This is a long clip but worth watching. Faber says govt’s “have no other option in the long term but to print more money and that will lead to inflation.”
He makes the point that gov’t’s are trying to “ensure lending” when the reality ought to be the opposite. He says what they ought to be doing is encouraging saving and lower consumption, “but that is painful”.
He says in a recession that “ordinary” American’s will not get hit that bad but the owners of the assets will.
I tell you, the the more I look at it, the more I am thinking we are in for a period of “restrictive economic times”. Now, the argument should be made that this is good because we have been “too loose for too long”. While that may be true, like Faber says, getting back to normal will be painful and unpleasant especially for those too exposed.
It also argues against simple index funds as the major markets may go nowhere for a while but there ought to be plenty of individual winners in the mix.
5 replies on “Mark Faber Pours Cold Water on Today’s Rally”
excellent clip synthesing most of the up and down reports universe and trending it out.
I draw the conclusion that the equities that make sense are some of the dividend paying infrastructure and commodity stocks that focus on real growth and not service industries that rely on earnings growth.
Just in reference to SHLD, shouldnt this theory mean that SHLD could be depressed for a couple of years as Lampert basically is managing the growth of ‘assets’?
OTOH, it should spell good news for DOW. BTW, THANKS for your reporting on DOW. I entered at $24 and look forward to 6% div. yld for years to come.
I am a big fan of Value Plays. Keep up the excellent work.
aitraders
dow…agreed
shld, a tough one. i think the bet is on lampert ability to monetize assets vs growing them organically.
now he could grow them through acquisition..
i think the new structure of the company will open it up to currently unavailable options (craftsmen in HD for example).
if you used a Macy’s i might agree but shld is a much different story..
time will tell though..
For my retirement planning, I plug in 8% returns. At it’s current yield, DOW looks very, very attractive. But what about the relatively high payout ratio in a recessionary enviornment?
i don’t believe Dow has ever lowered it dividend
Dont get me wrong. I am in SHLD with both feet as I agree completely with your thesis – craftsman in HD, diehard in AZ, lands end in ‘pick any big retailer’, and then after AZ and AN, stakes in other companies to add to the ’empire’. He has to learn the Buffett ‘hands off’ – big test.
Just the Faber theory about assets would depress evaluations of different asset components (like real estate) and keep intrinsic value expectations down until asset values begin rising again.
Would expect Lampert to pick up some more SHLD at $50+ (would hope).