It pays to sell in a buyers' market: Marc Faber

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Investment guru Marc Faber is in India today and shares some of his thoughts on the  global markets in India.

"I think as we move into 2007, I noticed globally the wave of optimism,the art dealers are bullish on art, and the commodity traders bullish on commodities, the real estate guys bullish on real estate, the stock traders bullish on stocks, everybody has something to buy," Marc Faber says.

He says this type of an environment is very dangerous and he feels that this is a suitable time to liquidate some assets and just sit back and see what happens. He considers that there is no bargain in the world only some relative bargains like the price of sugar or the price of cotton.

"I do not think that gold is terribly expensive. I think we are very stretched in the asset markets and just looking at the rise we had in markets since July of this year after the correction, we have gone up almost vertically and all the markets are overbought. One reads in the paper about excess liquidity and soft landing and that is the accepted view. I will say that basically you should sell stocks and assets when there are no clouds in the sky and you should buy them when it is a thunder and storm and everything looks dismal. Today everything looks wonderful, I could see the global economy is expanding, we have synchronized growth, economically everything looks good, the problem is the inflated asset market, that is the bubble,"added Faber. 

The long-term case for Indian property investments is compelling, according to Faber, as he feels that in India only about 4-5% of the retail market is organized and the housing market is much less developed in a country like Malaysia, Thailand, Indonesia, Singapore and Hong Kong. He stresses that for the long-term there is no problem with the real estate except when there might be from time to time an oversupply situation and then overtime which will fill it up. He favours real estate investment from a long-term perspective.

Faber also talks about his concerns on the liquidity situation. He mentions, "I think we are extended in asset markets, we had huge moves. In Europe, everybody talks about the excess liquidity, that is correct. But I would like to remind you that even though you can have huge liquidity, markets can go down."

He further adds, "In the Middle East, we still have lot of liquidity because oil prices have not collapsed and the production is still at very high levels, yet the Middle East, the markets have all declined by 50%. So I think that we have to distinguish between markets and the fundamentals. Here in India, one of the problems I see is that unlike Japan in the 80s, when the Nikkei went up more than 5 times here in India, we do not have the same amount of liquidity. In the 80s and 90s, interest rates were declining whereas now it would seem to me that globally interest rates are at artificially low levels."