-- Published: Sunday, 17 January 2016 | Print | Disqus
Featured Guests:
Dr. Marc Faber & Professor Burton Malkiel
Guest order - alphabetical.
Summary:
Dr. Burton Malkiel, Professor from Princeton University returns to the show to discus the 11th edition of his magnum opus, A Random Walk Down Wall Street.
His outlook for 2016 is somber - equities and most asset classes seem overvalued.
The CAPE P/E ratio, currently near 23 in the US, which indicates US shares are overpriced relative to global shares, on a historical basis.
When valuations are extended, diversification is most necessary, buffering the impact of increased volatility.
Although the professor agrees with the host that 2016 will be a year of Fed rate hikes, tame economic conditions will likely hold policymakers in check.
The idea of market unpredictability is comparable to quantum mechanics, where Einstein could not accept quantum theory.
Instead of predicting price outcomes, probability theory facilitates enhanced portfolio return.
Even the Oracle of Omaha, Warren Buffett has publicly denounced active investing, instructing his heirs to engage in passive index investing.
The professor offers his favorite index fund with a low expense ratio, the ETF: (VTI), with a remarkable expense ratio of 1/20th of one percent, 0.0005%.
Using such low expense ETFs, the typical individual investor can easily outperform virtually all top money managers and hedge funds.
Adding bonds to stock index funds is advisable.
Chris welcomes back Dr. Marc Faber, a widely respected economist and editor of the GloomBoomDoom report.
Our guest expects the Fed to backpedal with the new rate hike policy, with the announcement of a new wave of monetary expansion this year, QE 4.
Policymakers are pushing on a string - monetary expansion is far less affective with each installment.
Although the equities indexes are being buoyed by a few key shares, the majority of stocks are in bear market territory.
Dr. Faber questions the veracity of official US economic figures, noting a high likelihood of a recession in early 2016 despite official indications to the contrary.
After years of stagnation, gold shares are outperforming most sectors, as their relative value encourages wise investors to allocate funds into the XAU.
Dr. Faber recently added to his gold position, using weakness as an opportunity to procure sound money at a discount.
The storage cost for physical gold bullion is low making the yellow metal an ideal asset to outperform other commodities amid a 2016 rebound rally.
Dr. Burton G. Malkiel, the Chemical Bank Chairman’s Professor of Economics at Princeton University , is the author of the widely read investment book, A Random Walk Down Wall Street. The revised 9th edition paperback of the book was published in 2007.
Dr. Malkiel has long held professorships in economics at Princeton , where he was also chairman of the Economics Department. He was dean of the Yale School of Management and William S. Beinecke Professor of Management Studies there from 1981 to 1987.
He is a past appointee to the President’s Council of Economic Advisors. In addition, he currently serves or has served on the boards of several financial corporations including Prudential Financial and the Vanguard Group and nonfinancial corporations such as Genmab and Theravance. He has also served on several investment management boards including the Investment Committee for the American Philosophical Association. He is a past president of the American Finance Association and is a member of the American Economic Association.
He is also the author or co-editor of eight other books, the most recent of which are The Random Walk Guide to Investing: 10 Rules for Financial Success and Global Bargain Hunting: An Investor’s Guide to Profits in Emerging Markets, with J. P. Mei and From Wall Street to the Great Wall, with others.
He holds a B.A. and MBA degree from Harvard and a Ph.D. degree from Princeton Universities and began his career in the investment banking department of Smith Barney & Co.
Dr Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude.
Between 1970 and 1978, Dr Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong.
Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, MARC FABER LIMITED which acts as an investment advisor and fund manager.
Dr Faber publishes a widely read monthly investment newsletter "The Gloom Boom & Doom Report" report which highlights unusual investment opportunities, and is the author of several books including “ TOMORROW'S GOLD – Asia's Age of Discovery” which was first published in 2002 and highlights future investment opportunities around the world. “ TOMORROW'S GOLD ” was for several weeks on Amazon's best seller list and is being translated into Japanese, Chinese, Korean, Thai and German. Dr. Faber is also a regular contributor to several leading financial publications around the world.
A book on Dr Faber, "RIDING THE MILLENNIAL STORM", by Nury Vittachi, was published in 1998. A regular speaker at various investment seminars, Dr Faber is well known for his "contrarian" investment approach.
He is also associated with a variety of funds and is a member of the Board of Directors of numerous companies.
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Dr Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude. 
