Marc Faber December 2012 Market Commentary

Marc Faber has just released his December 2012 market commentary "Always try to be a little kinder than Necessary" on gloomboomdoom.com.

This month report explains that something is clearly not quite right with the economy, as the recent performance of Wal-Mart, Tiffany, Genesco, and Kohl’s show. What concerns Marc Faber greatly is that most asset markets had outsized gains since early 2009, excluding Vietnamese, Chinese, Japanese, and European equities, as well as US housing. He believes that investors’ expectations about future returns are far too optimistic, and that in a world that currently hardly grows, investors will need to reduce their future return expectations. Therefore, 2013 will most probably not be a good year for holders of assets, and he has now shifted to the preservation of the outsized gains he has achieved over the last 3 years.

Marc Faber also wishes Merry Xmas to everybody and reminds his readers to try to be as nice and kind to other people quoting Albert Schweitzer: "Constant kindness can accomplish much. As the sun makes ice melt, kindness causes misunderstanding, mistrust, and hostility to evaporate." 

The monthly market commentary including one attachment:

• The Fed’s Last Hope by Michael A. Gayed,Chief Investment Strategist at Pension Partners, LLC.

I cannot find the attachment, but Gayed mentions it in a marketwatch.com articles, and explains bonds have now very little value, and the relative advantage of dividend yields over bonds yields, will be bullish for stocks.

If you want to access the full Monthly Market Commentary (MMC) by Marc Faber, it is available for 300 USD per year.

Invest in Vietnam with ETF

Vietnam is one of few (only?) countries in the emerging market which currency value went down vis-a-vis developed market currencies such as the US Dollar or the Euro (Cf. 10 year EUD VND Chart below- Source: xe.com).



They have also devalued their currency recently by 8.5% due to rampant inflation (20%) and already high (but still negative) interest rates (15.9%). They have also raised their interest rates, increase the electricity rates and the stock market tanked following those bad news.

Marc Faber also recommended investing in Vietnam at the end of last year.

I found 2 ETF to do so. One is available in the US market: Market Vectors Vietnam ETF (VNM) and the other in Hong Kong: X DBFTSEVIET (3087.HK).

The graph below charts the vietnam stock market (red), VNM ETF(green) and 3087:HK (orange) since the ETF are available (July 2010).




Bear in mind that the ETF are in US and HKD (linked currency) but the Ho Chi Min index is expressed in Vietnamese Dong, so adjusting for currency fluctuations shows that 3087:HK tracks the Vietnam stock market closer, but VNM outperforms both the Ho Chi Min index and the Hong Kong ETF.

I am not sure about the reason for this difference, but this is not because of the expense ratio (VNM: 0.76% vs 3087:HK: 0.85%) or premium (VNM: 2.404% vs 3087:HK: 1.129%)