Marc Faber: Pray All Asset Classes Don't Collapse at the Same Time
Tuesday, 15 Oct 2013 02:23 PM
By John Morgan
Marc Faber, publisher of the “Gloom, Boom and Doom Report,” says there are no safe havens left for investors, and diversifying to spread risk around in a troubled world is the only hope.
In an interview on Bloomberg TV, Faber ticked off the problems with traditional investments.
“Bank deposits are not safe which used to be safe,” he said. “Money in Treasury bills is not 100 percent safe and there is inflation in the system and you would hardly get any interest.
“Bonds are not very safe anymore because eventually interest rates will go up,” Faber said. “Equities in the U.S. are relatively expensive by any valuation matrix you may use.”
The federal government is dysfunctional, far too large and is “essentially wasting money left, right and center: Republicans on the military and the Democrats on buying votes with transfer payments and entitlements,” he told Bloomberg. “The best you can hope for is that you have diversified your portfolio of different assets and they don’t all collapse at the same time.”
Some investors suffer from what Forbes calls “sit-it-out syndrome.”
Forbes contributor Carrie Sloan described the phenomenon as characterized by people who are keeping sizeable cash holdings in savings accounts instead of investing it.
Sloan interviewed a number of women who apparently suffer from the malady, but said research from Fidelity Investments showed that women who face the fear of financial decision-making tend to be better investors than men.
According to MarketWatch, endowment funds at Harvard, Yale and other colleges are already well-diversified, which has contributed to their success.
Over the past decade, the Yale endowment's average annual return has been about 11 percent, compared to 7.1 percent for the S&P 500.
MarketWatch reported that in addition to traditional stock and bond investments, the Yale endowment also has money in private equity and venture capital, real estate, hedge funds, forests and farmland.
MarketWatch suggested individual investors can mimic the Yale approach by using ETFs that are invested in non-traditional asset classes.
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Poster Comment:
Gloom, Boom and Doom. ;)