"I would be interested in investing in the physical goods space..." - Views on News from Equitymaster

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  • Jul 21, 2008 - "I would be interested in investing in the physical goods space..."

"I would be interested in investing in the physical goods space..."

Jul 21, 2008

Dr. Marc Faber was born in Zurich, Switzerland. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics. In June 1990, he set up his own business, Marc Faber Limited, which acts as an investment advisor, fund manager and broker/dealer. Dr. Faber publishes a widely read monthly investment newsletter "The Gloom Boom & Doom Report" report, which highlights unusual investment opportunities. He is also associated with a variety of funds.

He is the author of the book "The Great Money Illusion - The Confusion of the Confusions" which was on the best-seller list for several weeks in 1988. His latest book is “Tomorrow’s Gold”, which sets out to find tomorrow’s gold - the outperforming asset class of the future. His website is www.gloomboomdoom.com

On the Economy...

Equitymaster: The resilience of the Indian economy is something that is oft spoken of. What are your estimates of economic growth in India, both in the next couple of years, and from a very long term perspective? What do you think are the biggest challenges we face going forward?

Dr. Faber: Indian economy along with other emerging economies will continue to grow faster than the developed economies. If you look at the 200-year-old history of India, under the British rule, it had gone through a period of de-industrialisation and that really affected its GDP growth rate. But now the benefits of liberalization are for everyone to see. As far as the biggest challenges to growth are concerned, I see poor infrastructure as one of the biggest challenges in India’s growth path.

On the Stock markets...

Equitymaster: Are you invested in the Indian stock markets? Are you putting more money to work? Which sectors/stocks appeal to you in present times?

Dr. Faber: The Indian stock markets have traversed a journey from 3,000 to 21,000 in 5 years and now they have corrected back to some 13,000 levels, which to my mind is also a very good performance. As far as I am concerned, while I would generally avoid Indian markets even at current levels, the one sector that I would be interested in investing is the physical goods space. This could be anything from metals to other value added products.

On the Debt Markets...

Equitymaster: Any opportunities in the debt markets that make investment sense presently?

Dr. Faber: Among debt instruments, I like the Euro denominated bonds because I believe Euro to be a lot stable and stronger currency than say the US dollar.

On the Commodity markets...

Equitymaster: The commodity markets have had a fantastic run in the last few years. From an investment perspective, which commodities appeal to you the most?

Dr. Faber: There had been a bear market in commodities between 1980 and 2001. This means that the commodities did nothing during this period. It is only after 2001 that we have seen commodities go up the way they have. Bull markets in commodities typically last for decades and hence by that yardstick, we are only at the beginning of the commodities cycle. While I would like to advise caution for the next six months or so, longer term I continue to remain bullish on commodities like Zinc, Nickel and Lead.

On Gold...

Equitymaster: Gold again has delivered very good returns in the last couple of years. Where do you see gold prices headed say in the next couple of years, and also in the very long term?

Dr. Faber: Positive on gold over the longer term but investors should be prepared for a correction in the medium term.

On Real estate...

Equitymaster: Real estate prices globally have taken a big hit. Are you now seeing some investment opportunities emerging there? What’s your take on the Indian real estate market?

Dr. Faber: Real estate market is a fragmented market with prices differing from one city and one colony to another city and another colony. I think the market will continue to perform poorly as a house in India is still out of reach of an average Indian. Indians should try to own houses without mortgage liability rather than speculate in stocks.

On the Currency...

Equitymaster: How do you see the Indian Rupee faring against the other major currencies in the world?

Dr. Faber: The Indian rupee will continue to weaken in the near to medium term.

On Asset Allocation...

Equitymaster: Is there any advice you would like to give to investors in India?

Dr. Faber: I would to tell equity investors to become light at every rally

Also Read:

  • Jim Rogers - "It looks to me that this is the right time for a bounce..."
  • Ajit Dayal - "India is a big buy. India is on sale."

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    Aug 14, 2020 (Close)