In this episode, host Eric Chemi engages with Marc Faber, the Editor and Publisher of ‘The Gloom, Boom & Doom Report.’ Known for his candid and often contrarian views on the economy and financial markets, Marc Faber offers a wealth of insights. From assessing the quality of global leadership to the impact of central banks’ policies on economies and personal investments, Faber delves deep into the current financial landscape. Don’t miss his unique perspective on where to invest and the potential future of the global economy.
Eric Chemi 0:05
Welcome to Wealthion. I’m your host, Eric Chemi. Today we are joined by Marc Faber. He’s the publisher of the gloom boom Doom reports, and is well known in market circles, especially for his so called pessimistic stock market commentary. Mark, thank you so much for joining me here at the beginning of the year, appreciate you coming on the show.
Marc Faber 0:23
Well, thank you very much for having me. And for giving me your time. And I wish all your viewers a prosperous, and life fulfilling 2024
Eric Chemi 0:37
For sure. I think we’re all we’re all trying to get that right. That’s the goal for everybody. And my first question is, I know you’re in Asia, you’re in Thailand. It’s noon here on the East Coast. What time is it over there? And like, I appreciate you making time for me in the middle of the night.
Marc Faber 0:53
1212 in the morning,
Eric Chemi 0:57
so it’s exactly 12 hours. So I knew
Marc Faber 1:01
midnight plus 12 minutes.
Eric Chemi 1:03
That why I appreciate that. If you were not with me right now, would you even be in bed because I got the sense that you’re kind of a night owl, you’re a late guy.
Marc Faber 1:11
I never go to sleep before eight or 10 o’clock in the morning, because I work at night. Okay, because a lot of markets trade around the s&p. I mean, it may happen that the market goes up when the s&p closes down. But it’s rather exceptional. So when the s&p closes down, it brings about the negative tone to other markets to the Asian markets, which then open after the close in New York. How
Eric Chemi 1:44
do you sleep? At eight in the morning, nine in the morning, when it’s sunny outside? How long can
Marc Faber 1:52
people sleep? I don’t know how other men sleep, I sleep any time I sleep the base on my chair when I fall asleep working or watching a movie or whatever.
Eric Chemi 2:06
Is there anything? Is there anything in the markets right now? That I would say keep you up at night? But maybe they’ll say that keep you up in the morning? Or to prevent you from falling asleep? Is there any stressful events in the markets or geopolitics that that worry you?
Marc Faber 2:18
Well, it doesn’t worry me specifically in my daily life. But I’m deeply concerned about the quality of the bureaucrats we have in the western world in the US, and especially in Europe. The quality of our leadership is a disaster. I mean, if you compare to the great presidents the US had in the 19th century, then we really have had in the last 20 years, a series of completely incompetent characters.
Eric Chemi 2:54
How would you rank the incompetence? If you look at the last 20 years, if you look, you know, 2000 onwards.
Marc Faber 3:02
I’m not the school teacher. And I’m not in the quality of Harvard and servers. But common sense is an important feature for someone who has competence and the talent for organizing and for implementing policies that make sense instead of that, or policies that are based on some kind of ludicrous ideology. So we have an example as an in the case of Germany, which was in the 50s and 60s, so called via shaft swung during the miracle economic miracle. And the country did very well until the late 1980s 1990s. We had in my opinion in Germany in the form of Karl Otto Pearl, who was the chairman of the Bundesbank, the CEO of the Bundesbank, we had a brilliant, intelligent, central banker with common sense. And now we have in Europe, all this money printers. And the worst part is this intervention is that central bankers have become the when you hear their speeches, they want to do this, they want to do that. And it’s all nebulous, because they are data dependent themselves. And it would appear to me, sadly, that the current Fed chair is also motivated by politics. In other words, his desire is to have The Democrats specifically Biden reelected. And at all costs. To avoid having a Trump winning the elections. Yong Yong said, it seems to me that the government, the Treasury Department, and the Janet Yellen, who is not exactly a qualified person to run anything in government, and the Fed is all the same. And the deficits in the US, as you should know, are enormous, over 6% of GDP, in what the administration calls an economic expansion. I’m not so sure the economy is expanding. But that’s what the administration says, and we have these deficits, you take the deficit the way it has no economic growth, and devastate these idiots for years and years, they told us that through the monetary, modern modern monetary theory MMT that deficits wouldn’t matter. And now they have it in front of their eyes that it matters because the interest payments on the debts are going ballistic, up strongly.
Eric Chemi 6:21
So those facts I think we can we can all agree on. Right? I think that’s a that’s anyone who doesn’t know that is missing something important. So my question is knowing that, how are you personally invested? Where do you actually put your mark Farber money?
Marc Faber 6:36
Well, the guiding principle is not to trust any politician or any central bankers, they’re all liars. They mislead the public throughout the period that they’ve been in, in office. And my sense is, the only way to really protect yourself, is by owning precious metals. I’m not saying it’s the best investment, but it’s kind of a safe way to protect yourself from I have to emphasize this the evilness of central bankers, because the central bankers are basically bankrupting the middle class and the lower classes, and are of benefit to pigs like myself that have assets, you understand, we have precise statistics, how much of the wealth in America is owned by the richest people and how much is owned by the 50 poorest people. I mean, there shouldn’t be any poor people in America, it should be reasonably well distributed. But it’s happened because of monetary policies, because the asset holders benefit from asset inflation, including me, I’m saying this as an economist and a social observer, not as someone who is an investor, but as an investor, I don’t care how much they print, because something goes up and something goes down. And it is our duty as fund managers and investors to find the sectors that will go up and the sectors that will go down.
Eric Chemi 8:25
So I guess that’s that’s my question is, a lot of people watching a lot of people listening, they’re gonna agree with you that they’re concerned about Fed policy about central bankers about inflation, about printing money about the value of MMT. And so that’s what I was getting to like, knowing all that, but what do they do about it? Do they stay invested in the market? Are you invested in the stock market? Are they just do you just own a bunch of gold and silver and you keep it at your house? And what do they actually do? If they 100% agree with? What should he actually transact in them? Because I assume you don’t, you don’t just have gold and silver? I assume you’ve got money in equity markets, maybe you even have some fixed income?
Marc Faber 9:02
Yes. But I mean, it’s a good idea to hold some gold in your garden somewhere. But don’t tell your relatives about it, because you may get killed relative is poisoned or whatever. And the other point I want to make is, you understand your question would have been easy to answer in the 1950s. My grandparents always told me Mark, you have to work and 10% of your salary you put aside and you save and you put it in kantonalbank is kind of state institutions in Switzerland. They’re owned largely by the cantons by the states. And it’s very safe. And but this has changed you understand money in the bank, in an inflationary environment, never pays the surface Shouldn’t interest is always sort of below the true cost of living increases. Now, the problem with gold, there are many problems. I don’t want to go into all the problems. But one of them is obviously, where do you keep your gold? Because if the government’s at the great wisdom, because they’re all dictatorial, although they pretend to be elected by the voters, they behave like the worst dictators and locked people up, and when to the population said, if you work for the government or so and so you have to be vaccinated, you understand, they can force the most evil measures on the people, because people don’t resist anymore. This is the problem of the current environment in the world, is that the people who are who can think, don’t resist sufficiently and they don’t go and vote sufficiently to vote the socialist and green communists out of government?
Eric Chemi 11:09
What is the perspective like being in Thailand? Not living in the States anymore? You know, you’re seeing this from afar, right? The news flow is different, right? You’re not You’re not in New York City. You’re not in Washington, DC every day? What is your perspective? Being an outsider being your 12? timezones what you’re as far away as possible from the United and maybe that’s on purpose?
Marc Faber 11:32
No, it’s not by purpose. Because let me tell you the following. People sometimes asked me well, how can you live in, in a country with it, which is run by the army or king and savours? I want to say that I’m Swiss, and in Switzerland, I feel that I have far less freedom than when I’m in Thailand. As long as you don’t viciously attack the government, and you don’t make any nasty remarks about the King. Your individual freedom in Thailand is very high, very high. And
Eric Chemi 12:18
what kind of freedom now freedom to speak freedom to act, what kind of freedom do you have there that you wouldn’t have in America,
Marc Faber 12:25
I can go anywhere and buy a can of beer or a bottle of beer, I don’t need to shop with a license to sell me b or something like this, you understand that there is freedom in America when I go to a hotel, and I want to go buy a beer outside the hotel, because the hotel bars or mini bars are so expensive. Or if I want to go and buy a bottle of whiskey, I have to travel for ages to find the liquor store. This is what destroys the economy, regulation by the government. And that mean I don’t have a very high opinion of Trump. Actually, I have a rather low opinion of him academically speaking, and intelligent wise. But by doing nothing for four years, and eliminating a lot of dead wood regulations, the economy under him, and the mood on him was much better than it is at the present time on the Mr. Biden.
Eric Chemi 13:33
I think a lot of people think that way, I think you’re gonna see, you know, maybe he’s gonna win as a result, right? We, we can get into that, right. That’s a whole other perspective we’ve got for the next
Marc Faber 13:46
we need to know who is counting the votes. And Starling who was a very intelligent man, correctly observe, it doesn’t matter who votes what matters is who counts the votes. Right.
Eric Chemi 13:57
Right. The the other the other question I want to get into with you is knowing these facts that we know the debt is massive, we know the deficit is getting bigger. We know, we know that they’re paying so much on interest rates. And we know that there’s a lot of political coordination between the Fed and the US government, right? We know all of those things, right? So yes, we’re Wait, when do we see that ticking time bomb, right? Because we could have said the same things 20 years ago, right? Or let’s say 15 years ago, post, oh, seven or eight. And here we are. 15 years ago gotten richer.
Marc Faber 14:32
I was a very good friend with Stan salvage axon. And he was called Aaron Steen, and Charlie mentor, they were the three leading strategist at Merrill Lynch in the 80s. And already in 8586, they started to talk about excessive debt grows. And if one thing has surprised me The world that I have to admit openly when I studied and also earlier in my career where I started to work in 1970, on Wall Street, and interest rates were in 19 76%, on the 10 year Treasury, and then they went to over 15%. In 81, I never would have anticipated to see in my life negative interest rates. I had read at university, the works of Silvio Gizelle, who, at the beginning of the 20th century, had written books about how to drive consumption. In other words, you introduced negative interest rates in the banks. So people will not save money, and then they go and spend it, you understand this was kind of a economic surface, because the economy needs savings in order to carry out the capital investments. But anyway, and ever, so I would say it because interest rates at the end of the 1970s, were at 14 15% interest and the interest rates on on deposits was 22% bank deposits. So nobody expected interest rates do go up as much as they did. And then nobody expected them to go as low as they did eventually, in 2010 2020. But the one thing that I want to say about your questions about investments are knowing that we all know that. I think people have to analyze everything more in nominal terms, but then adjusted for inflation. Now you and I, we could have a discussion for three hours about what is inflation, I’d like to say inflation is principally a monetary increase in the system. In other words, the quantity of money goes up. And the level of interest rates will never tell you whether money is tight or not tight that I want to stress. Because in Turkey, we have 100% interest rates, and we have inflation at around 100%. And you go into Istanbul, and life goes on like normal. So even at 100%, you can have easy monetary policies, which happens during high inflationary period. The criteria is tight in a tight monetary environment, the currency strengthens strongly. And there is very little speculation. In other words, you don’t get I give you an example. The Russell 2000 Made in October November, a new low. And within 48 days, it made a new high never happened before. This is the kind of things that happen when money is that there’s plenty of liquidity in the system that many people overlooked. That’s why I’m telling you, I would not be a heavy short seller of stocks. I might be a short seller of the dollar. But even that I wouldn’t do because I don’t know what the central bankers would agree with each other because they coordinate their policies.
Eric Chemi 18:53
So despite all these concerns, you would still stay long stocks or you certainly wouldn’t be short stocks because these things can whip around and you say fundamentally, it’s because you think interest rates are not high enough. They’re still too easy at the moment. Is that right? Am I understanding that?
Marc Faber 19:10
Correct. But they may come down somewhat in the next few months. And that would have to explain why exactly. But in general, I think that we began an inflationary upcycle. And as a former central banker in America, said, the Fed chair, he said it’s easy to squeeze the toothpaste out of the tube to bring it back into the tube is next to impossible. That I agree. And this is with inflation. You know, everybody says it’s over and suppose I don’t believe it’s over and not at all. over inflation, if
Eric Chemi 20:02
you are Jerome Powell right now, if you are in charge, what would you be doing then? Would you be even thinking about cutting? Would you be jacking rates higher?
Marc Faber 20:09
Right away and resign from the mistakes I made?
Eric Chemi 20:13
Okay. Okay, so let’s say let me let me rephrase the question. Let’s say the real Jerome Powell resigns, and they put you in charge. And now you’re starting on day one, what would you do tomorrow?
Marc Faber 20:25
Tomorrow, they will kick me out.
Eric Chemi 20:27
Probably, let’s say, let’s say you can survive though, right? Let’s say what would you do to charge? Let’s
Marc Faber 20:34
say, you’re an optimist, they would kick me out with a huge kick,
Eric Chemi 20:39
they wouldn’t even let you in the building. They need security security blocking you from the building my
Marc Faber 20:44
keys away. Anyway, but I tell you what, I think that I mean, in a, I know that nobody will vote for my view. But my view is, in the Western world, the government’s need to cut government expenditures by 50%, five, zero, they have to cut Social Security, they have to cut defense spending. All these American bases all over the world are useless in my opinion. And the other thing I want to say. We had price increases over the last three years now we may debate for a family with children and the family without children, a family that owns their home outright. And the family that pays mortgages, variable mortgages, or rent property. Everybody has a different rate of inflation, right? My rate of inflation in the last three years was relatively low, because the price of beer has stayed steady didn’t go up.
Eric Chemi 21:57
That’s that’s your number one expense.
Marc Faber 22:00
No, cigarettes is the number of
Eric Chemi 22:04
cigarettes and beer you sound like. You sound like a 19 year old teenager, right? It’s cigarettes and beer?
Marc Faber 22:11
No, I’m a worker and a union worker. Anyway. But the point is simply, let’s say over the last two, three years, the cost of living for most households has gone up between 15 and 25. And maybe 30%. True, correct? Yeah, roughly. Now, this year 2024, the rate of price increases is only say one or 2%. Because the rate of inflation is coming down, let’s assume is 1%. Then the central banks will say, Oh, you see, we brought down inflation. And they will then do what will they do? They will print again money quantitive easing number IO, in 2009. When they started, I said, it’s going to be infinity, they will never stop printing money. And everybody thought things in your life is to stop smoking, stop taking drugs, and to stop printing money for central banks. Because the system is adjusted to it, we have debts, there’s only one option for the US government default, or print money. And in all societies, all societies, whether the Babylonians or the Romans and the Greeks, they have eventually printed money, because that’s the easiest to do this the least painful. So
Eric Chemi 23:49
let’s let’s try to put you back to let’s say somehow, miraculously, you’re in charge of the Fed, would you be? Would you be raising rates? Let’s say we know, we know your right? Government needs to cut spending? We know they’re not going to do it. Right. So let’s say you go to Congress and say I need you to cut 50%. And they say no, we’re going to increase spending. Now it’s back to you at the Fed? Would you be raising rates to six to seven to 8%? What can you do? Or is the Fed fundamentally powerless in a world?
Marc Faber 24:18
You could do it? I would increase it to 20% 20%? Yes, then the Congress may wake up Congress may wake up because Congress is as useless as the Roman Senate. Under the Emperors they had no power anymore. I
Eric Chemi 24:37
think Congress has power and they have the power to spend. They have the power to put laws and rules into place there. They have the power to take away those freedoms that you talked about in Thailand. I think they’re not powerless.
Marc Faber 24:47
If they are not powerless, but it’s a uni party blaming describe that very well that Congress doesn’t represent the interests of the ordinary American people. But it represents its own interest. Predominantly, every CEO has to announce what stocks is buying and what stocks is selling. And whether it’s trading his own stock. Every Wall Street executive, I also took all the causes on Wall Street, when I became a registered trade representative, a principal of a company, and the branch manager and option exams, one exam after the other. So I know the rules. But the congressmen they can trade in stocks on inside information. I
Eric Chemi 25:38
know it’s really bad. And I know people. It’s
Marc Faber 25:41
not bad. It’s unfair to society and the shows precisely the arrogance, and complete disregard of public interest by politicians. Even honest people there one day in political office, they become liars.
Eric Chemi 26:01
Yeah, you know, it is funny to watch who to chooses to go into into politics. So the thing is that as we know, like, you’re going to sit back in, oh, 70809, this is going to be infinite, the money printing, right? And people who are concerned about it, they still were better off keeping their money in the stock market, right? They made good returns keeping their money in equities. If they had gone to cash, they would have done much worse. So is the answer, then you still have to stay invested in stocks regardless?
Marc Faber 26:31
Yes, but that’s what I’m trying to explain. In the printing, money printing environment. It’s very dangerous to short stocks. Because I think that the Magnificent Seven are grossly overvalued and so forth. But I would have said the same in 2000. And between Christmas tussah, 9099. And March 2000 2000. The NASDAQ went up another 30%. Right, three months out with my shorts in 99. But I had huge losses.
Eric Chemi 27:09
How often do you try to short scale? Do you even try to short sectors, indices countries, or you only do single names?
Marc Faber 27:19
I don’t do it, I rather go into cash. But what I wanted to say before you see in the 50s, you could put your money in a bank and say it’s safe, that you cannot do anymore. Nowadays, money on deposit in a bank is not safe. That is should be clear to anyone. Otherwise, today, I could get 5% interest on my deposits, or even more than 5%. But I am reluctant to put all my money on deposit that 5% is enough for my lifestyle. Although I still work and I earn my money from my business, not from my investments, the investments the societies. But I don’t think that the investments have gone up much more than the cost of living increases. And especially say, I look at home prices. Home prices have gone up much more than say cash deposits. And the Fed. Yellen was the president of the San Francisco fed. When the bubble burst in 2007. The San Francisco Fed is responsible for California, Nevada, Arizona, the three greatest bubbles in America in housing in 2007. Were in these districts and Yellin couldn’t see it. Couldn’t see it. It’s hard to believe that in politics nowadays, incompetence gets rewarded. They’re Shut up towards them. You also in Europe, you look at ossola underlying She’s the head of the EU or at Lagarde. All incompetent people but the more incompetent you are the higher you go in politics. I
Eric Chemi 29:15
don’t feel like you would get too far in politics.
Marc Faber 29:17
Look, I’m in the committee of an initiative in Switzerland for neutrality. The best Switzerland can do is to stay neutral. It’s good for the world. They can have all kinds of negotiations between evil people and less evil people. Good people don’t exist in politics. But let’s see well, maybe. But anyway. I had as a result of that a little to do with politicians. Never in my life life would I go like to go into politics to besides the fact that I’m too old. I mean, I don’t want to waste my time with these idiots and Same I can say never, never in my life would I go and work in university never.
Eric Chemi 30:06
The Union mentioned the housing reminds me, at least from my perspective, and I’ve heard this so many other people, if you look at the three biggest areas where we see massive inflation, is health care, it’s housing, and it’s college education. And those are the three things that the US government subsidizes. So the things that they’re trying to help us by subsidizing, those are the things that the prices run rampant and, and you sort of wonder, if they had stopped subsidizing it, maybe the prices would come down, because those those companies, those businesses, would have to actually have a market appropriate price. And not that we just keep giving you loans to maximize whatever price they want to charge you. The
Marc Faber 30:48
government officials are mostly left leaning characters, and also the wealthy people like the socialists. And I tell you why. The easiest in life is to bribe a socialist, because he’s so incompetent, that you can even bribe him with little money.
Eric Chemi 31:09
Have you seen that from direct experience?
Marc Faber 31:12
I don’t bribe people because I don’t run a big business and so forth. And I was subjected to the temptation of bribes. But I didn’t do it because I never needed it in my life. My desires for wells are inferior to my morals.
Eric Chemi 31:32
Do you sometimes wonder I liked that I liked that phrase, your desire for wealth are are less than your morals, right? The probably not
Marc Faber 31:42
the high morality person. I
Eric Chemi 31:48
like less than degrees of evil. It’s like they’re all still at the bottom somewhere. Do you sometimes think when you see when you see this world around you moving in this direction, like when you see where we were 15 years ago, or 30 years ago, or 50 years ago? And you see now, do you ever think maybe I’m crazy, right? Like maybe Marc Faber is getting it wrong, because everyone around me seems to be crazy. So they either all they’re crazy, or I’m crazy. Does it ever sometimes make you so frustrated and disappointed that that the rest of the world is not seeing it the way that you’re seeing it?
Marc Faber 32:23
I live a life, most of the time in solitude, you understand, I stay in the North of Thailand in my house. And across the little road of my living house is my office building. So I’m close to the living house. But I can also stay in the office, which I do at the present time because my house is being redecorated at the present time. Because it’s an old Thai house, but the office, I am alone the whole night. And you are say someone I talked to now. And when I finished this interview, I have to go to a birthday of a friend of mine, who is in an unfortunate situation because he drank a bit too much. And that diabetes, then he had to cut all his toes offensive force, but he owns a bar. Is is a is a positive character.
Eric Chemi 33:28
You’re going tonight at one in the morning? Yes, I
Marc Faber 33:32
go now at one and then I come home around four, three, whatever. And I’m not disappointed. Not at all. I sort of think that it’s normal when you give the vote to everyone. I don’t think that the founding fathers of the US and the Greeks they had democracies and also other countries had democracies. But it was never a question that everyone could vote that should be understood. And I’m not sure that democracies are the ideal system. Some people say they’re all the systems are bad, but democracy is better. The problem the way democracies are structured today is that people do not get punished for very bad decisions and evil decisions. You understand, as I said, you get promoted. If I run a business, I make a mistake, I lose a ton of money. And in the worst case, I have to close down my business. This is the point I want to make is a personal responsibility doesn’t exist by in government circles. And I have a very low opinion of politicians very, extremely low.
Eric Chemi 34:53
I see that and I think anyone who goes to your website will see that too. Anyone who reads your report will see that too.
Marc Faber 34:58
I move around On the lowest Circles of Society nightlife, in the worst fires you can imagine, but I feel more comfortable among these people than among politicians. The
Eric Chemi 35:12
ranking when you look at different countries, right? If you’re obviously there’s opportunities now to invest across the globe, no matter where you are. Would you invest in in US stocks? Here we are in January, you know, first first week here, stocks are starting to decline. Would you be investing? Would you be going along in the US? Would it be Europe? A lot of people I’ve talked to say Europe’s got even more problems than the US? Would it be parts of Asia? Correct. If someone’s got money, let’s say they’ve got some money, right? They got to put it somewhere, they got to put it to work, you can’t put it in the bank. Like you said, that’s gonna get you nowhere. You can’t, you can’t buy all gold and stick it in your in your garden. So you got to put in an equity somewhere, how would you rate the countries? And what factors are you looking at for that ranking?
Marc Faber 35:51
I don’t want to give advice, I can only tell you what I do with my money. That’s
Eric Chemi 35:57
the most interesting to me is what does Marc Faber do with his money.
Marc Faber 36:00
So I’ve starting with Europe, I have a portfolio in Switzerland. I’m Swiss, have a Swiss passport. And I own some properties in Switzerland, and essentially a patriotic Swiss. I’m in Switzerland, we have left wing political parties, the Socialist Party, sp, and then we have S. VP, they call it a right wing party, I would rate myself as being far right from the right wing party in Switzerland, I mean, miles away from the party in Switzerland, and in Germany. But I have investments in Switzerland, and also in other European countries in France. And in I keep some gold in Switzerland, in safe deposit boxes. And then I have a portfolio of resources in Canada, which include some gold shares, but the gold share component in my portfolio is very small compared to the physical gold, and silver and platinum that I hold, because I don’t hold gold, because I want to become rich. But because I consider it to be relatively not 100%, but relatively safe. Okay, so this is the European and resource part. And then I also own Asian stocks, have a portfolio of Asian property stocks. And I’ve increased this in the last two, three months significantly. Because I think that an unusual opportunity has arisen in Hong Kong, Hong Kong property stocks. Most of them are not highly leveraged, there’s one or two companies that have leveraged but the other ones have very low leverage. And some have no leverage, no dates, zero dates. In other words, the families own everything. And these companies sell at between, say, a 60 to 75% discount to asset value. So the asset value of the share market, that of the of the marketplace, is significantly higher than the share price would indicate. So if I can buy an asset at a 60% 70% discount to asset value, I think the risk is still existent. But in absence of a huge debt load, it’s not that great. And I’m the first one to think that Hong Kong property prices will still go down. But I wrote a very negative book about city, Hong Kong in 1997, when the handover took place. It was a history of the rise and the fall of cities. And it’s always the case when an empire takes over a city whether it was Augsburg or Venice, or Tangier, the city’s importance diminishes, that is clear. But Venice has survived relatively well. Until today. You know, and Hong Kong, the character is changing from a very international city. It will become a very important city within China, and specifically within the Greater Bay Area that GB a around Hong Kong including Guangdong Province and Guangzhou, these are 80 million people. So if I am important city in our country was 80 million people, I think I can do quite well. And Hong Kong still has unusual freedom for people. And the infrastructure. I’d like to hear from any of your viewers in America. Where is it guaranteed that in rush hours, you’re inserting minutes from the center of the city at the airport? Show me that in America? I’ve been many times in the Kennedy two hours sometimes. And in horrible taxis.
Eric Chemi 40:55
Yeah, the Kennedy, the getting from Kennedy to New York City to actually get to Manhattan is often longer than the flight itself in many circumstances, right? So that’s your investments. And so it’s real estate, gold physically and in shares.
Marc Faber 41:15
All kinds of shares, because in Asia, we have essentially two in Well, I mean, two important conglomerates, the Swire group, and Jardins, Jardins. They head office or legal offices now in Singapore, and their stocks are quoted in Singapore, and among their companies, a Hong Kong Land, dairy farm and charging cycle and carriages and Jardine Matheson, all these companies sell at a huge discount to asset value, also Swire that is why this why group is a very high quality group, because it’s run by a very, say conservative family. Extremely low key and conservative, nice people.
Eric Chemi 42:09
What’s your advice for people who, let’s say they’re stuck here, they can’t go to Thailand, they can’t move to Thailand, right? They have their regular job, they’re working class, they want to save they’ve got kids and the hearing here they think, I don’t know if I’m ever gonna make it. I don’t know if I’m ever going to be able to provide for my family. I don’t know if my kids are ever going to grow up in a country where they have the same opportunities that they did or that you did you know, at that age, previous generation. What’s your advice for them? What are they supposed to do?
Marc Faber 42:37
Well, I think that, you know, I see this in Jewish families, mostly, that the parents are very kind of concerned about the good education, and that they have the right teachers and so forth. And when I see Randi Weingarten Weingartner, she’s the president of the Union of the teachers, then it I feel sick. You know, to have someone like this, representing the teachers union is a disaster. I mean, it’s a horrible thing. I think I would give or put more time into the education of my children.
Eric Chemi 43:21
That’s probably the best thing.
Marc Faber 43:24
I think that our us I mean, although I have a strong criticism of its government, the typical American is a nice guy, and is a decent person. What came in through the migration is another story. You understand in terms of culture, and of religion frequently, and of the morals. That tip typical American is a hard working guy. No, this was always our impression that the American that they actually do work more than we Europeans. But nothing exceeds the evilness of the American State Department that I need to point out. They are run by Neo cons who want to war and everywhere they interfere when a foreign country interferes in America. It’s a huge violation. But the Americans interfered everywhere. I’ve seen it with my own eyes. And I know it because I was the trustee of the children of one of the democracy leaders during the demonstrations in Hong Kong in 2018 2019. These demonstrations were instigated, organized and paid for by NGOs from the US. They wanted to do this Credit China. And the laws, the security laws have tightened in Hong Kong, because of this intervention by the Americans.
Eric Chemi 45:10
I feel like there’ll be a whole separate podcast. That’ll be a whole other topic that we could spend a lot of time on.
Marc Faber 45:18
But I noticed very well, I mean, the leader of the Democratic Movement of this demonstration is sitting in jail. His family can’t even visit him. He was a very good friend of mine. I’ve known him for 40 years for 40 or 50 years, because his wife is the best friend of my wife.
Eric Chemi 45:40
Yeah, no, no, I believe I think that was a very
Marc Faber 45:44
torturous time. Yeah. But the other point about markets, I just want to say I think Latin America is still looks reasonably attractive. It’s gone up a lot last year. I mean, Brazil has outperformed the US, as well as Mexico, and Argentina performed very well. But I think that Colombia has potential at the present time. And I have money in Latin America, because if it comes to world war three, which some Americans want, not the American individual, the American individual, he hates sore. But the politicians like it, and the defense industry loves it. And the weapon dealers and ask where are the weapon deals coming from? They love it as well.
Eric Chemi 46:32
You know, it’s never them who actually have to fight the war, right? It’s the regular working class people that actually have to put their bodies on the line. They’re the
Marc Faber 46:41
Roman emperors were mostly useless. But some of them were in the frontline of battles. Napoleon was initially also in the front lines. pattern was in the front lines.
Eric Chemi 46:54
I don’t see whoever wins the election. I don’t see whoever wins the election this year. I don’t see any of them going to the front lines. If we have a war. I don’t see that happening. I see
Marc Faber 47:02
them running down into the bunker. Yeah, they all cowards.
Eric Chemi 47:06
Mark, I appreciate the time, I really appreciate you walking through your investments and how you thinking about stuff and even say, you may be bearish, but it’s too dangerous to short. With such accommodative policy, it allows for so much speculation, I think that’s really important for our viewers to understand that and to hear that from you.
Marc Faber 47:22
Actually, the worst the economy becomes, the more likely that money is being printed. And I’ve seen many countries with my own eyes that were in high inflation with all the Latin American countries in the 80s and 70s. And also in China, and also in Russia, what happens is that the worst economy becomes, the more they print money. And so the stock market in nominal terms can go up like this, okay. But the currency then goes down like this. And as a result of that high inflation countries can get the very low level of price stocks of stock prices, like Argentina a year ago. And in 85, in 86, the Argentine stock market had a market cap of $600 million, the whole country’s $600 million. In the 1920s, Argentina was the third or fifth richest country in the world, no
Eric Chemi 48:35
longer no and not even close. And it shows you that with bad decisions, you can really have bad outcomes, right? Progress is not guaranteed. In the case of Argentina, for example, you can be one of the richest countries in the world. And now you’re just simply not even close to that because there were bad decisions made. Correct.
Marc Faber 48:52
But it wasn’t just bad decisions. It was bad decisions by the interventionist socialists, the populist Paragon and so forth spending money spending money without this worries me the most about the US. That complete disregard of saving money. The government, they don’t care. They send the billion here as building No, not a billion 100 billion here on the
Eric Chemi 49:22
trillion or 2 trillion here. A trillion them. Yes.
Marc Faber 49:25
I mean, I tell you in 1970, if someone walked into your office, or you got the client, and he opened an account with you for, say, half a million or a million, it was a huge account for an individual. The typical account, the average account at Merrill Lynch was about 3000 US dollar, nothing. Yeah. And now people say, oh, there hasn’t been much inflation bullshit. That’s been huge inflation in asset prices. And if you Your story for young people, there’s no way they can live my lifestyle. When they are 25 years old. I rented an apartment in Zurich, best location behind the theater. A Bellevue clouds is the best location you can have in Zurich. And I spent about 5% of my income on the rent. Show me anyone in New York, no way to
Eric Chemi 50:29
go by it’s 50%. Are you living with your parents? Yeah.
Marc Faber 50:34
This is the point,
Eric Chemi 50:35
that that’s what I was getting at earlier about the next general
Marc Faber 50:39
public, they say everything is wonderful.
Eric Chemi 50:42
Do you have any investments in the United States,
Marc Faber 50:45
I have, occasionally treasury bonds. That’s it. I think that you see, I don’t know how the world will look like in five years time. I’m not as terribly bullish about treasury bonds. But there is a chance that we are already in a what I would call a silent depression. It’s not obvious, but the standards of living are going down. That is clear that is statistically shown by the Fed actually. And the Bureau of Labor Statistics, the standards of living are going down. And we may slip into a depression. And it is possible that it could be a deflationary recession. So I’m not ruling out that Treasury bond yields before they go to 20% yield, that they drop, say the high was around 5%. On the 10 years, they could drop to say 3%. And then they go up to 8%, and then drop to three 4%, then they go up to 20%. But it doesn’t happen overnight interest inflation cycles, and low interest cycles, or long term cycles, the last 5060 years from peak to peak and trough to trough. There’s
Eric Chemi 52:03
a lot of a lot to think about it. I feel like my mind is going to be buzzing. Now the rest of the day thinking about everything you said thinking about how to process it. And
Marc Faber 52:16
let’s go to a bar. Yeah,
Eric Chemi 52:18
I know you get that birthday party to go to you got to hit the bar. Yeah, I appreciate the time Mark is super fascinating. I appreciate you walking through just how you’re investing how you’re thinking about it, and how you see different parts of the globe right now.
Marc Faber 52:32
I mean, in general, as an observation, I think wealthy families in the western world do not have enough money. In the emerging world.
Eric Chemi 52:43
How much do you think they should
Marc Faber 52:47
say, in New Zealand, and in Australia, and in the UK, and in Europe, and in the US? And maybe Canada was right, but they don’t have enough money in India, China, Thailand, Indonesia, Russia and so forth. This is a mistake.
Eric Chemi 53:06
What percentage should they have? Like 15%? Something like that, just to have some exposure to those areas? 5%
Marc Faber 53:14
equities in equities I have 70% of my investments are in emerging economies.
Eric Chemi 53:23
What do you think in America, like you said, a wealthy American family? How much should they be putting in emerging markets if they live in the US?
Marc Faber 53:30
Well, depends which family
Eric Chemi 53:36
whichever one, you’re thinking, maybe
Marc Faber 53:38
there are some families, it’s just put everything away. But I would say 88% of the global population lives outside NATO and EU and the US, you understand is a different world. And if 88% of the population lives there, I would consider having at least 50% of my money in these countries.
Eric Chemi 54:06
Make sense? Makes sense. So good. Thank you so much. We we went longer than we thought we’re gonna go we could keep going but I know you got you got a busy night ahead of you tonight.
Marc Faber 54:16
And you and all your viewers, I wish all the best in 2020. I think it’s going to be a very volatile year.
Eric Chemi 54:25
Thanks again, my guest Marc Faber for joining me here on wealthy on of course, if you liked the episode, or if you hated the episode, feel free to comment forward it share it engage with it. That’s how more people can be part of the debate. Right? He said some things that you might not like you might disagree with. But that’s why we want to present different opinions here so you can get a sense for what some people are thinking about. And that can help you figure out how you can invest as well. You want to hear all sides of the story here, especially in the markets. And if you’re thinking about someone to maybe help you with these investments, you can go to wealthy on.com There’s a short form there. We’ve got investment professionals that we endorse that we vet And that we work with it you can connect with. It’s free. There’s no commitment, there’s no obligation, you can just have a conversation. See if they’re right for you. Again, that’s a short form on wealthy on.com. And you can also put in your questions for Anthony Scaramucci show. He’s got a live show every Friday at 11am. Eastern so you can watch the show live where you can put your questions in on wealthier.com or you can do both. Thanks again for watching and listening American champion. We’ll see you next time.