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Faber: Put Half of Your Cash in Emerging Markets

Tuesday, 28 Sep 2010 08:20 AM

U.S. investors should invest at least half of their money in emerging markets, as the U.S. economy isn't healthy enough to produce attractive returns, says investment guru Marc Faber.

The emerging-market world is larger than the developed world in terms of goods markets, Faber tells the Hera Research Newsletter, which makes it a better investment choice.

“I think people should have at least 50 percent of their money in emerging economies. With interest rates at zero and with the prospect that they will stay at zero, or below zero in real terms for a long time, I think cash is not particularly attractive,” Faber says.

“I think U.S. government bonds are unattractive in the long run, although they may be attractive for the next three months. I would recommend to people to accumulate precious metals and invest in a basket of shares in emerging economies.”

The U.S. economy is recovering from the worst recession since the Great Depression albeit sluggishly, as high unemployment rates still bother President Barack Obama, who admits that even though the recession is officially over, it doesn’t feel that way for many.

That, other market watchers say, helps make emerging markets, home to higher growth rates, look more attractive.

“We think there is room for further market outperformance by emerging markets, reflecting continued economic outperformance,” says Piero Ghezzi, head of economics and emerging markets research at Barclays Capital, according to Citywire.

“Last-time around the emerging economies were forced to tighten monetary policy to restore credibility and that exacerbated their pain but this time around the emerging markets have fared better than the developed countries because they have not had the same balance sheet problems.”

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U.S. investors should invest at least half of their money in emerging markets, as the U.S. economy isn't healthy enough to produce attractive returns, says investment guru Marc Faber. The emerging-market world is larger than the developed world in terms of goods markets,...
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2010-20-28
Tuesday, 28 Sep 2010 08:20 AM
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