investing
Where to Invest in 2012 Are there any safe havens left? How investors can position portfolios in the new year.
s 2011 drew to a close, investors reflected on what has been a challenging year in the world markets. Indices the world over, only just recovering from the 2008 global financial crisis, were hit with challenge after challenge. So after the volatile ride in the equity markets in 2011, how can investors position their portfolios for 2012? Dr Marc Faber, an international commentator best known for his accurate predictions on the stock market was quoted as saying he believes the best thing an investor can do in the current economic crisis is to follow his ‘Rule of 25’. The publisher of the ‘Gloom Boom
Doom Report’ said,“the best thing an individual investor can do right now is hold 25% of his assets in equities, 25% in real estate, 25% in gold, 25% in cash. If equities, real estate or gold drop another 10-20% put more cash in.” Speaking during a visit to Taiwan in November last year, Faber criticized the practice of printing money which he believes will continue in the US and Europe. “Printing money is a way global governments will evade debt crises. Loose money policies are intended as short-term fixes,” he said. QE3 is looking more and more inevitable as some FOMC members believe the economic outlook might warrant additional ‘help’. The US Federal Re-
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serve is said to be gearing up for another round of quantitative easing in 2012. Faber recommends risk diversification against the current economic backdrop, but says to avoid government bond purchases, as they would require ‘trust’ in central bankers easy monetary policy. Instead he suggests owning physical gold, equities and Asian real estate, which will prove a better defense against inflation in the long term. Meanwhile, UBS said the 2012 investment outlook is to be “distressingly familiar” to the investment climate in 2011 dominated by the uncertainty surrounding the Euro zone crisis and doubts about the sustainability of the global economic recovery.
All Photos from Corbis / arabianEye.com
By Patricia Andrews