Saturday, November 28, 2015
MARC FABER : We had a fabulous time for Asset holders
MARC FABER : Well, my view is that we had a fabulous time for asset holders, from 1981 to recently. Stocks went up. Interest rates went down. In other words, that lifted bond prices.
If you invested continuously with the cash flow every year since 1981 in 30-year bonds, you’ve actually outperformed equities. But you have to roll it over and you have to reinvest the interest.
If you invested in homes in 1980, even after the recent decline, you’ve still made a lot of money. In particular, if you invested in high quality homes, in say Newport Beach, Vancouver, Whistler Mountain, Sun Valley, Aspen, the Hamptons, New York City, Madison, Fifth Avenue and so forth, those have gone ballistic.
If you bought a Roscoe or Picasso painting in 1980, by now it’s up maybe 20x. So lots of things have gone up a lot in price, and that was the ideal time for asset holders. But from here on I expect asset returns to be very muted.
Now you can come to me and say, “Yes, but if you invested in Facebook, you would have made a lot of money.” Yes. But I can then turn around and say that Facebook investors, they probably also owned GoPro. They owned Yelp and Twitter, all stocks that have tumbled. You understand?
So that one stock has done fantastically well and this is one of the problems for the stock market. At the present time, there are only about 10 or 15 stocks making new highs. The broad market-- in other words the ‘generals’ are moving ahead, and the soldiers behind are no longer following. They’re all down. They’re all dead.
So the market in my opinion has very little upside potential. Bonds have very little upside potential. Gold, silver, and platinum probably have the best upside potential in this environment. But it may take a while until it really gets going. -- in Sprott Money
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.
Posted by Nicole Bourbaki