Here is some advice from Dr Marc Faber from an interview on The Star.
The first advice I can give is this, if you cannot tolerate 30% downside volatility when you buy something, don't even get out of bed in the morning. Because, you understand, we go and buy something today, a house in KL , a house in Singapore, or the stock market, or some what. We can easily go down 30% before it goes up 5 times. I mean, that kind of volatility that you need to live with. And its courtesy of central banks that prints money and that keeps interest rates essentially at zero percent.
Secondly, my advise to investors is, what you think is really irrelevant. Because you are operating in a market. You are just one participant in the market. There are zillions of other participants. And so what you believe is not relevant to what will happen to the market. So, in absence of being able to rely on yourself, I think you have to diversify your assets. You have to have some real estate, you have to have some equity, you have to have some cash, you have to have some precious metal and so on.... Not US government bonds. That's for sure. Although maybe for the next 1o days they rally, but as I said, there will be a lot of volatility. But in general, I would say you have to diversify.
And as an advice in life, being living and investing with low leverage, which is you don't borrow money when you pay cash, if you borrow money to buy a house, you borrow a little, you will lead a happier life because you are never pushed to the wall when markets go down. Say you have a house and it is fully paid. And you paid say half a million, and it goes down by 90%. If it is fully paid for, you are not happy about it but it is still the same house that which you live. If you buy that house for 500,000 and you borrowed 550,000 and it drops 20%. The bank will call you and take it away from you. Then you have no money and no house. You understand so? I think that my advice to people is really to try to go through life with low leverage and low borrowings.
Equally, the worst investment you can ever make is to lend money to friends. At the end you have the friend no more, and no money.
Here is some advice from Dr Marc Faber from an interview on The Star.
ReplyDeleteThe first advice I can give is this, if you cannot tolerate 30% downside volatility when you buy something, don't even get out of bed in the morning. Because, you understand, we go and buy something today, a house in KL , a house in Singapore, or the stock market, or some what. We can easily go down 30% before it goes up 5 times. I mean, that kind of volatility that you need to live with. And its courtesy of central banks that prints money and that keeps interest rates essentially at zero percent.
Secondly, my advise to investors is, what you think is really irrelevant. Because you are operating in a market. You are just one participant in the market. There are zillions of other participants. And so what you believe is not relevant to what will happen to the market. So, in absence of being able to rely on yourself, I think you have to diversify your assets. You have to have some real estate, you have to have some equity, you have to have some cash, you have to have some precious metal and so on.... Not US government bonds. That's for sure. Although maybe for the next 1o days they rally, but as I said, there will be a lot of volatility. But in general, I would say you have to diversify.
And as an advice in life, being living and investing with low leverage, which is you don't borrow money when you pay cash, if you borrow money to buy a house, you borrow a little, you will lead a happier life because you are never pushed to the wall when markets go down. Say you have a house and it is fully paid. And you paid say half a million, and it goes down by 90%. If it is fully paid for, you are not happy about it but it is still the same house that which you live. If you buy that house for 500,000 and you borrowed 550,000 and it drops 20%. The bank will call you and take it away from you. Then you have no money and no house. You understand so? I think that my advice to people is really to try to go through life with low leverage and low borrowings.
Equally, the worst investment you can ever make is to lend money to friends. At the end you have the friend no more, and no money.
Transcripted by: Lok