Tuesday, May 29, 2012

Marc Faber Revisits His 1987-Style Crash Scenario

In an interview with Bloomberg TV, Marc Faber discussed his previous warning of a potential crash on the scale of Black Monday, 1987.

I said that if the markets were not correcting by now meaningfully, and would continue to rise into July and August, then the likelihood of a crash in the fall was increasing. And a crash in the order of say 1987.

Now, we are in the midst of a very significant correction, not so much yet in terms of indices but many shares have already declined 20-40 percent from their highs.

As we posted earlier this month, Faber called for the potential of a 1987-style crash if the markets continued to rise through June. He was not necessarily calling a crash, but that the potential for one was there if the markets did not correct as they currently have.

That crash-risk now appears to have diminished.

The entire interview with Bloomberg can be seen below.

15 Quotes from Great Investors

Via Addicted2Success, here are a few awe­some invest­ment quotes by a few of the worlds great­est investors:

Insight­ful Invest­ment Quotes
warren-buffett quoteWar­ren Buf­fett (Net Worth $39 Bil­lion) – “‘Price is what you pay; value is what you get.’ Whether we’re talk­ing about socks or stocks, I like buy­ing qual­ity mer­chan­dise when it is marked down.”

george-soros quoteGeorge Soros (Net Worth $22 Bil­lion) — ”I’m only rich because I know when I’m wrong…I basi­cally have sur­vived by rec­og­niz­ing my mistakes.”

david-rubenstein-quoteDavid Ruben­stein (Net Worth $2.8 Bil­lion) – “Per­sist – don’t take no for an answer. If you’re happy to sit at your desk and not take any risk, you’ll be sit­ting at your desk for the next 20 years.”

ray-dalio quoteRay Dalio (Net Worth $6.5 Bil­lion) – “More than any­thing else, what dif­fer­en­ti­ates peo­ple who live up to their poten­tial from those who don’t is a will­ing­ness to look at them­selves and oth­ers objectively.”

edward-lampert quoteEddie Lam­pert (Net Worth $3 Bil­lion) – “This idea of antic­i­pa­tion is key to invest­ing and to busi­ness gen­er­ally. You can’t wait for an oppor­tu­nity to become obvi­ous. You have to think, “Here’s what other peo­ple and com­pa­nies have done under cer­tain cir­cum­stances. Now, under these new cir­cum­stances, how is this man­age­ment likely to behave?”

t boone pickens quoteT. Boone Pick­ens (Net Worth $1.4 Bil­lion) — “The older I get, the more I see a straight path where I want to go. If you’re going to hunt ele­phants, don’t get off the trail for a rabbit.”

Charlie Munger quoteChar­lie Munger (Net Worth $1 Bil­lion) – “If you took our top fif­teen deci­sions out, we’d have a pretty aver­age record. It wasn’t hyper­ac­tiv­ity, but a hell of a lot of patience. You stuck to your prin­ci­ples and when oppor­tu­ni­ties came along, you pounced on them with vigor.”

david-tepper quoteDavid Tep­per (Net Worth $5 Bil­lion) – “This com­pany looks cheap, that com­pany looks cheap, but the over­all econ­omy could com­pletely screw it up. The key is to wait. Some­times the hard­est thing to do is to do nothing.”

Benjamin Graham QuoteBen­jamin Gra­ham – “The indi­vid­ual investor should act con­sis­tently as an investor and not as a spec­u­la­tor. This means that he should be able to jus­tify every pur­chase he makes and each price he pays by imper­sonal, objec­tive rea­son­ing that sat­is­fies him that he is get­ting more than his money’s worth for his purchase.”

louis-bacon quoteLouis Bacon (Net Worth $1.4 Bil­lion) – “As a spec­u­la­tor you must embrace dis­or­der and chaos.”

paul-tudor-jones quotePaul Tudor Jones (Net Worth $3.2 Bil­lion) - “Were you want to be is always in con­trol, never wish­ing, always trad­ing, and always, first and fore­most pro­tect­ing your butt. After a while size means noth­ing. It gets back to whether you’re mak­ing 100% rate of return on $10,000 or $100 mil­lion dol­lars. It doesn’t make any difference.”

bruce-kovner quoteBruce Kovner (Net Worth $4.3 Bil­lion) - ” My expe­ri­ence with novice traders is that they trade three to five times too big. They are tak­ing 5 to 10 per­cent risks on a trade when they should be tak­ing 1 to 2 per­cent risks. The emo­tional bur­den of trad­ing is sub­stan­tial; on any given day, I could lose mil­lions of dol­lars. If you per­son­al­ize these losses, you can’t trade.”

rene-rivkin-quoteRene Rivkin (Net Worth $346 Mil­lion) — “When buy­ing shares, ask your­self, would you buy the whole company?”

peter lynch quotePeter Lynch (Net Worth $352 Mil­lion) – “I think you have to learn that there’s a com­pany behind every stock, and that there’s only one real rea­son why stocks go up. Com­pa­nies go from doing poorly to doing well or small com­pa­nies grow to large companies.”

John Templeton QuoteJohn Tem­ple­ton (Net Worth $20 Bil­lion)- “The time of max­i­mum pes­simism is the best time to buy and the time of max­i­mum opti­mism is the best time to sell.”

jack bogle quoteJohn (Jack) Bogle (Net Worth $4 Bil­lion) - “If you have trou­ble imag­in­ing a 20% loss in the stock mar­ket, you shouldn’t be in stocks.”

Jim Rogers Interview about Hard Assets, Oil, and Currency Diversification


Bad news for wine drinkers from BofA Merrill Lynch's "Spirits, Wines, and Ciders" coverage group: supplies around the world are tightening, which means prices are going up.

In a note to clients, the equity research analysts lay out three key reasons for their call:

1) Global supplies appear to be tightening simultaneously and thus have less of an impact on specific market supplies.

2) Global wine demand is pretty strong, with Asia having more of an impact than ever before.

3) Recent U.S. beer industry price increases and emerging signs of higher prices on Spirits creates a supportive competitive environment.

Moreover, the analysts project that we could just now be entering a "long duration up cycle" that could extend all the way through 2018:


BofA Merrill Lynch

The note explains that California, a major wine producing region globally, has been dealing with declining production for the past few years already. Typically, wine imports from Australia, Chile, and Spain have stepped in to fill the gap, but government policies aimed to reduce production in Australia and Europe coupled with bad weather for growers in South America means that those days are likely over, according to BofA.

Looking For Miners To Fall Next Week

Stocks in this sector that I’m looking to short.

Stocks for the Long Run?

While the below chart cherry picks one of the best per­form­ing fixed income sec­tors, it is still pretty amazing.
Bonds (defined in this exam­ple as the Bar­clays Cap­i­tal Long Gov­ern­ment / Credit index) have now out­per­formed stocks (defined as the S&P 500 index) going back to Novem­ber 1980 (10.7% annu­al­ized vs. 10.4% annu­al­ized) and has more than dou­bled the per­for­mance of stocks over the past 15 years (239% vs. 108%). Note the chart below is total returns includ­ing rein­vest­ment coupon pay­ments and dividends.
Is this likely to continue?
Unless cap­i­tal­ism as we know it ends, the answer is a sim­ple 'no' over the next 15 or 32 (or even 3–5) years. The gov­ern­ment / credit index shown above yielded a whop­ping 13.18% as of Novem­ber 1980 and the next 32 years were the great bond run that has resulted in the cur­rent pal­try yield of 3.89% (just 7 bps off its all-time low).
Source: Bar­clays Cap­i­tal / S&P
Copy­right © Econom­pic­Data

Behind the Scenes With Harry Schultz

by Jim Sinclair, JS Mineset

Dear CIGAs,

The following intel came from Harry Schultz this morning: Euro bears be warned. There is more, but this is all I dare post.

Harry remains the main man in gold, currency and economic intel. Bravo to you Harry.

Behind the scenes at the G-8 and NATO summit meetings, some significant decisions were made that will impact over the coming weeks.

The critical decision at the G-8 meeting and several of the bilateral meetings that took place on the sidelines of the Camp David gathering centered on the decision to plunge ahead with the bailout of the European banks in an effort to save the Euro system, with Greece still inside.

Read More @ JSMineset.com

Will the U.S. Dollar break this 10-year old falling resistance line?


U.S. Dollar is now facing a falling 10-year resistance line and Dollar bullish sentiment is almost reaching 80%.

Despite these high bullish readings, if the Dollar succeeds in a breakout, odds move up considerably that "Deflation/Falling prices" picks up speed.