange rate obviously collapsed during the preceding phase of high consumer price inflation. In the first phase of the asset inflation, policymakers, investors, and economists still worry about consumer price inflation — not understanding that inflation has shifted from commodities, wages, and consumer prices to assets. Towards the end of phase one, excessive speculation becomes evident, some inflationary pressures develop, and the monetary authorities overreact and tighten money excessively, which then leads to a big setback for asset markets (in the US, real estate after 1986, and equities in 1987). Since the setback in asset markets threatens to bring about another recession, monetary conditions are quickly loosened again and asset markets begin to recover in phase two of the asset inflation cycle. In the early part of phase two, foreigners are largely absent since they were burned badly when phase one of the asset inflation experienced a serious setback. The additional liquidity injection that gets phase two in motion then brings about additional asset inflation and, through the illusion of wealth, strong consumer confidence and general financial contentment, complacency, and happiness. Phase two of asset inflation is facilitated by still-declining commodity prices [as more supply comes to market from the increase to capacity started when commodity profits were high during the previous inflationary period] and diminishing consumer price inflation [as reduced commodity prices and interest rates as well as increased productivity - output to hours - improves business margins which can then be held or lowered to try to improve volume and market share as the market recovers], and increasingly begins to be perceived as resting on sound economic fundamentals. In this phase of the asset inflation, the loss of international competitiveness [of exporters due to rising currency] begins to show up in rising trade and current account deficits. However, asset markets continue to perform well because foreigners are drawn to the asset inflation party and become active participants once again (in the US, in the late 1990s). Forgotten are the pains from the losses incurred at the end of phase one; and, having missed out on the early stage of phase two, when assets recovered from the losses incurred earlier at the end of phase one, foreigners rush into the inflating asset markets in order to reap some 'quick gains'. In this phase the incoming liquidity from foreign investors will even strengthen the currency and lead to declining import prices. This condition provides additional confidence to the monetary authorities and the public, who come to believe that their economy and their monetary policy are fundamentally sound. Otherwise, why would foreigners shift their assets into a country with high asset inflation? Phase two of asset inflation usually ends in a wild orgy of stock market and often also real estate speculation [as people pile in after watching friends early into the market make 'easy' money and 'greed for gain and fear of missing out' becomes the theme]. Prices become grossly overvalued, and when investors’ expectations are disappointed the markets collapse. Before the collapse, the financial markets, which expanded at a much faster clip than GDP in phase two of the asset inflation cycle, become disproportionately large in terms of their size relative to GDP [i.e. as a rough rule of thumb, total market capitalisation of the share market exceeds the annual GDP]. The collapse of financial assets worries the monetary authorities who, up to now, have feared a recurrence of consumer price inflation. Suddenly they change their mindset and begin to believe that declining financial asset prices could seriously damage the economy, and that deflation could become a problem (the US after 2001). Through a massive injection of liquidity and, frequently, direct purchases of equities, [or government bonds in 2009-11 called quantitative easing - money printing keeping bond prices high and therefore interest rates low] the policymakers support the market. This leads to phase three of asset inflation, the most unhealthy phase. In the early part of this phase, consumer price inflation remains low despite negative real interest rates, because the system suffers from excess capacities that came about from a capital spending boom at the end of phase two [and also now there may be more unemployed]. However, the smart money begins to realise that asset inflation erodes the purchasing power of money in the same way that consumer price inflation does. Since excessive liquidity injection prevents financial asset prices from becoming truly inexpensive, money begins to shift into hard assets, such as real estate, commodities, and foreign currencies. The public, who just lost a ton of money when the equity markets broke down and who are desperate to make up for their losses, then follow and boost the hard asset markets to lofty levels. For a while, all assets become grossly inflated. There is simply too much money chasing too few assets. Speculation becomes rampant in all asset classes. In the meantime, the productive economy doesn’t perform particularly well and, due to the artificially inflated price level brought about by negative real interest rates, becomes totally uncompetitive. But the public, brainwashed by the media and the monetary authorities, believe that asset prices are rising due to sound economic fundamentals and a solidly recovering economy. At some point in this third phase of asset inflation, consumer prices begin to rise more than was expected. At this point, the most crucial time in the whole asset inflation cycle occurs. If the monetary authorities are alert — which is an unrealistic assumption — they would tighten monetary conditions resolutely. But their response will be to do so only reluctantly and timidly. Having gone from fearing consumer price inflation for as long as it wasn’t a problem (in the case of the US, for 20 years or more right up to the year 2000), to fearing deflation [and unemployment], the monetary authorities (who are usually several miles behind market events) will argue that the rise in commodity and consumer prices is only temporary. Nevertheless, the market will perceive the modest tightening as a measure to contain inflationary pressures, and the asset markets will begin to stall or decline moderately while the foreign exchange rate improves temporarily. However, when consumer price inflation does accelerate, which is inevitable in an environment of negative real interest rates, rising commodity and basic material prices, and renewed serious foreign exchange weakness, the market will push up interest rates through a bond market collapse [where central banks from around world reduce buying and bond vigilantes sell bonds, including short selling, that increases supply and reduces demand lowering prices and raising effective yields]. It is important to understand that, in phase three of the asset inflation cycle, there is an inflection point that leads to asset deflation. This is brought about either by tight monetary policies or by consumer prices beginning to increase at a faster pace than asset prices, which is exacerbated by a collapse in the foreign exchange rate as the smart money and foreigners — even central bankers with a huge time lag — lose faith in the currency of the asset inflating country. How ugly phase four of the asset inflation cycle becomes will largely depend on how high the asset markets were pushed by the easy money policies [too low interest rates] of the central bank during phases one to three and how the downturn is brought about. If asset prices became grossly inflated in phase three (the US in 1929, Latin America in 1980, Japan in 1989), the downturn in asset markets can be severe and long lasting. Moreover, if the downturn is brought about by monetary tightening measures by the central bank, the result is likely to be a severe deflationary asset market decline in local currency. Conversely, if during phase three the central bank failed to increase interest rates in an attempt to curtail the emerging inflationary pressures in consumer prices — for fear of popping the asset bubble it itself created — the deflationary process is more likely to be through the exchange rate mechanism. In this instance, the asset markets may only decline moderately in local currency terms (down only by 30–50%) but collapse against strong currencies. If at this juncture no strong paper currencies exist, the asset deflation occurs against gold and silver [which rise as currencies fall or are debased and fear prevails]! The important point to remember is that there is a continuous process in economic development that leads to alternating phases of consumer price inflation and asset price inflation. At times, asset prices rise more strongly than consumer prices; at other times, consumer prices rise much faster than asset prices. I admit that my analysis of the alternating consumer and asset price inflation cycles is an oversimplification of economic conditions. If consumer prices rise strongly, not all asset markets suffer to the same extent. For example, in the 1970s bonds performed miserably, while real estate had its fair share of a collapse in 1974 but then recovered strongly. Similarly, in periods of asset inflation, not all consumer price increases decelerate. High asset inflation will increase the wealth of rich people more than that of poor people; therefore, prices of certain luxury goods (caviar, very high end luxury cars, prestigious premium wines, etc.) continue to rise strongly. But these imperfections don’t alter the fact that the best time for asset markets is in the Kondratieff downward wave [Kondratieff cycles also called Commodity cycles, tend to last between 45 and 60 years from peak to peak - some commodity downward waves were between 1814–1845, 1864–1895, and 1921–1942], during which commodity prices and interest rates decline. (All the major financial manias in the last 200 years coincided with declining commodity prices.) Conversely, during the Kondratieff upward wave, during which commodity prices and interest rates rise, asset markets don’t perform spectacularly well. Again, I concede that there are exceptions to this general rule. If at the onset of the consumer price and interest rate upswing (the early stage of the Kondratieff upward wave) asset markets were terribly depressed as a result of a massive debt liquidation, such as was the case in the US in the 1940s, then asset markets can perform superbly in an environment of rising consumer price inflation and rising interest rates... fully understand that, whereas in the 1940s and early 1950s the asset markets were low (as was, at that time, total debt) as a percentage of GDP, today the asset markets are as badly inflated as total outstanding credit market debt. David Malpass should perhaps consider that the rise in household net worth in recent years may have had something to do with the rapid credit growth we have recently experienced. (Total credit is up by approximately US$10 trillion in the last four years.) IN WHAT PHASE OF THE [GLOBAL] INFLATION CYCLE ARE WE NOW [in 2005]? In economics it is always difficult to know precisely what stage of a price, business, or speculation cycle one finds oneself to be in. However, we know that consumer price increases have been moderating since 1980 and that interest rates have been declining since 1981. At the same time, asset markets have been rising since 1982, although equities experienced a serious downturn after 2000. Therefore, it is easy to determine that we are not at the beginning of consumer price disinflation and an asset inflation cycle. Rather, we are likely to be in either phase two of the asset inflation cycle or, even more likely, in the third phase where the inflection point from asset inflation to consumer price inflation is reached. Why do I think so? Unless a business downturn occurs, interest rates in the US cannot decline any further. A business downturn, however, would not be good for asset markets, as affordability of the inflated assets would become a serious issue. If, however, the economy continues to expand, inflation to accelerate, and interest rates to rise, then it would seem to me that even modest interest rate increases brought about by the Fed, or by the market if the Fed doesn’t take any action, would cool, or more likely depress, various highly leveraged investment or asset markets..." - Dr. Marc Faber
Economic historian, investment advisor and author. Quoted from his financial newsletter, 'The Gloom, Boom and Doom Report', April 20, 2005.
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[Quote No.36076] Need Area: Money > Invest
"FRODOR is a creation of my friend [the highly respected economist] Ed Yardeni and stands according to him for 'Foreign Official Dollar Reserves of central banks' and is 'the sum of U.S. Treasury and U.S. Agency securities held by foreign central banks. It is probably the best available measure of world liquidity because foreign central banks tend to transmit and to amplify U.S. monetary policy globally. The yearly growth rate of FRODOR is extremely pro-cyclical. It tends to rise during global economic expansions and to fall during recessions.' [It can be used as a Leading Economic Indicator as well as a Leading Market Indicator.] When FRODOR expands asset markets including stocks, commodities and real estate tend to perform well while the US dollar tends to decline. Conversely, when FRODOR growth decelerates, asset markets come under pressure while the US dollar strengthens." - Marc Faber
Editor and Publisher of 'The Gloom, Boom & Doom Report,' and author of the bestselling 'Tomorrow's Gold'. Quote from 'The Gloom, Boom and Doom Report', 6 May 2005. www.gloomboomdoom.com/gbdreport/indexgbdreport.htm http://www.gold-eagle.com/editorials_05/faber050605.html
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[Quote No.36078] Need Area: Money > Invest
"A recurring theme in this monthly commentary and in the more detailed Gloom Boom & Doom Report has been that we are in the midst of a significant liquidity contraction as a result of slower debt growth. The slowdown in credit growth depresses the US housing market, the stock market and increasingly commercial property prices and leads to far weaker consumption. Official statistics still maintain that consumption is growing but if inflation was properly accounted for it would show a pronounced decline in real terms. Don’t forget that lending standards are now tightening in earnest for both individuals and for commercial property lending. In turn, tighter lending standards hurt personal consumption and lead to a contracting US trade deficit as a result of lower demand for imported goods and also. Moreover, lower imports have negative implications for Asian economic growth rates. In turn, slower Asian economic growth amidst high inflation depresses the domestic demand in the Asian region, which then leads to reduced demand for commodities. In addition, a declining trade deficit leads to a decline in the current account deficit and a relative tightening of global liquidity as Foreign Official Dollar Reserve (FRODOR) growth slows down. Since FRODOR growth is inversely correlated with the USD and correlates over time with the movement of gold prices, any contraction in FRODOR growth would be USD supportive and negative for commodities and gold. I have a friend who is an outstanding economist who thinks that the Asian current account surpluses will shrink in 2009 by about 50% from their peak in 2007. In this scenario, global liquidity would become extremely tight and would have a devastating impact on asset markets including real estate, commodities, non-AAA bonds and equities. Such a decline in the Asian current account surpluses would cut the US current account deficit by half and lead to a very strong USD [currency]." - Dr. Marc Faber
Market Commentary August 20, 2008 - Interim Report www.gloomboomdoom.com http://www.gloomboomdoom.com/subscribers/download/080820_interim.pdf  
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[Quote No.36079] Need Area: Money > Invest
"Also a new bull market is unlikely to get underway soon because mutual fund cash positions are still very low [under 5% is considered low and showing complacency regarding cash required for redemptions so if there is a crash it will be made worse by redemptions requiring selling shares to get the cash]. Please compare today’s cash positions to the cash positions which existed at the 1982 (12%) and 1990 (13%) market lows! Over the last 18 months, households have been heavy sellers of equities (in order to maintain their spending). The support for equities in 2007 came only from LBOs and share repurchases. " - Marc Faber
Market Commentary August 20, 2008 Interim Report http://www.gloomboomdoom.com/subscribers/download/080820_interim.pdf
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[Quote No.36080] Need Area: Money > Invest
"...the 'newest economy' is characterized by seemingly endless bubbles, courtesy of the man who has done more to destroy the value of paper money than any one else in the 200 year history of capitalism: Mr. Alan Greenspan [in his position as the Chairman of the US Federal Reserve Bank]. The destruction of paper money as a store of value - the most important quality paper money should have - occurs only in one way and that is through increasing the quantity of paper money at a higher rate than real GDP growth [Refer ‘Global liquidity’ and USA’s ‘Foreign Official Dollar Reserve (FRODOR)’ – USA’s because it is the Global Reserve Currency]. At times this 'excessive' money supply growth will lead to real wages rising strongly [wage inflation], such as in the 1960s, or to commodity and consumer prices soaring [physical commodity inflation], such as in the 1970s. But, excessive money supply growth can also lead to the most dangerous form of inflation and this is [financial] asset inflation, which at times will boost equity prices to lofty levels (Kuwait in 1980, Japan in 1989, Taiwan in 1990, NASDAQ in 2000, etc) and on other occasions boost the value of real estate into cuckoo-land (Tokyo in 1990, Hong Kong in 1997, and now in the Anglo Saxon countries). The reason asset inflation is so dangerous is that central bankers - usually unemployable in any other capacity - not even as waiters - only pay attention to consumer price inflation. Therefore, when consumer prices do not rise much, for example because of international competition (as is now the case), they print money like water [to remove the chance of deflation - falling prices and rising purchasing power, which they believe is even more destructive than inflation - rising prices and falling purchasing power, especially regarding loans because they become even harder to service as time passes in deflation. Refer 'The Debt-Deflation Theory of Great Depressions', by the economist, Irving Fisher, published in 1933]. So, with the entry of China and India into the global economy we had low consumer price increases around the world - although higher than the statisticians in the US are under political pressure computing, calculating and doctoring - and this led Mr. Greenspan to create, after he fueled the NASDAQ investment mania with easy money, another gigantic bubble: the housing bubble! There are many ways to recognize a bubble. One of the most reliable indicators that an investment mania is underway is always very high volume." - Marc Faber
Editor and Publisher of 'The Gloom, Boom & Doom Report,' and author of the bestselling 'Tomorrow's Gold'. Quote from 'The Gloom, Boom and Doom Report', 6 May 2005. http://www.gold-eagle.com/editorials_05/faber050605.html
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[Quote No.36081] Need Area: Money > Invest
"[Turning points in markets – boom to bust or bust to boom indicator; bearish/negative or bullish/positive divergence:] Usually if a new high in a physical market is not confirmed by the stocks in the respective sector - that is if there is a divergence in the performance between physical and financial market we call it a non-confirmation. If the non-confirmation occurs following a long term up or down trend it frequently leads to a very sharp reversal whereby an uptrend is followed by a collapse in prices and a downtrend is followed by an explosive upward move." - Marc Faber
Editor and Publisher of 'The Gloom, Boom & Doom Report,' and author of the bestselling 'Tomorrow's Gold'. Quote from 'The Gloom, Boom and Doom Report', 6 May 2005. http://www.gold-eagle.com/editorials_05/faber050605.html
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[Quote No.36443] Need Area: Money > Invest
"I keep on accumulating gold. Not to own any gold is to trust central bankers [not to deliberately devalue the government's unsound, fiat currency to surreptitiously inflate away debt and the purchasing power of your savings], and that you don't want to do." - Marc Faber
Noted economist, investor, financial commentator, author and publisher of the 'Gloom, Boom and Doom' report.
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[Quote No.36449] Need Area: Money > Invest
"Whenever you have proliferation of fraud on a massive scale... it’s a very very clear symptom of a bubble of a mania." - Marc Faber
Successful share investor and commentator. Publishes the financial newsletter, 'Gloom, Boom and Doom Report'.
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[Quote No.38790] Need Area: Money > Invest
"[In a falling share market] Extreme negative sentiment is a contrarian indicator [as all the people who are going to sell have already sold. So the supply of selling can be easily overcome with a small increase in demand from buyers on even slightly less negative economic or company information]." - Marc Faber
Famed investment strategist and author of the 'Gloom, Boom, Doom Report'.
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[Quote No.60398] Need Area: Money > Invest
"The moment you diversify, your returns are suboptimal, but it's likely to preserve your capital." - Marc Faber
Swiss investor based in Thailand. Faber is publisher of the 'Gloom Boom & Doom Report' newsletter and is the director of Marc Faber Ltd, which acts as an investment advisor and fund manager. [http://www.zerohedge.com/news/2016-09-13/dow-100000-marc-faber-warns-central-banks-will-monetize-everything-introduce-sociali ]
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[Quote No.30849] Need Area: Money > General
"What is remarkable is that for as long as there was no Federal Reserve Board - that is between 1800 and 1913, the purchasing power of the dollar was more or less constant. However, as soon as the Fed was formed in 1913, the purchasing power began to decline - in fact by 92% over the last 100 years or so." - Dr. Marc Faber
Famed investment advisor
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[Quote No.35775] Need Area: Money > General
"...lending money to friends has been a disappointing experience since neither has ever any of the money lent ever been returned nor did the friendship continue! " - Marc Faber
Famous financial advisor and author.
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[Quote No.41633] Need Area: Money > General
"I think in life success comes on many different levels, monetary success is just one of them, there are many other ways to be successful in life. If you have a happy family and are a good father, this is also a measure of success, if you can help other people this is also a measure of success. I think our society over rates monetary success and associates success with having a big house, having 3 cars, being able to go on holidays and live the good life when in fact, these are all relatively superficial symptoms of success." - Marc Faber
Investment advisor and author of 'The Gloom, Boom and Doom Report'.
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