Thursday, January 08, 2009

Marc Faber on base metals, shares, economy

Marc Faber joined Bloomberg in the studio to discuss his outlook for 2009, and to offer his views on favorable areas for investment in the year ahead.

Here's a quick summary of points made in this studio interview:

· Marc's dour economic view for 2009 is maintained, though he notes that we may have some positive news over the next few months, providing a temporary break in the gloom.

· Faber chuckles at the mention of the "Obama plan" to stimulate the economy. He points out that government intervention in the economy will prove disastrous in the long run.

While everyone clamors for the government to "do something" to avoid the economic pain, Marc feels that the best policy is to do nothing and let the needed corrections take place. "If people can not accept the downside of capitalism, they should become socialists".

· Industrial commodities and metal mining shares imploded last year, while gold held up in price. As of today, Marc would rather buy a basket of oversold industrial commodities and related shares (Xstrata, BHP, Rio Tinto, and small mining companies) to play a rebound in the sector.

· Faber is long term bullish on oil, noting that the longer term demand for oil is still in place while supplies are limited and declining. On a related note, Marc points out that geopolitical tensions are a looming issue and will likely rise in the future.

Much more to hear in this Bloomberg interview. Enjoy the discussion.