A contrarian's advice on crash-proofing

The Contrarian Investors' Journal is also waiting for a crash and considering strategies.

More on Marc Faber

I missed this article from May 23 about Faber's recent recommendations - some on currency, but also some on commodities, e.g. gold versus oil.

Contrarian update

Let's take a look at the 6 contrarians favoured by Investment U:

Jim Rogers reportedly (today) likes farmland in Latin America, because of the water supply (I think Bill Bonner has gotten into this, too)

Marc Faber is sounding very cautious and cash-oriented at the moment, though I have previously quoted a report of his investments

John Templeton is quoted as stating the principle “invest at the point of absolute pessimism,” a point which surely hasn't yet been reached

Sam Zell has sold a real estate business (Equity Office Partners) to Blackstone - which makes the Chinese a part owner of New York, and the Daily Reckoning thinks Zell did rather better out of the deal than Blackstone. Zell is reportedly buying the Tribune media group

Eduardo Elsztain is in Argentine real estate

George Soros' recent portfolio is reported here and the same source reports his purchase of rail companies recently - an indication of moving towards more conservative value investing?

... and Steve Sjuggerud, also mentioned in the Investment U article that named the above, is tipping shares in a gold mining venture.

Bulls AND bears buy bargains

If you read the IU article linked to the end of the previous post, you'll see one of the fabulously successful contrarian investors is John Templeton. You'll also see that the foundation of his fortune was investing in low-priced shares in 1939. The macro view DOES have a bearing on investment decisions.

Earlier, I quoted the new Chinese owner of the ThyssenKrupp steelworks, who expects the steel market to collapse again sometime and this is one reason why he bought the works at bargain cost - to survive when others go under because of debt.

Speaking of debt, Bill Bonner opined this week:

A credit expansion is always followed by a credit contraction. And this credit expansion has led to the world’s first, and biggest, planetary bubble. When it corrects, it will be the world’s first, and biggest, planetary bust. So keep your eyes on our Crash Alert flag, dear reader. We may be early. But we won’t be wrong.

Ignore the bulls AND the bears?

A stimulating article from Investment U about how some of the greatest investors admit they can never predict what the market will do. Their strategy is to buy businesses whose shares are worth much less than the assets, then sell when the share price catches up with the asset value.

I suggest you add Investment U to your favourites, for a good read round. And have a look at today's IU article on 6 top contrarian investors.

A cheerfully dissenting view

Rachel Beck of the Associated Press is determined to see the sunny side, quoting past history to show that interest rate hikes don't need to mean stock drops. And if investors' mood is less bullish, that means buying opportunities come up. And as long as the average yield on the S&P 500 is higher than that on Treasuries, etc.

However, what will the average yield on stocks be, when consumers buy fewer goods and services? And shouldn't the yield be significantly higher, to compensate for investor risk? And how long does it take for a less bullish mood to end? These soothing words don't quite reassure me, somehow.

The Sunday Telegraph gets bearish

Looking at the recent fortunes of US Treasury bonds, "Sunday Business" Editor Dan Roberts thinks the turning point has come:

I'm sticking my neck out and saying that the time has come. The writing is on the wall...What follows next may turn out to be mild turbulence or the start of a steeper nosedive. Either way, it seems a prudent time to adopt the brace position...