Marc Faber on Yields, Stocks, Cash, and
The Fallout of his Recent Comments
Forced off the boards of Sprott, NovaGold, and Ivanhoe Mines
Extended Interview With Marc Faber Transcript:
Daniel Ameduri: With the current trends that you’re seeing right now… Where do you suggest people look to for investments, specifically anybody looking for a yield?
Marc Faber: Yes, I’d just like to return to Trump for one second and say the following. I admire him having a thick skin so he can take criticism from just about anyone. The media is especially very against him. It probably has a negative impact on your psyche if every day someone goes after you. So far he’s done relatively well in that respect. Out of the question of economic trends and where to find yield, this is one of the problems. Today, you can invest in Treasuries, 10-year Treasuries. The yield is around 2.3%. You can buy European bonds. German bonds have less than ½ a percent yield. Swiss bonds have a negative rate of interest. Even Italian and Portuguese bonds, in Spanish anyway, they have a lower yield than the U.S. 10-year Treasury. Isn’t it amazing that someone would buy Portuguese bonds at the lower yield than the U.S. Treasury? The junk bond market in Europe has a lower yield than Treasuries (it varies every day) or about an equal yield to U.S. Treasuries. So the whole market has been essentially distorted through central banks’ accumulation of assets, mostly fixed interest assets. In Japan, the central bank also buys equities through CTS. They control, I think over 70% of CTS on the Nikkie. Now, the question is whether or not you can find yield. Well, there isn’t that much yield anymore. In the U.S., you can get 2.3% on the 10-year Treasury. That’s the maximum you can earn over 10 years. And that’s why when you asked me about equities before, yes, the whole thing will come to an end one day, at least everything will crash. But, you understand, if you tell me “Marc, here is a million dollars. Now, you have to go to jail because you’re crazy, and stay in jail for ten years, but you can choose to invest your money, this million dollars, in something like stocks, bonds, or anything.” Well, I think that over ten years, here’s another example. In Europe, I can find lots of companies that have a dividend yield of, say, 4-5%, but the bond market yields less than 2%. So under these circumstances, which do you invest the money in for 10 years? I think I would choose stocks.
Daniel: Are there any agriculture or farmland investments? I know you’ve recommended farmland before, but are there any funds that you suggest that people can get cash flow from?
Marc: I’m not that familiar with farmland funds. I am familiar with some plantation companies here in Asia. Some of them have like a 5% yield. They produce rubber or they produce soybeans, and sugar. So there are opportunities, but for these stocks to perform very well, they essentially need rising agricultural commodity prices. In the U.S., you can play rising commodity prices for agriculture by owning a fertilizer company.
Daniel: Marc, just in closing, when you wrote that piece, did you know that this was going to become a huge controversy?
Marc: No, I have to say that the whole thing has really been a small fly that has been built up into a huge elephant, and it’s a huge storm in a teacup! I’ve written these reports for the last four years and it’s not always 100% politically correct, but I didn’t think that someone would immediately interpret an economic fact that I mentioned in the report, and historic facts, as me being a racist. I really didn’t expect that. In fact, I want to tell you that I had a lot of black people from America write to me and tell me that I am absolutely right to have written it.
Daniel: I guess people just can’t have a serious conversation about these topics today. Everybody is so sensitive, and they just go into complete hysteria.
Marc: You see; I can understand because I’ve been on the board of public companies. Everything is wrong nowadays with compliance departments and consultants, and consultants go to the institutions and tell them “Oh, the board is well organized, they just don’t want to take the risk to have a director who has been labeled a racist so they kick you out.” I understand that. We have freedom of the press, and like you say, part of the success of Western society was freedom of expression. But as you said, to have a normal discussion is no longer possible. I have seen alt-right publish my report. There were some reporters in some papers that sent me emails with questions. These questions were very leading questions. Essentially, if you didn’t answer them very carefully, they could have been interpreted as a racist comment. The situation as it is, if I had known that it would be blown so much out of proportion, I probably wouldn’t have written it the way I wrote it. I would have written that a great part of America’s success, after all, is that it was essentially colonized or populated by people who came to America to work, and they brought along skills and tools and stuff. I’d leave it at that. It is what it is, so I will live with it. You’d be surprised about how many people have actually written to me saying that they really admire someone who spells out the truth.
Daniel: Well, there’s been a lot of nasty things said by many people. I think Trump was one of those election moments when people are just sick and tired of hearing all these nasty lies and all these nasty things about white people or the United States. When you said something like that, I think it did probably get a lot of support because people are just “Hey, you know, it is what it is.” Everybody wants to run around and act like Native Americans are completely innocent and there was no killing going on before white people touched the shore.
Okay. Marc Faber, GloomBoomDoom.com
Marc: Thank you very much for calling me and giving me the opportunity to express my views.
Daniel: Thank you, Marc, hope to have you back on the show soon.
Marc: Bye, thank you.