Is Marc Faber Crazy? – The End Of The World As We Know It by Dr. Robert Johnson, CFA, CAIA
There, that headline caught your attention, didn’t it? I use it to make a point about the state of financial reporting and the dangers surrounding the “infotainment” industry. I refer to the industry as infotainment because what often passes of as news is really some sort of strange hybrid between information and entertainment. The problem is that many people fail to understand the entertainment aspect and treat many stories as purely news.
Last Friday a story caught my eye and warrants a revisit of my March 9 ValueWalk post, entitled “Economic Forecasters: A Cry for Attention.” A headline on Bloomberg via Yahoo! Finance stated “Faber: I’d vote for Trump because Hilary Clinton will destroy the whole world” appeared and, no doubt, piqued the interest of many internet surfers. Realize now that this story wasn’t coming from TMZ, but had its genesis in an interview at Bloomberg.
Reputed short-seller Spruce Point Capital Management released its latest short report this week. The firm is shorting Canadian dairy and grocery manufacturer Saputo. Spruce Point chief Ben Axler believes the company is entering a phase of declining growth and highlights the financial stress and growing challenges he sees it facing, not only in Canada but Read More
Now, Marc Faber didn’t provide a ringing endorsement of the presumptive Republican nominee in his Bloomberg interview. He stated that he would vote for Trump because “Trump may only destroy the U.S. economy, but Hilary Clinton will destroy the whole world.” In other words, Trump was the lesser of two evils.
It is easy to pass these remarks off as simply someone making an attention grabbing statement or exaggerating for effect, but this is indeed the heart of the problem with our 24/7 news cycle. Many uninitiated observers will take Faber’s comments to heart. After all, he is a successful investor whose opinion seems valued by the mainstream financial media. And, his statements do have consequences.
Does Marc Faber really believe that if elected president of the United States Trump would “destroy the U.S. economy” or Hillary Clinton would “destroy the global economy?” Of course not. If one is familiar with Marc Faber’s history they realize that is his modus operandi. The issue is that many people hearing these remarks may not have that context.
Is Faber crazy? Yes. Crazy like a fox. In the same interview he made very reasoned comments about valuations in emerging markets, making a cogent case on the basis of fundamental analysis for greater commitment to these markets that are undervalued and have seen precipitous declines in recent times. I am convinced that his outlandish Hillary Clinton statements were simply made to generate interest in his thoughts on emerging markets. Faber is all about infotainment and he is certainly not alone in that orientation.
One of the most memorable debates on the confluence of economics and entertainment was the widely-viewed appearance of CNBC’s Jim Cramer on The Daily Show in the midst of the financial crisis in early 2009. Jon Stewart famously admonished the host of Mad Money for blurring the lines between information and entertainment – “I understand you want to make finance entertaining, but it’s not a [expletive] game.” It appears Stewart needs to reprise his remarks this election season.