Monday, July 9, 2012

Prefer Indian companies to US Treasuries from 10 year perspective: Mark Faber - Economic Times

CHANG MAI, THAILAND: Recommending portfolio diversification, investment guru Mark Faber told ET Now that it is the right time to own a mix of equities, cash, gold and real estate. "Asset allocation will need to be rebalanced from time to time," Faber said.

Faber is bullish on gold as an asset class. With gold expected to head lower, he advised to accumulate it. He prefers gold to paper currency. "Central banks around the world will continue to print paper currency which will decrease the currency's purchasing power," he said. ithin real estate, he feels that 'weekend destination properties' will be desirable over the next 10-15 years in India.

Faber is of the opinion that it is difficult to be bullish on the US economy, but given the current scenario, dollar is a relatively safe currency. Faber feels that huge capital gains from asset classes over the coming years are unlikely and that in the next five years capital preservation will be of utmost importance. He even said that globally a period of asset deflation may be witnessed.

Asked about the Asian economies, Faber said that he does not see significant growth in Asia and that is reflected in the equity prices. He expects corporate profits to fall in the coming years.

Faber was extremely bearish on the US Treasuries and government bonds from a 10 year perspective. The notion that US Treasuries are a safe investment is misplaced, Faber opined.

He also said that between Indian equities and US Treasuries, he would prefer to invest in companies in India from a 10 year viewpoint. "Even though the macroeconomic signals are not favourable, Indian companies are better run than their Chinese counterparts," he added.

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