Friday, January 6, 2017

Marc Faber : Indexing has become The Game in town Globally

What would you say about the state of the market?

Marc Faber : The market has adjusted downwards and we are in a buying range. As for the economy, it does not matter whether India grows at 5% per annum or 7% per annum but if you look at the next 10 years or so, you could easily expect an economy that on an average grows anywhere between 4% and 7% per annum. That is a very high growth rate compared to practically no growth expected from the US or in Europe.

I believe that earnings eventually track nominal GDP growth. In the long run, earnings expand at roughly GDP growth rates. The valuations in India right now are reasonable. But I would like to add one thing. In the last few years, indexing has become the game in town globally. A lot of money has been invested passively in ETFs that just buy the index.

When I look at 2016, we see huge differences in the performance of different sectors in the US. The best performing sector was essentially gold shares. But other than that, energy was the best performer and one of the worst performance was from biotechnology. The world is now moving back into essentially a “stock pickers’ environment” where people who are in the right sectors perform very well.

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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.

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