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Dr. Marc Faber: How not to lose money?

Monday, August 22, 2011

I have the greatest respect for Dr. Marc Faber and his insights have so far been spot on. In a recent interview, he said "I am ultra-bearish about everything geopolitically. In an environment of money printing, we have to ask ourselves, how do we protect our wealth? ... Where do we allocate the money?"

In summary:

1. Treasuries:

"U.S. government bonds are junk bonds," Faber said. "As long as they can print, they can pay the interest. But another way to default is to pay the interest and principal in depreciating currency." (AK71: Yup, countries inflating their way out of hard times has been done before.)

2.  Cash:

Specifically, the problem in Faber's view is the loss of purchasing power as inflation whittles away the value of money. (AK71: I believe he is referring more to the US$ and also the Euro. The S$ has been strengthening and we are still seeing inflationary pressures but it would be much worse for the US$ and the Euro.)

3. Stocks:

If you print money, stocks will not collapse. (AK71: I am sticking to my plan like glue! Remember my plan?)

4. Emerging markets:

Faber's own stock portfolio is centered on dividend-paying Asian shares, particularly in Malaysia, Singapore, Thailand and Hong Kong. These include a variety of real estate investment trusts and utilities. (AK71: Honestly, I knew that he was a fellow investor in Hyflux Water Trust but I did not know that he is also into REITs! I like this. Stick to the plan!)

5. Gold:

Faber is convinced that the price of gold will continue rising and that any pullback is a buying opportunity. And as a currency, Faber said gold should be held in its physical form and not in shares of gold miners or even exchange-traded funds. (AK71: I have recently replied to a reader that I feel that I am underinvested in gold and silver. However, being in Singapore and having S$ denominated assets, I feel much safer.)

Read complete article here.

Related post:
1. Sleep well at night with a plan.
2. Hedging and precious metals.
3. Hyflux Water Trust: Privatisation.
4. Staying positive on S-REITs.

6 comments:

Singapore Man Of Leisure said...

You must be sleeping like a baby!

The price of success and doing your own thing is to get "labelled" as a REIT and average down investor.

We see what we want to see. Not all your readers will want to see your sector rotations and your cut-loss moves (you don't sell into panic; but reduce in the rebound).

Well, at least I see YOU, my myojo mee friend. Not maggi mee but close enough!

AK71 said...

Hi SMOL,

Another comment from you in an investment related post! Wow! I am honoured. ;p

I don't know if I would consider myself a success. I think I should be worth more if I were successful. Some people younger than me are worth more than me, as you know.

Labelled. I have a label? That's interesting. ;)

Don't start on instant noodles. I have not had any since my last blog post on the cup noodles from Korea!

INVS 2.0 said...

Hi AK71,

AIMSAMP Capital proposes 5-into-1 share consolidation, which will see investors receiving a new share for every 5 shares held.

Is this a good news?

AK71 said...

Hi INVS 2.0,

Been short on time the last two nights. So, although I was wondering if I should blog about this, I decided that it is not really an important development. Why?

Well, the fundamentals of the REIT have not changed. The value stays the same. Of course, on the face of it, per unit is worth more now but we will own proportionally fewer units anyway.

Technically, this is unchartered waters. So, is this a good thing in terms of unit price? Can't tell.

In the end, there is really nothing meaningful to blog about. ;)

financialray said...

Dr Faber forgot to mention another way not to lose money. Don't fall into bear traps.

AK71 said...

Hi financialray,

Dr. Marc Faber is a macro-economics guy. TA doesn't matter to him. ;)

Of course, you have raised a valid point. Thank you. :)

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