Question- Marc Faber

S

swifteagle

Member
Hi guys,

I was listening to Marc Faber speak about how he splits his money:
25% stock allocation - in emerging markets
25% in precious metals - Gold
25% in cash and bonds
25% real estate

I have a question about the 25% real estate part, what would he mean by that? A normal guy like me, would I put 25% of my money onto my mortgage or is he referring to a managed fund that only deals with property?

I am am wondering if someone could please help me clear this up.

Thanks for the time and help.
 
Public and/or private REITS would be my guess but without Faber giving more detail that's being presumptuous
 
swifteagle said:
I have a question about the 25% real estate part, what would he mean by that? A normal guy like me, would I put 25% of my money onto my mortgage or is he referring to a managed fund that only deals with property?
Click to expand...

I'm not sure but I think he has a preference for physical ownership of land. He likes farmland and I think has some in Thailand where he lives.
Owning equity in your house would count. Maybe calculate whether house equity would amount to 25% of your assets?
A-REITs (Australian real estate investment trusts) here were very leveraged and took a big hit in the GFC. They are probably less geared now, but the quality would be variable and pretty perilous for the inexperienced.
We have some shares in an asx listed housing project developer which funds its projects largely from its own cash flow. Has conservative debt. It has a 'land bank' for future development, so that sort of thing might count.
 
@Finicky Would you care to share the company name for further research please?

So perhaps it is not as clear as one might think just by saying 25% in real state as it seems to be open to interpretation. Now what is the best interpretation?

P.S
Now that I am here asking about all this, does someone have any experience with 25% stock allocation - in emerging markets... How does once go about investing in the emerging markets from Australia. I see it as a hard thing to do, but I am sure there is a way or someone with lots of knowledge on the subject.
 
swifteagle said:
... Would you care to share the company name for further research please? ..
Click to expand...

It's Cedar Woods Properties (CWP), but the valuation service I'm using (stocksinvalue.com.au) currently estimates it as 30-40% overpriced by the share market. Also I can't tell yet from the chart whether it is topping and ready to fall or just consolidating for another run. That's why I didn't name it. I discussed it on this thread: http://forums.silverstackers.com/topic-32124-cedar-woods-properties-cwp.html

Marc Faber is a sophisticated investor so there would be nuances to his 25% real estate suggestion that we can't know. He is also capable of changing his investments very quickly. While I suggested that he would lean towards physical land ownership, particularly rural land, I would be surprised if he didn't also have something in funds that own commercial/office stuff in Asia - just guessing

One way of investing in 'emerging markets' would be via an asx listed etf (exchange traded fund), but I've stayed clear myself and would not recommend it if inexperienced.

Australian companies have that great advantage of franked dividends - you could do a lot worse than them for your 25% equities. Maybe there are some ASX listed companies that have exposure themselves to emerging markets. The ANZ bank might count, can't think of any others offhand. I wouldn't recommend food related companies - they never seem to get anywhere. Maybe Ansell (ANN) the condom and glove maker. Maybe gambling companies like Crown (CWN) or Ainsworth (AGI), Can't tell you whether those particular stocks are good buys based on earnings outlooks or share prices. I did hear that ANZ bank is the least expensive of the four banks lately, but no view myself.
 
I usually think of Faber as a showman, and anyone who recommends Bonds to me loses lots of cred.

JMO


OC
 
swifteagle said:
Hi guys,

I was listening to Marc Faber speak about how he splits his money:
25% stock allocation - in emerging markets
25% in precious metals - Gold
25% in cash and bonds
25% real estate

I have a question about the 25% real estate part, what would he mean by that? A normal guy like me, would I put 25% of my money onto my mortgage or is he referring to a managed fund that only deals with property?

I am am wondering if someone could please help me clear this up.

Thanks for the time and help.
Click to expand...

His investment money is probably more than you and I have together as net worth so you have to keep things in perspective. The way Mr Buffet (or Marc Faber and others) invests in interesting too but may not be applicable to you and I either, or a lot of other people in this forum. Assuming you are referring to your residence when you mention your mortgage and assuming your investment capital is a lot less than the value of your mortgage then I would do precisely as you say, reduce it by 25% as it is expensive debt. If it relates to an investment property, commercial or residential, then it maybe a different story as those are usually better when leveraged to just under break-even point.
 
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