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FINDING YIELD IN A BARREN MARKET: Marc Faber’s Outside-the-Box Ideas for Investors Wary of Stocks and Bonds
For the modern-day investor, it feels like a no-win situation. There’s $10 trillion sitting in negative-yielding bonds in the world today, and stock indices are teetering at the tail end of a decade-long and highly manipulated bull market. The question is, where can investors find any real yield nowadays?
It’s a question that every investor deserves an answer to, and Wealth Research Group knew of one special individual who could shed some light on the issue: Dr. Marc Faber, author of the widely read monthly investment newsletter “The Gloom, Boom & Doom Report,” available at GloomBoomDoom.com. In case you weren’t already aware, Marc Faber has garnered worldwide acclaim from his uncanny market calls over multiple decades, as well as his outstanding track record as an investor.
Dr. Faber is known as the author of numerous popular books, including the Amazon bestseller Tomorrow’s Gold – Asia’s Age of Discovery, which warns that today’s richest cities and clusters of wealth are unlikely to retain their exalted positions in the future. Additionally, many of Mr. Faber’s followers look to his report, which highlights investment opportunities for investors wishing to capitalize on short- to medium-term asset market moves, for education and inspiration.
Born in Zurich, Switzerland, Marc Faber currently resides in Hong Kong, China. He obtained his Ph.D. in Economics (magna cum laude) from the University of Zurich at the age of 24. Dr. Faber gained worldwide renown due to his prediction of the global stock market crash of 1987 – he advised his clients to get out of the market before the precipitous collapse.
Courtesy: Marc Faber
Well known and regarded for his bold style of contrarian investing, Marc Faber is regular speaker at various economic seminars and has contributed articles and columns to Forbes, International Wealth, and other publications. He is also associated with a variety of funds and is a member of the Board of Directors of numerous companies.
Wealth Research Group sought Dr. Faber’s answer to the question of where to find yield when bond yields around the world are in the gutter, and stock market indices are expensive. According to Marc Faber, there are actually plenty of opportunities, if you know where to look for them.
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One place to look for yield, according to Marc Faber, is in REITs, which are real estate investment trusts. Dr. Faber himself has invested substantially in REITs based in Singapore as well as in Hong Kong, since they offer dividend yields of around 5 to 6 percent.
REITs are attractive, according to Marc Faber, as they offer an alternative to equities. However, Dr. Faber is not entirely against owning equities: for example, he’s looking at utilities, which are equities but don’t necessarily move in tandem with the overall stock market.
Courtesy: Marc Faber
According to Marc Faber, we must observe that utilities are more dependent on interest rate movements. Recently, the U.S. utilities index hit a new high because of the sharp decline in Treasury interest rates. Thus, utilities as an asset class aren’t 100% correlated with equities, though utilities do admittedly have an equity characteristic.
If one prefers to avoid equities altogether – which is entirely understandable in the current market environment – then another idea from Dr. Faber is to buy real estate. For example, an investor can buy an office building or a rental property and earn regular returns on that investment over time.
Even with these out-of-the-box opportunities, according to Marc Faber, fund managers persist in buying negative-yielding securities. Often it’s because they have to: German, Swiss, and other European insurance companies are in some cases required by law to invest a certain amount of capital into government bonds.
It’s a shame, because these are negative-yielding assets that carry no guarantee of surviving a global economic crisis. We have to ask ourselves: could these sovereign bonds actually pay if global stock markets dropped by 30 to 50 percent? The logical answer, of course, is that the bond markets would be bankrupt, just like the stock market.
Courtesy: Marc Faber
Nonetheless, sovereign bonds are often perceived as high-quality investments, according to Marc Faber, as unfortunately some investors will consider them to be a safe haven in times of crisis – but make no mistake about it, there’s nothing to ensure that these government debt notes will provide any safety or security in this shaky economic environment.
As you would certainly expect, Wealth Research Group’s interview with Marc Faber is absolutely riveting, so don’t miss out on this informative presentation. We also suggest that you subscribe to Dr. Faber’s timely newsletter, “The Gloom, Boom & Doom Report,” which is available at GloomBoomDoom.com.
Wealth Research Group’s commitment remains firm to keep you informed and prepared for the global economic changes to come. You’ll definitely want to download our report detailing how you can shelter your portfolio from the impending bonds collapse, our report on how the American Dream of retirement has become an impossible nightmare (and how you can protect your financial future), as well as our report on how you can arm yourself with knowledge as the globalist enemies from within conspire to destroy the middle class.
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