Famed Swiss Economist and Investor, Dr Marc Faber, has garnered a wealth of investment experience throughout his career and life. He currently resides in Thailand, runs Marc Faber Limited, and monitors economic growth in Asian markets closely.
He has shared his economic insights, in-depth study of financial markets, and knowledge in his book: ‘Tomorrow’s Gold.’ It is a well-paced, elegantly written, and brilliant book that would be a great add on to the serious investor’s library.
Here are some main points and takeaways from Faber’s book and career:
1) Study History:
The only thing that mankind ever learnt from history is that we never learn from it – writes 19th century German statesman Otto Von Bismarck. Turning the clocks forward into the 21st century, it seems that Bismarck is not entirely wrong about his sharp observation and comment on mankind.
Faber explores the history of financial markets, particularly the history of financial panics, manias and bubbles. He has pointed out that he enjoys the works of the renowned economic historian Charles Kindleberger.
Knowing the history of manias and bubbles will equip the student of history with certain patterns, parameters and signs that he or she can identify or observe in the present. This will greatly sharpen the thinking and objectivity of the serious investor.
2) Do Your Own Homework and Research
It is of utmost importance that every serious investor must put in the time and effort to conduct their own research, study and due diligence when managing their own money. Nobody’s advice, no matter how capable that person is, will help you in the long run in investing.
Faber also quoted the famous English philosopher, Bertrand Russell, who said: “The degree of one’s emotion varies inversely with one’s knowledge of the facts – the less you know, the hotter you get.” We may all get excited on hearing what seemed to be fantastic investing opportunities, but merely investing based on those emotions is the fastest way to the poorhouse. Studying about the opportunity and getting to know the facts will help objectify the thinking and decision making process.
3) Do Things That No One Else Is Doing
Faber has explicitly mentioned in his website that he greatly enjoys Paulo Coelho’s ‘The Alchemist.’ He writes: “This is not a typical investment book written by another Wall Street shark or by someone who won a lottery and then writes how you can with his system also win the lottery. This book, however, will give you an insight that in order to fulfill your dreams much hardship will have to be endured and also that you must do things no one else would remotely consider doing. It is a book you will never forget and never regret having read.”
One has to take the road less travelled some times. This requires audacity, boldness and a tough mental state. Often, the road less travelled can be psychologically daunting and mentally challenging. One has to be exceptionally brave, ignore conventional wisdom and daring to be different. The rule of thumb is simple: when a route gets very crowded, it is time to avoid it.
Faber makes his case for it throughout his book, applying contrarian investment wisdom to the markets.
Faber has also recommended reading the works of the famous Austrian economists like Joseph Schumpeter, Ludwig Von Mises and Friedrich Hayek. He is known to align himself with the Austrian school, and is often a fierce critic of the Neo-Keynesian way of running economics.
In ‘Tomorrow’s Gold’, Faber covers inflationary and deflationary cycles, and how astute investors can take advantage of such conditions. The book also has chapters on Long Wave / Kondratieff Cycles and his own economic model on growth in Emerging Economies.
More information can be found on his website: http://www.gloomboomdoom.com/