Dr Doom - Correction to be 30%

[wayneL]

Video interview with Dr Marc Faber on Bloomberg Click link in menu on right.

I always like what Dr Faber has to say as it marries up pretty closely with my own thoughts.

Main Points:

* The expansionary policies of CBs are the cause of this crisis. Printing more money will exacerbate the problem.

* We only have a correction of 8% which is only a minor correction. Let the market run its course.

* Investors have become unaccustomed to downside volatility.

* Correction should be in the order of 30%

* We are at the beginning of a bear market.

* Problems are many and there are no easy solutions.

* Not impressed with US productivity.

* CDOs are garbage and a worldwide problem

* Cutting Rates will tank the dollar

* (Laughs at sound economy hypothesis) Ernings always greatest at the top and always a disaster at the bottom.

* Expects earnings disappointments next quarter.

* US economy already in depression… growth just inflation.

* Bailing out banks is a mistake and it won’t work… system will eventually work it out providing the dollar doesn’t tank.

* At the July peak there were poor internals with high number of stocks making yearly lows

* Market leaders (GOOG, AAPL etc) to lose 40%

* Emerging markets are particularly vulnerable in an environment of de-leveraging.

* Real estate to decline

* Bullish on reasonably priced farmland.

 

[Agentm]

'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'

maybe,,

but is it as big as people make out.. berknanke said 50 - 100 billion, only 1% of US motgages.. tops.. and he should know..

storm in a tea cup until reality checks come into play.. IMHO

 

[Sean K]

but is it as big as people make out.. berknanke said 50 - 100 billion, only 1% of US motgages.. tops..

This is one of the type of figures that has stuck in my mind, which has made me hesitate about jumping completely into the Bear's den.

The US is much, much bigger than even 100 sub prime morgage houses and a couple of investment bank's hedge funds. Are these events another excuse to take money out of the market at a peak?

Having said that, who's to say that any of the information we are receiving is correct?

Having said that, I think Marc Faber has one of the biggest brains on the planet!

 

[Agentm]

next week it will be flu, then it will be korea, then iran..

Fear...

fear drives the market down, and theres always a ton of cash waiting to make it big on the ride up..

if the figures are right i am not in the slightest bit concerned..

 

[tech/a]

There are 2 fighting factions.
Bulls and Bears.
Both are using real bullets/Money.

You can choose a side load up and take the punt that youve picked the strongest most well equiped side.You may even become a double agent,using sniper tactics to pick off players in both sides--dont get caught though neither take prisoners!
You maybe wounded or even killed.

OR

You can take no part and watch.Waiting to see which overcomes which before choosing a side.
Ive been in enough wars to know which I prefer.

 

[Sean K]

Ive been in enough wars to know which I prefer.

Double agent?

 

[Pager]

Marc Faber is forever a pessimist, every so often he gets it right and his predictions look good but no more so than any other market commentator/expert.

It does make me laugh though, we may well be at the start of a bear market who knows, maybe another correction, I don’t want to guess but every time there is a bit of weakness, we start to see Mr. Faber on the likes of Bloomberg with his message of doom!, not that long ago since the last shake out and guess who was preaching doom doom doom, how often does he get it right, maybe this time maybe not?.

Cheers

Pager

 

[noirua]

Marc Faber is forever a pessimist, every so often he gets it right and his predictions look good but no more so than any other market commentator/expert.

It does make me laugh though, we may well be at the start of a bear market who knows, maybe another correction, I don’t want to guess but every time there is a bit of weakness, we start to see Mr. Faber on the likes of Bloomberg with his message of doom!, not that long ago since the last shake out and guess who was preaching doom doom doom, how often does he get it right, maybe this time maybe not?.

Cheers

Pager

Hi, All fair comment. I watched an interview with Marc Faber on Bloomberg TV about a Month ago. In it he seemed to be covering himself by saying, that it was all about which sector was invested in and not a particular asian country. He seemed to be saying that he'd invested in certain sectors in Singapore, Hong Kong, Thailand and China. Most of the investments were to do with the buying of land in Thailand, Singapore and Hong Kong. Also highlighted the weak Hong Kong Dollar.

 

[Pommiegranite]

He's not a pessimist:

"* Bullish on reasonably priced farmland"

 

[dhukka]

This is one of the type of figures that has stuck in my mind, which has made me hesitate about jumping completely into the Bear's den.

The US is much, much bigger than even 100 sub prime morgage houses and a couple of investment bank's hedge funds. Are these events another excuse to take money out of the market at a peak?

'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'

maybe,,

but is it as big as people make out.. berknanke said 50 - 100 billion, only 1% of US motgages.. tops.. and he should know..

storm in a tea cup until reality checks come into play.. IMHO

Get ready for a dose of reality boys, that figure will turn out to be well short of the final count. The first estimates are always the kindest. Remember this is from a guy who has consistently said that the sub-prime problem is contained.

More importantly that figure does not take into account the mortgage baceked securities or CDO markets and the leverage behind them.

 

[CanOz]

More importantly that figure does not take into account the mortgage backed securities or CDO markets and the leverage behind them.

This is what i was thinking, its not just the defaults thats killing the MBS holders, its the leveraged effect right.

Cheers,

 

[dhukka]

Video interview with Dr Marc Faber on Bloomberg Click link in menu on right.

I always like what Dr Faber has to say as it marries up pretty closely with my own thoughts.

Main Points:

* The expansionary policies of CBs are the cause of this crisis. Printing more money will exacerbate the problem.

* We only have a correction of 8% which is only a minor correction. Let the market run its course.

* Investors have become unaccustomed to downside volatility.

* Correction should be in the order of 30%

* We are at the beginning of a bear market.

* Problems are many and there are no easy solutions.

* Not impressed with US productivity.

* CDOs are garbage and a worldwide problem

* Cutting Rates will tank the dollar

* (Laughs at sound economy hypothesis) Ernings always greatest at the top and always a disaster at the bottom.

* Expects earnings disappointments next quarter.

* US economy already in depression… growth just inflation.

* Bailing out banks is a mistake and it won’t work… system will eventually work it out providing the dollar doesn’t tank.

* At the July peak there were poor internals with high number of stocks making yearly lows

* Market leaders (GOOG, AAPL etc) to lose 40%

* Emerging markets are particularly vulnerable in an environment of de-leveraging.

* Real estate to decline

* Bullish on reasonably priced farmland.

Great interview, thanks for posting it Wayne. You have to like Faber - a straight shooter who knows his stuff. I think you covered most of the points. I'd add one that Faber noted.

That is that investors have gotten used to buying the dips of small corrections and then seeing the market rally to new highs. Many of those will be disappointed when the market fails to rally to a new high in the short term exacerbating the fear.

 

[noirua]

To put matters in perspective, Dr Marc Faber only controls funds worth US$300 million which puts him in the minnow class of big hitters.

 

[CanOz]

Thats a great video, particularly the emphasis on this unwinding or deleveraging effect on the markets, thats to me is the key here...Cash is king for me too, save save and save until this thing is worked off. Working this off will be the only solution that will work and not make it worse.



Cheers,

 

[numbercruncher]

'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'

maybe,,

but is it as big as people make out.. berknanke said 50 - 100 billion, only 1% of US motgages.. tops.. and he should know..

storm in a tea cup until reality checks come into play.. IMHO

Well thats just a big fat lie, well atleast not telling the whole truth anyways ...... more than 100b has already been injected to the system from central banks, if that figure was true it would of been cheaper to pay out all those morgages and say "have a nice day"


This is what happens in the great rort of modern economics, that so called 100b is probably used as security on a trillion worth of loans .... The home gets bought on borrowed money, Banks turn the mortgage into securitys, people/Hedge funds/companys again borrow to buy these securitys, and inturn they then borrow against those securitys to buy more "investments" ..... Its a big fat debt fueled rort that comes tumbling down as soon as the suckers whom bought the houses they couldnt afford in the first place stop making repayments.

And Billions and billions more of these Subprime and Liar Loans have there rates adjusted upwards each month for years to come, I beleive the peak is October with 50b+ that month alone, Id hate to think just how much is loaned or at stake with these mortgages as the underlying security.

It simply has to get worse before it can get better, Unless the Fed massively slashes interest rates but that would open yet another big drama .......


Talk about caught between a rock and a hard place, Central Banks caused this whole problem by fuelling an asset boom with their low interest money, will be interesting to see how they intent to fix it!

 

[CanOz]

To put matters in perspective, Dr Marc Faber only controls funds worth US$300 million which puts him in the minnow class of big hitters.

From what i've recently read, thats actually pretty high for an individual trader managing a fund. There are much larger accounts, but most are manager type positions for banks and investment companies. New Market Wizards covers some of these traders.

Cheers,

 

[dhukka]

To put matters in perspective, Dr Marc Faber only controls funds worth US$300 million which puts him in the minnow class of big hitters.

How does that put anything he said in the interview into perspective?

 

[noirua]

Just for a moment, I'll get away from Dr Doom as I can't hear his video due to a computer problem.

Australian mining stocks should be far better off, those that are producing in Australia, as the US Dollar gets stronger. Receipts in A$ terms are up around 6% from a few weeks ago. DR Doom is usually far too busy discussing his interests and forgets about Australasia.

 

[dhukka]

Just for a moment, I'll get away from Dr Doom as I can't hear his video due to a computer problem.

Australian mining stocks should be far better off, those that are producing in Australia, as the US Dollar gets stronger. Receipts in A$ terms are up around 6% from a few weeks ago. DR Doom is usually far too busy discussing his interests and forgets about Australasia.

Well that's nice, but how does the fact that Marc Faber manages a paltry $300 million put anything he says into perspective?

Incidentally how much did Long Term Capital Management manage? How did they end up?

 

[nizar]

Remember what Marc Faber said about the gold price?

Oh yeh -- he never put a time frame on that -- so i guess he can never be wrong -- just early

Yeh Marc Faber got the 1987 crash right, he got Asian Crisis right and he picked the Commodities boom correctly, but how many calls between all those were wrong?

But then again no remembers when he got it wrong

And $300million is nothing.
Read this article
http://www.dailyii.com/article.asp?...040590&stage=True&zonZoneID=156&pagPageID=218

Paul Tudor Jones manages $5.3billion. James Simmons about the same.
Daniel Loeb $3.8billion.
Steve Cohen about $4billion.
Jerry Parker $1billion.


Even local guys like Kerr Nielson manage several billions (is it about $10??).