Stuck for investment ideas? Marc Faber, the investor whose predictions have earned him the moniker Dr Doom, has given some of the world’s most powerful fund managers some apocalyptic advice: buy farmland and stock up on gold. Faber told an investors’ meeting in Tokyo that they should start looking beyond market volatility when thinking about possible investments. There are other disruptive elements to beware, he said - like the small matter of a dirty war. You can probably see where he got that nickname from…
Faber advised fund managers to buy houses in the countryside because it was more likely that violence and biological attack would occur in cities – while gold, he pointed out, is one form of wealth that can be carried. He also advised stock pickers in Asia to buy into companies with exposure to agriculture and water treatment technologies, to play on future food and water shortages. ‘What are you going to do when your mobile phone gets shut down or the internet stops working or the city water supplies get poisoned?’ Faber demanded, in slightly scary fashion.
Unfortunately for the rest of us, Faber isn’t just some Armageddon nut, the kind you’d see on Louis Theroux stocking up their mountain shack with tins of baked beans and AK47s. He actually earned his claim to the Dr Doom title (which he shares with similarly miserable economist Nouriel Roubini) by advising investors to pull out of American stocks one week before the 1987 crash. He was also one of the very few who predicted the latest financial crisis. So when the pony-tailed investment expert starts warning of social and financial meltdown, it’s probably worth listening. And possibly buying some baked beans.
Central to Faber’s bleak economic viewpoint is his take on the American economy, and its inability to service its phenomenal mountain of debt. The US faces imminent bankruptcy, he argues, as well as the growing risk of military tension with China, as the two superpowers face off over dwindling oil supplies. ‘When I tell people to prepare themselves for a dirty war, they ask me: ‘America against whom?’’ said Faber. ‘I tell them that for sure they will find someone.’
His hypotheses may sound extreme, but you wouldn’t necessarily bet against them happening at some point. On the other hand, if we spend too much time fretting about imminent apocalypse, nothing will ever get done. So we suspect all we can probably do is have a nice cup of tea and crack on.
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Buy farms and gold, insists Faber (aka Dr Doom)