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Dr Doom sings a different tune

Published August 27, 2007

Don't enter Asian markets now, says Faber

'At this point I do not like any of the Asian stock markets and I would hold cash and wait for better entry points,' Dr Faber told The Business Times in an email interview.

These points could present themselves over the next six to 18 months, he added.

'I believe we have seen the high for most stocks including Singapore stocks for 2007,' he said.

'We are in the midst of a global tightening. Under these conditions asset prices will find it difficult to increase. At the very least I would wait for a retest of the recent lows.'

But Dr Faber noted that excluding financial centres such as Singapore and Hong Kong, real estate in Asia is reasonably priced.

He added: 'Here and there I find some stocks with dividend yields of between 5 and 7 per cent. So, at least you get paid a higher return than deposit rates when owning these companies.'

In 2002, Dr Faber wrote a book, titled Tomorrow's Gold: Asia's Age of Discovery, that detailed investment opportunities in Asia.

ASIA is not attractive now as asset price increases are likely to be crimped by the latest credit crunch, said Marc Faber, who has been bullish about emerging markets in the region.

Published August 27, 2007

Dr Doom sings a different tune

This investment guru is well-known in the financial circuit for his contrarian calls and bearish remarks, writes JAMIE LEE

Investors wiped the sweat off their brows and heaved a sigh of relief.

Not Marc Faber. Quite on the contrary, the 61-year-old investment guru has labelled the move as 'not justified' in a Bloomberg interview last week. He argues that the current problems in the credit market are a direct consequence of irresponsible monetary policies over the last 20 years.

'The Fed is acting as if it was trying to reduce the pain of a drug addict by giving him more drugs,' said Dr Faber in an e-mail interview with The Business Times.

'In particular after 2001 the US pursued ultra expansionary monetary policies and kept interest rates artificially low for far too long. So, now the Fed wants to 'save' the system with policies that brought about the problems in the first place. Not a very wise decision, in my opinion!'

Such is the signature style of Dr Faber, also known as Dr Doom after the gloomy Bible prophet Jeremiah: bold and non-conforming.

And Dr Doom - who spots a short ponytail and rides a motorcycle in Thailand, where he and his Thai wife live - has found fame in the financial circuit for his contrarian calls and bearish remarks.

In a separate Bloomberg article, he said the US economy will be in a recession three to six months from now, and expects corporate earnings to tumble, adding that the benchmark indexes may decline more than 30 per cent.

The doomsayer had spotted excessive speculation in 1987 US stock market, and told his clients to retreat before Black Monday.

In addition, the Swiss-born fund manager recognised a huge over-valuation of Japanese equities, with the Nikkei hitting miraculous levels of about 39,000 in 1988, and warned of an impending crash. He was also spot-on about the 1997 Asian financial crisis, which shattered regional economies.

But Dr Doom doesn't just bet on bad news and he counts himself as an optimistic person, because 'otherwise, I would not ride motorcycles in Thailand', he quipped.

Instead he looks for 'contrarian heaven - quiet, forgotten, low-key markets', according to the book Riding the Millennial Storm by Nury Vittachi, which profiled Dr Faber and his investment ideas. In 1988, he recommended stocks listed in Argentina - a country which had an estimated 600 per cent inflation rate then. The next year, the sleepy market stirred; by 1993, the index had jumped more than ten-fold.

But detractors have pointed out that some of his predictions fall short on timing and criticised his early 'sell' call on the US bull market in the mid-1990s.

Gloom, boom and doom

Under his investment advisory firm Marc Faber Ltd in Hong Kong, he manages about US$300 million in assets for those who applaud his alternative views - influenced by history, his favourite subject in high school. He also edits and publishes a monthly newsletter known as The Gloom, Boom & Doom report (www.gloomboomdoom.com).

The investment guru was born Markus Faber on Feb 28, 1946. He has an older brother, and two younger step-sisters from his surgeon dad's second marriage.

After scraping through high school, he went on to read economics at the University of Zurich so as to be different from his brother Alexander, who was studying law. Dr Faber - who spent a lot of time in school ski-racing - received a PhD in Economics magna cum laude at the age of 24.

He has more than 30 years of experience in the financial world and has spent most of his time working in Hong Kong. From 1978 to February 1990, he was the managing director of Drexel Burnham Lambert (HK) Ltd, which was part of the Wall Street investment bank that went bankrupt. Dr Faber set up his own company the same year.

'On the surface (Dr Faber) has a typically dour Swiss manner but the reality is that he is a bon vivant who loves food, music, the arts and, at least in his younger days, the ladies,' said William Thomson, chairman of Private Capital Ltd in Hong Kong, senior adviser to Franklin Templeton International HK and Axiom Opportunities Fund in London, and a friend of Dr Faber.

GLOBAL markets rallied with approval after the US Federal Reserve sliced the discount rate by 0.5 per cent recently in a bid to calm nerves over the US sub-prime mortgage crisis.

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Dr Doom sings a different tune