• 308 days Will The ECB Continue To Hike Rates?
  • 309 days Forbes: Aramco Remains Largest Company In The Middle East
  • 310 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 710 days Could Crypto Overtake Traditional Investment?
  • 715 days Americans Still Quitting Jobs At Record Pace
  • 717 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 720 days Is The Dollar Too Strong?
  • 720 days Big Tech Disappoints Investors on Earnings Calls
  • 721 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 723 days China Is Quietly Trying To Distance Itself From Russia
  • 723 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 727 days Crypto Investors Won Big In 2021
  • 727 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 728 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 730 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 731 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 734 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 735 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 735 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 737 days Are NFTs About To Take Over Gaming?
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Marc Faber: Right Now a Bubble in Safest Govt Bonds

Marc Faber, publisher of the Gloom, Boom and Doom report, spoke to Bloomberg Television's Sara Eisen and Erik Schatzker and said that investors have created a "bubble" in the "highest-quality" government bonds and should move to equities.

Faber said, "People feel so insecure that they say, 'I'd rather be in a Treasury in America with almost no yield or in Germany with negative yield and get my money back.' But it doesn't make them a good buy in the long term."

 

Courtesy of Bloomberg Television

 

Faber on whether U.S. stocks still look attractive:

"I wouldn't say they are particularly attractive but, look, I am in Switzerland at the moment. The 10 Year government bond yields is 0.7% and you can buy quality companies and they have a dividend yield of maybe 3%. Relative to government bonds, equities are attractive. If you really think it through and you are bearish as I am and you think the whole financial system will one day collapse, maybe three years or five years or 10 years, one day there'll be a reset and everything will be essentially started anew. Then you are better off in equities than in government bonds because a lot of government bonds will either default or they will have to print so much money that the purchasing power of money will depreciate very rapidly."

On whether he feels comfortable predicting calamity in Treasuries again given his inaccurate forecast in December 2009:

"No, if we talk about the end of 2009, we still had a very strong rise in equity prices thereafter and it is true that last year, the 30-Year Treasury bond returned 30% total return. That I admit I was wrong and I lost a bet to David Rosenberg and I shall pay him a bottle of whiskey, one of the more expensive brands if I can afford it. In the meantime, people in precious metals have done well. In emerging economies, people say last year was a disaster for emerging stock markets, but Malaysia, Thailand, the Philippines, and Indonesia were essentially flat. A lot of stocks actually performed well. My portfolios in Asia have done surprisingly well. I don't feel that I missed out a lot risk adjusted by not being in 30-Year government bonds."

"August 1999 to March 2000, the Nasdaq doubled by 100%. But at no time during that timeframe was it good buy. People lost a lot of money. We have today a symptom of monetary inflation. This is corporate profits which have rebounded. They are at record highs. The second thing is essentially a bubble in high-quality government bonds, not in Italian or Spanish bonds. People feel so insecure and they are so much worried that they say I would rather be in a Treasury in America with no yield or in Germany with negative yields and get my money back than in bond that may not repay me or in equities that drop 30%. It does not make them a good buy in the long term."

On making a choice between U.S. government debt or Italian and Spanish government debt:

"I would take the U.S. because they can print themselves out. I would not take them as a good investment because I think you have today a yield on the 10-Year of around 1.7% and on the 30-Year around 3%. I think eventually in the next few years yields will be much higher the purchasing power of the dollar will have depreciated significantly. You give me the choice between Spanish, Italian, and U.S. bonds and I take U.S. bonds, but otherwise, if you give me the choice of assets of real estate, equities, bonds, precious metals, I would rather take precious metals than equities."

 

Back to homepage

Leave a comment

Leave a comment