Caroline Hyde: What should they be doing? What policies would you want to be enacted, Mr. Faber?
Marc Faber: I want to tell you, the less policies, the better it would be. We all learned at school that the free market and the capitalistic system is the best allocator of resources, and now what we have is the worst allocation of resources because it’s the government that tells you how these resources are allocated and they continuously expand their interventions, and I can tell you, I started to work in 1970. In the 70’s and early 1980’s, central banks actually never came up in discussions. They have now become like the messiah, and everybody watches what the central banks do and in the end, in my view, they will have, from a long term perspective, no impact whatsoever. Now can they move markets short term? Yes, but maybe not in the direction they want to.
Hyde: You talk about allocating resources, Mr. Faber. Allocate my resources for me right now, because I’m looking at the picks that you have and you’re saying, get into the dogs of the world, of course, your usual pun. Brazil. You’re saying get into Brazil, get into Russia. How are you going to convince me? I mean, such political turmoil there.
Marc Faber: Well, you see these emerging markets like Brazil and Russia, of course they are in recession, whereby Russia is doing better than Brazil, but the valuations have come down very substantially, and if you ask me, Marc, where should I allocate my funds today in the U.S. stock market, which is essentially very highly priced by any measure, priced to sales, priced to earnings, and so forth. Market cap to GDP, the U.S. market doesn’t come out favorable. Now, the emerging markets, they have corrected significantly, some since 2006, and some since 2011, and I would say they are relatively attractive, so if I have to invest money today and I’m investing all the time money, because I have a cash flow, I invest in emerging economies. You can buy the Singapore stock market with a four percent dividend yield. Well, Singapore is a relatively sound economy. It’s diversified and it’s well run, unlike the U.S., unless, of course, the U.S. is run by Mr. Trump. Then the U.S. will improve.
Barton: Are you really a fan of Mr. Trump, Marc? Do you really believe — ?
Marc Faber: It is all relative. Given the alternatives, I would vote for Mr. Trump, because he may only destroy the U.S. economy, but Hillary Clinton will destroy the whole world.
Barton: Why will Hillary Clinton destroy the whole world? What’s the evidence? (laughter)
Marc Faber: Look. Look at her nation building in the Middle East, how successful that has been.
Hyde: But Mr. Faber, I mean, we’re seeing from Donald Trump’s potential policies that he wants to slow international trade between the United States and other countries. Surely that’s going to be a block upon free markets.
Marc Faber: Well, I agree that it is negative if you have restrictions on a free market. That, I agree entirely. But you have to equally see that the U.S. has essentially given in on a lot of things that benefit other countries. If you look at, say, the growth, 2000 to today, which countries have done relatively well? The emerging markets have done fantastically well. Their GDP has gone up substantially. The standards of living have gone up substantially. They have accumulated large reserves, and so forth. The U.S. and Europe and Japan, relatively speaking, have been declining, and that, the statistics are visible from industrial production in emerging economies. It’s doubled in the last 12 years. Global trade, you look at the share of emerging markets, it’s gone up. The developed world, the U.S., Europe, Japan, it’s gone down and so forth. So I think that maybe we have to find a way to have a more balanced approach to global trade. I’m not saying protectionism, but the more balanced approach that is fair to the developed world.
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.