Marc Faber's Asset Protection Plan: Machine Gun, Tank

He's joking, he says. He lists these two items to protect against "unintended consequences of market manipulation" by Mr. Bernanke under Mr. Obama, who he says "basically doesn't care about piling up debt".

"[U]nintended"?

From Zero Hedge (11/7/2012):

Faber on President Obama’s reelection:

“I am surprised with the reelection of Mr. Obama. The S&P is only down like 30 points. I would have thought that the market on his reelection should be down at least 50%...I think Mr. Obama is a disaster for business and a disaster for the United States. Not that Mr. Romney would be much better, but the Republicans understand the problem of excessive debt better than Mr. Obama who basically doesn't care about piling up debt. You also have in the background Mr. Bernanke, who with artificially low interest rates enables the debt to essentially escalate endlessly.”

Onwhere he sees the equity markets given Obama’s reelection:

“You have offsetting factors. The problem with Mr. Obama is that you get more regulation and it’s disincentive for businessmen to hire people. You probably also get higher taxes, so in terms of the economy, he is very negative in my view. But you still have Mr. Bernanke, and you still have because of money printing very high corporate earnings. They are now coming down, but they are still at the elevated level. You have money printing supporting the market and on the other hand, you have an economic slowdown globally which will affect earnings negatively. It is difficult to tell where the market will go because we have so much manipulation. I think, minimum, it will drop 20%.”

On how investors should protect their assets:

“They should buy themselves a machine gun…I need to buy a tank. Joking aside, look, we have manipulated markets. Whenever you manipulate markets, you will get unintended consequences. i think the reelection is unintended consequence of money printing, that favors the so- called 0.25%. It was easy for the Democrats to attack the wealthy fat cats of Wall Street, the elite, and the privileged people to portray them as a profiteer of the system, which to some extent, they are. Not because they wanted to but because Mr. Bernanke enabled them to be profiteers. We have a situation where you have today Mr. Obama, I doubt he will stay at the presidency for another four years. I think there will be so many scandals, but that’s another story.”

Zero Hedge has the video of Mr. Faber's interview with Bloomberg TV.

The stock market looks to stage a DCB (dead cat bounce) from the drop of over 300 points in Dow Jones Industrial on Wednesday, with Dow E-Mini futures (December) right now 34 up from the close of the day. Not much of a bounce but flat-lining. For now.

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November 3rd: A "Sell the News" Event?

No, not the election results but the decision by the Federal Reserve on November 3rd on QE2.

While regular news is almost nothing but the mid-term election and last-ditch campaigning (amusing news today was that Prez Obama skipped lobster dinner at a R.I. fundraiser for scooping the dog poop - I can't believe he actually said that to the guests when they were about to eat... but oh well what do you expect, this is the same guy who skipped luncheon with the king and the queen of Norway after receiving $1.4 million prize money), the financial media has been focusing on the day after the election, Wednesday November 3rd, when the Federal Reserve's FOMC meeting concludes; analysts and pundits have been expecting the announcement of a new round of asset purchase by the Fed, so-called QE2.

Will they, or won't they? And how much?

Will the market do a 'flash dash', or 'flash crash'?

Marc Faber thinks the investors will be disappointed a little bit if QE2 is short of $1 trillion, but he also thinks Bernanke will launch QE3, QE4, and so on if the market reaction to his QE2 is a dud.

The stock market is overdue for correction, but it corrects after the widely-expected Fed announcement it may be a buying opportunity, he says, and a crack-up boom in stocks and commodities may ensue.

Longer-term, he's bearish bonds and cash.

Here's the interview on Bloomberg:

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Marc Faber: We Ain't Seen Anythin' Yet

at the Mises Circle on Austrian economics and finance. The 1-hour video was posted on Lewrockwell.com, "The Coming Economic Catastrophe" (5/31/2010).

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Dr. Doom (Marc Faber) Says "Buy Stocks"

because U.S. dollar will be worthless.

Marc Faber, of The Gloom, Boom and Doom Report, says there are money-making opportunities in stocks, by going long.

In his interview with Yahoo Tech Ticker,

"However, in the near term, Faber sees plenty of money-making opportunities in stocks. Sure, prices aren't as cheap as they were in March, yet he's confident, "in this environment cash will become worthless." As a result, he says investors are, "better off being in equities," for the next two to three years."

He sees value in energy and mining stocks, and some more:

• Newmont Mining (ticker symbol: NEM)
• Nova Gold (NG)
• Chesapeake Energy (CHK)
• Exxon Mobile (XOM)
• Large-cap pharma like Pfizer (PFE), Johnson and Johnson (JNJ) as defensive play
• Airlines including Thai Airways
• Russian market
• U.S. real estate
  

(If the video doesn't work (as the embed code keeps disappearing after I paste it!!), click on the link to Yahoo Tech Ticker here and view it at Yahoo.)

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How Much $100 Will Be Worth In Inflationary Economy

Marc Faber (his interview with CNBC is 4 posts down, or here) thinks hyperinflation is coming. Other people think it is deflation that's coming. I am leaning toward inflation. The monetary base is already 100% inflated, and I don't see how the Fed can collapse it back without collapsing the entire economy.

In case it is indeed inflation/hyperinflation, here's a table that tries to show how much US$100 is worth at different inflation rates. I did this exercise a while ago, but I've added a few more columns for hyperinflation possibilities.


Even a benign inflation of 2%, your $100 will be worth 20% less after 10 years, and worth only half after 30 years. If the inflation rate is 8%, $100 will be worth half after 8 years, and retain less than one-fifth of the value after 20 years. If it's a hyperinflation like Mr. Faber is talking about (10 to 20%), the value of the dollar gets halved after only 5 years. This Harvard professor will get his wish; he wants to see 10% negative return on money so people would rather spend like maniacs.

For those of you who are more visually inclined, I plotted the same data in a graph. The dotted blue line near the bottom is 95% from the top ($100).

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Marc Faber on Hyperinflation

(Make very, very sure you mute the ad in the beginning.)

"The first period , from 1800 to 1930, when the price level was stable and actually moderately falling. We had a deflationary boom in that period. The United States had 4 million people in 1800 and in 1910 it already had 90 million inhabitants. In this period we had the entire industrialization of the US, the construction of railroads, electricity, the first cars, the first airplanes and so forth under a stable price level.

"Then the introduction of the Federal Reserve in 1930 and since then the US dollar has lost 95% of its purchasing power. We already had a lot of inflation. And if it took 100 years to lose 95% of its value, I think that the next 95% loss in purchasing power will be very quick."

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