Why Marc Faber Thinks It’s Time to Diversify Your Portfolio
Risks to the global economy
Marc Faber is concerned about how the global economy (ACWI) (VTI) will perform in the next five years. He is very concerned about the rising global debt level. According to him, too much leverage is very dangerous for the economy. Global credit growth is rising continuously. Faber thinks that if this bubble isn’t controlled properly, it could be a great risk to the economy and could be even more dangerous than the 2008 crisis.
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Marc Faber on asset allocation
Due to the threats Faber sees, he thinks investors should diversify their portfolio. According to him, investors should allocate portions of their portfolio into the equity market (SPY), the bond market (BND), real estate (IYR), and precious metals (GLD).
He said that if we see a disturbance in the global market in the near future or if this credit bubble bursts, then he wouldn’t worry too much about investment returns from a diversified portfolio. He also said that he has been following this investment strategy for the last 20 years.
You may be interested to read, Morgan Stanley’s James Gorman on Global Economy and Banks for more analysis.