“Dr. Doom” bullish on Vietnam stocks

Dr. Marc Faber foresees a new global financial crisis that could be even worse than 2008

All doom and gloom
Marc Faber is noted worldwide as a contrarian investment advisor, the publisher of the monthly investment newsletter The Gloom Boom & Doom Report and the author of the best-seller Tomorrow’s Gold: Asia’s Age of Discovery.

He is a respected economist and investment guru who predicted the Wall Street Crash in 1987, the Nasdaq crash, the property bubble and the Euro zone and global debt crisis.

Barron’s, America’s premier financial magazine, began an interview in June 2013 with Faber in which it was revealed that he tended to view the world with a sceptical eye, and was not afraid to speak his mind when things do not look quite right. “In other words, he would be the first in a crowd to tell you the emperor has no clothes, and has done so early, often, and aptly in the case of numerous investment bubbles.”

He is now bearish on the world’s economic outlook. As might be expected, his predictions are not accurate  all of the time, as no one is perfect. He once acknowledged that his best prediction of all time was also the worst investment call he ever made. That was the prediction about the dot com bubble bursting in 1998, but it came two years early.

Marc Faber admits that at least the timing of some of his calls has been wrong. His best bet was to warn his clients to cash out a week before the 1987 crash. But even it was a coincidence that it happened a week later. “I thought the US market would have a 20 per cent correction last fall, but it didn’t happen,” he told Barron’s.

His arguments are always based on analysis and he has won respect for being right, but has equally won admiration for being wrong because of the justifications he offered for his opinions.

He claimed monetary easing and the expansionary monetary policies in the US over the last 30 years were a major factor causing the financial crisis of 2007-2008 and the continued malaise we still experience today. Fiscal measures introduced by governments have also been very disruptive for the economy.

“We will have a huge systemic crisis. The last time the financial sector went bust, it was bailed out by governments. The next phase is governments themselves go bust. Before they do that, they print money like there is no tomorrow. We don’t know when the crisis will happen. It could happen tomorrow, but it could also happen in three, five or ten years’ time. Like when your computer crashes, there will be a re-booting of the global economy. But before that, most likely we will have high inflation rates, maybe we will have a deflationary collapse and we will have wars. We are all doomed.”

Vietnamese stocks
Marc Faber will be the keynote speaker at the Vietnam Investment Forum (VIF) 2014 that is scheduled to take place on June 19 at White Palace Convention Centre in Ho Chi Minh City, co-organised by VIR, Malaysian-owned HVS Vietnam Securities Co. and Hong Kong-based Asia Frontier Capital (AFC).

The main theme of his address is set to include investment opportunities in Vietnam, given that he has consistently recommended Vietnamese stocks to investors around the world through interviews with international TV channels for over a year.

Late last year, Marc Faber predicted Vietnamese stocks among the three best long-positions for 2014 besides gold and gold shares. “I think the Vietnamese stock market, which this year was up 22 per cent…which is not bad for an emerging market, will continue to go up,” he told Talking Numbers, an integrated media experience co-hosted by CNBC and Yahoo Finance.

Marc Faber earlier said at the interview with Barron’s that he valued Military Bank (MBB) and Vinamilk (VNM) shares highly. “You can find companies in Vietnam with yields of 5-7 per cent. I like Military Bank and Vietnam Dairy Products. It’s a dominant force in the dairy-foods industry and has been growing by about 20 per cent a year for the past 10 years. It could keep growing by 10-15 per cent per annum, and the valuation is low. Sooner or later, it will be acquired.” The assessment was made after a holiday in Vietnam. 

The Australian Financial Review reported a year ago that Marc Faber believed the Vietnamese bourse offered opportunities despite some troubles in the economy. “If you take a long-term horizon, five to 10 years, I think you will make some money in Vietnamese shares.”

Marc Faber is now chairman of Indochina Capital, chairman of Dragon Capital-managed Vietnam Growth Fund Ltd. and a shareholder of AFC.