The Hindu Business Line : Nuggets

Dr Marc Faber is the guru of modern investing. His opinion on markets and currencies are meticulously implemented across the world. He is one of the savviest observers of trends across different asset classes in the global markets. His own firm, Marc Faber Ltd, offers investment advisory and fund management. Dr Faber publishes a widely read monthly investment newsletter The Gloom Boom & Doom. He is also the author of several books including the highly acclaimed Tomorrow’s Gold — Asia’s Age of Discovery published in 2002, which highlights the investment opportunities around the world. Below are a few of his quotes:

“As an investor, you need to buy a post-office scale. When all the reports on a stock or sector are light, it means ‘buy’. Conversely, when the weekly reports you receive on an industry add to several kilos then ‘sell’!”

“It is much easier to pick bottoms than to judge market tops. Tops are usually formed with spikes and no one knows when the bubble will burst but the bottom is a long extended period of side ways movement.”

“Follow the course opposite to custom and you will almost always be right.”

“A bear market is a financial cancer that spreads. Intermediate rallies (occasionally very strong ones) keep the hopes of investors alive. Furthermore, by continuously publishing bullish reports, brokers and economists, like good nurses, keep the flame of hope from burning out. But after 18 to 36 months of continued losses, total capitulation usually sets in and a major low occurs.”

“At the start of a bear market, nobody knows it is a bear market — they just think it is a correction.”

“Whenever an economy has high dependence on a single commodity, the business cycle will correlate very closely to the movement of that commodity.”

“Inflation works in three ways. One, by lowering real prices and, two, by threatening continued erosion in purchasing power of cash. A third is through the “wealth effect”: When asset prices inflate, people misperceive the inflation as true wealth and increase their spending.”

“In the long run most things will appreciate in value, but the problem is that most companies live only 30 years and then they die. In other words, they go bankrupt. So when people talk about stocks going up in the long run, one would have to constantly re-balance one’s portfolio. One could also argue that stocks go up sometimes but they fall as a result of inflation adjustment or in other words against another currency or gold.”

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