FAANG stocks: Everything is in a bubble, only precious metals are relatively safe – Marc Faber

Hypothetically, if someone gives you $10 million, you are free to invest it for the next three years, but with the clause, the money should give you a 40% to 50% return over the next three years. How would you invest that $10 million?
Marc Faber: I’ll give it back to you because I don’t think you’ll get 40-50% returns in the next three years. I want to sleep well at night. I don’t want to lose you as a friend. So I’ll give it back to you and tell you to please give it to someone else.

What happens if I increase the term to five years?
Marc Faber: Even in five years, the return will be 10% per year. I look at my money, which I manage, among others, and I don’t think it’s easy to achieve a 10% return per year if you’re diversified. I like to be diversified. I have different currencies, gold and stocks. In some emerging markets, I could see that I could get maybe 10% per year, including dividends. Dividends would be 5% per year and the return on stocks would be 5%, so maybe 10%.

But I’m not sure that 10% will be reached in real, inflation-adjusted terms. I don’t know. However, investors should stop believing that they can make money on assets and start believing that something is wrong with the market. global economyAnd the question should be, how can I navigate negative returns in asset markets? Suppose, for whatever reason, everything goes down, how can I best survive if everything goes down?

In my view, precious metals will probably fall less than other commodities, but if everything falls 50% and gold falls 20%, you are like a king because all your friends lost 50% and you only lost 20%. But what I mean is that people should change their minds and think that we have had this wonderful asset inflation for the last 40 years. It is going to come to an end. When it comes to an end, it is going to go downhill. When it goes downhill, you essentially want to lose the least. It is not about making money, it is just about losing the least. So that is my view of asset markets.

So when you say it’s about protecting capital and not so much about capital appreciation, where do you think we are facing what could be called a bubble or a problem? In what direction do you think this particular instrument or financial asset is heading towards a bubble?
Marc Faber: Well, to be honest, I think it’s all in a bubble. On Monday, they sold a jersey of the famous American baseball player Babe Ruth for $24.1 million. You have to wonder if it’s very inflated. But we can discuss what is more inflated and what is less inflated. The most inflated are the FAANG stocks in the United States, the so-called Magnificent Seven. The Magnificent Seven stocks have a market capitalization greater than all the listed Chinese stocks, including the one in Hong Kong. This is something for the history books, seven stocks in the United States have a market capitalization greater than China with 1.3 billion people and very large and successful companies that we have to look at.You may not remember, but I clearly remember when we first met you, it was in 2001 in India, right after 9/11. You had predicted that there would be a big bull market in raw materials It was just about to start. In 2007, you were one of the first to say that there was a problem in the US housing market, and six or seven months later it collapsed. What do you think that mega-prediction or mega-trend could be for the next five or seven years?
Marc Faber: My view is that over the next seven years, US equity returns will be negative in real, inflation-adjusted terms, and I think that’s pretty clear. I have maintained for the last 20 or 30 years that an investment in India would be more successful than a typical investment in the United States. Now, India stock market It is on the high side. I wouldn’t necessarily rush into investing in India, but there is some value in the commodity markets. Food prices are relatively low and my friends who are very well informed believe that there will be a Third World War. I am more optimistic because I am an optimistic person. I hope that we can avoid it. But obviously, World War III would destroy virtually all asset markets, it would be a terrible event. And over the next 10 years, as I said, or seven years, I think if you can maintain your purchasing power, you will do well. And so, I still think that precious metals are a favorable path. It may not be the best, but it is relatively safe.

I remember, again, we had a conversation where it was said that Indians should start buying real estate in island cities, that as Indians get richer, they will buy more real estate, more holiday homes. Is there anything else that you think a country like India would consume and that investors could bet on right now? I think that is happening in India now. Holiday homes are becoming part of the lifestyle in all the rich cities. Is there anything else that you would highlight?
Marc Faber: If I were in India, and I am not a specialist in microeconomic facts about India, but what I have seen, both in Switzerland and in the United States, and also to some extent in Asia, is that many collectibles increase in value a lot. Let me give you an example. My grandfather built a big hotel in 1910 in Engelberg. It is famous for Mount Titlis because it has an aerial cableway that turns 360 degrees as it goes up. Many Indians would have been to Engelberg and would have known about the place because already in the 1950s we had many Indian visitors.

What I saw then was that old propaganda posters about tourism went up a lot in price and became collector’s items. When I came to Hong Kong, I bought 3,000 posters of Chinese revolutionary art, Mao Zedong propaganda art, and then I bought badges and so on. If I were in India, I would buy posters of famous movies and famous actors and keep them for 50 years and then I could get a very high price, I tell you, that’s what I would do.

When will we be able to see you in India? When will we have the honour and pleasure of having a coffee with you in the studio?
Marc Faber: Yes, I would like to go back to India. It would be very nice. I started travelling to India in 1973 and then I visited many different places in the south and Rajasthan several times. The south impressed me deeply because the people are very religious and there is a different atmosphere than in the north of India.

For me, India is a wonderful country. When I first started travelling to India, it was very difficult for foreigners to get a visa. The Indian consulate in Chiang Mai turned me away numerous times because they always had the most arrogant and incompetent people at the consulate. They would point out people who were not suitable for them and not give them a visa. But now it is easy. There is no problem anymore.

As I said, I love the title of the report: “Gloom, Boom, and Doom.”
Marc Faber: Thank you very much for your time. I wish your viewers and listeners all the best in their investments and to remember, from their religion, that money is not everything.