SOS Marc Faber

Actually the US economy can falls into both

deflationist and/or inflationist

Watch the interview between Marc Faber and Martin Song (?) on CNBC in July, Marc Faber says he is more in the inflaionist camp because the entire world is printing money. However, he also do not preclude that if everything goes wrong, the stimulus unable to stop the wave, deflationist should not be rule out as well.

All the following issues are unprecedented (that's why alien problems require monster solution):

1. the amount of credit bubble build up over the last 20 yrs in US and the rest of the world


2. the stimulus plan of trillions pump into the market


3. the increase in derivatives over the last 20 years

So it is very difficult to predict the share market, depends, which extremes it goes. If items no. 1 and 3 overpower item no. 2, then it inflationist is likely to be right, but if it otherwise, deflationist is right.

I believe it will be a mix of both. Deflationary on capital goods, and inflationary on consumer goods.

Marc Faber, Peter Schiff and Jim Rogers are certain that in 0-5 yrs time there will be hyperinflation and USD currency is going to collapse. They are also certain the 2008 & 2009 US crisis is not the last, but within the next 3-5yrs, there will be another BIG ONE coming as the stimulus plan slow down the death.

Well, it is challenging task to predict the near future, but it is easier to foresee the longer term effects as Jim, Marc and Peter Schiff pointed out.

Perhaps, blend your thoughts of Jim, Marc and Peter with Robert Prechter, Harry Dent and Gary Shilling, you will be totally confused.

Marc has always point out to its audience, in investment, it is really depends on your investment profile, your age, appetite, risk taking, others. Marc advocates holding gold and real estates in Asia, he also mentioned he hold F&N in Bursa Malaysia.

He also said, it is better to hold stocks in Asia, Singapore, Malaysia or Thailand that gives a net yield of say 5-7% p.a. is far more better than holding a 30 yrs bond that has a yield of 2-3% and in stock you can participate in the upside on the recovery, which will easily outperform bonds.

However, Prechter advocates to play save until the deflationy depression plays out in a few years time, i.e. when everything collapse, capital goods and consumer goods and financial assets, then you can pick up the pieces then.

Jim Rogers is more of a long term trend reader, which he is very good at. He advocates, invest in quality farm land, water projects in China, agricultural stocks, crude oil related business, because the fundamental is getting better even if the world economy tank, and when recovery comes, these investment will be the first to recover and in a big way. He has stop buying China stocks since late 2008 and he did says, correction may be coming.

Well, Peter Schiff advocates more on precious metals, foreign stocks in agriculture, oil and high dividend yield stocks (mainly in Asia, Austalia, NZ). Of course, he advocates on hyperinflation.

MyTake

All of them are correct. The only different is the timing of their judgement. Perhaps we may have a 40% Prechter, 30% Jim Rogers, 20% Marc Faber and 10% Peter Schiff.

This way, you will always be right. Or just follow one school, but whatever it is, please do your homework, don't be slack, use common sense, use whatever tools you can to help you forecast.

Safest bet will be high yield stocks - some of the good criterion - very low gearing, monopoly, low impact by world economy downturn, strong ROE, proven track record.