Thursday, June 10, 2010

Marc Faber says......equities will not visit Mar 09 Lows !

Cash and bonds will be very dangerous

Saeromi Shin SEOUL
INVESTOR Marc Faber said cash and bonds will be very dangerous in the next 10 years as governments increase money supply to cover fiscal deficits.
Theres no other way out but to print money, Faber, the publisher of the Gloom, Boom & Doom report, said at a forum in Seoul on Wednesday. In the long run, all paper money will go exactly to its intrinsic value, which is zero. Faber advised investors to protect themselves with assets such as gold and silver.
Bullion climbed to a record in euros, pounds and Swiss francs on Tuesday as investors sought to preserve their wealth against declining currencies. Risks to the global economic outlook have risen significantly and room for policymakers to support growth has become much more limited and has, in some cases, been exhausted, International Monetary Fund Deputy managing director Naoyuki Shinohara said in Singapore on Wednesday.
Total assets held by US Federal Reserve banks rose to a record $2.35 trillion on May 19 as central bankers printed money to buy debt and rescue lenders as credit markets froze during the global financial crisis. The European Union last month pledged a E750 billion ($900 billion) aid package to prevent a debt spiral that could spread from Greece to Spain and Italy.
Bill Gross, who runs the worlds biggest mutual fund at Pacific Investment Management, says the best is over for bonds. Record budget deficits and sales of government debt will eventually spur inflation, drawing the almost three-decade bond market rally to a close, the Newport Beach, California-based firms co-chief investment officer, said in a March interview.
Earlier this month, he said the US is emerging as the least dirty shirt because it is drawing investors who are seeking safety during the European debt crisis.
Spot gold has climbed 12% this year and silver has advanced 7%. At the same time, the euro has slumped 16% as the fiscal crisis made money managers wary that some debt-swamped nations might default, or even revert to old currencies. The MSCI World Index of stocks has slid 10%.
If not gold and silver, you will be better off with equities, Faber said, adding that stocks are unlikely to revisit the lows set in March 2009. They may not go up a lot, but they will adjust to money printers at central banks.
Faber advised investors to buy US stocks on March 9, 2009, when the S&P 500 reached its lowest level since 1996. The measure subsequently rallied as much as 70%. He also predicted in May 2005 that stocks would make little headway that year, with the S&P 500 gaining 3%.
Faber was less prescient in March 2007, when he said the S&P 500 was more likely to fall than rise because the threats of faster inflation and slower growth persisted. The S&P 500 climbed 10% between then and its record of 1,565.15 seven months later. Bloomberg

My Comments:
We all know that Marc Faber is the biggest critic of Ben Bernanke and Fed.He has always said that Dollar will lose value and will become junk.
Thousand of investor has relied upon him and followed him.I have never relied or believed in what he has said.But now when he himself says that Eqs will not visit Mar 09 lows.
He also says, Cash and Bonds will be dangerous while Gold and Silver and Eq will be a good hedge...mostly we invest in equities or remain in CASH, we do not invest in BONDS as that is for big institutionNow decide your self...what u need to do...khud hi phaisla karo ..whether we wants to remain in CASH or remain invested......

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