Barrons: What if the time frame is now and the investors are folks who are comfortable with risks of emerging markets and commodities?
Right now as I look at the world, I’m not terribly optimistic. The American stock market has been in a bull market now 6½ years. In America, we’ve had economic setbacks every four to seven years since the beginning of the republic, and chances are we’re getting closer to being due for some kind of correction, bear market even. And the next bear market is going to be worse than most of us have experienced because the debt is so much higher.
You know, we had a problem in 2008 because of high debt, but since then, debt worldwide has gone through the roof. I mean nobody has reduced their debt, almost no nation has reduced its debt since 2008—the debt has gotten higher and higher. So the next time around, we are going to have a very serious problem.
What I’m saying is that I’m not racing around looking for markets. I’m afraid that the big picture is such that we are going to have more problems in the next year or two, and being long most stocks or most investments is not going to be great.
Barrons: Let’s say you’re a 50-year-old Barron’s reader with a few million dollars in net worth. How much of your assets should be in these areas? So where do you think the big global problems are going to start?
Big problems are going to come from the U.S., essentially because it has been the American central bank that has been the most at fault. We’re the ones who started all this money-printing, and everybody else of course copied us. But it is the first time in recorded history that you’ve had all the major central banks printing staggering amounts of money: Japan, the U.S., Europe, Britain, we’re all doing it.
Having said that, when you look back at previous bear markets, they usually start with a small, marginal country that has trouble that snowballs, and the next thing you know, we’re all in trouble.
There is going to be another leg up in stocks as central banks continue to panic [and keep rates low]. I suspect it will be the last one.
*Last update Nov 22, 2015