BIO: Dr. Marc Faber, renowned for his unconventional expertise in investment strategies, is a fund manager and author. He serves as the editor of the “Gloom Boom & Doom Report” and the “Monthly Market Commentary,” earning international recognition as the pessimistic stock market expert “Dr. Doom.”
STORY: Marc recounts getting caught on the wrong side of the late-1990s dotcom bubble. He had been convinced that the tech crash was imminent and had taken heavy short positions, but at the turn of the millennium, the Fed injected massive liquidity. This unexpected rally sent the NASDAQ soaring another 30% into March 2000. Because one surviving company (Amazon) went up 100× while most others crashed, his timing error turned into a dramatic bubble loss.
LEARNING: True diversification saves the day. Spreading money across stocks, bonds, cash, precious metals, and real estate can protect you when markets surprise.
“When you lend money to friends, you risk losing everything…you lose your money and you lose the friend.”
Marc Faber
Dr. Marc Faber, renowned for his unconventional expertise in investment strategies, is a fund manager and author. He serves as the editor of the “Gloom Boom & Doom Report” and the “Monthly Market Commentary,” earning international recognition as the pessimistic stock market expert “Dr. Doom.”
Born in Switzerland in 1946, Faber pursued economics at the University of Zurich and achieved a magna cum laude doctorate in economics at just 24 years old.
His career took him to White Weld & Company Limited in New York, Zurich, and Hong Kong between 1970 and 1978. From 1978 to 1990, Faber was instrumental in establishing the Asia business for Drexel Burnham Lambert (HK) Ltd.
In 1990, he ventured into his own business. Faber’s monthly publications offer investors insights into potential market trends. While he maintains an office in Hong Kong, he has lived in Chiang Mai, Thailand, since 2001.
Marc cites two “worst” investments. The first was personal: lending money to friends. In his words, “to lend money to friends…is the worst investment you can make,” since those who are in trouble will pay back the banks first and will default on friends. He now refuses loans outright and will give small amounts as a gift if he wants to help.
Marc’s huge market failure was due to the dotcom bust. In 1999, he believed that most tech stocks would die in the dotcom crash. He shorted the NASDAQ heavily, expecting ten dead companies for every single survivor.
But the markets had other plans. A liquidity injection by the Fed in late 1999 (amidst Y2K fears) sent the NASDAQ soaring 30% by March 2000. Ironically, nine out of ten technology short bets he made did go bust 100%, but one – Amazon – rose roughly 100 times.
This one survivor erased his profit, turning his timing call into a massive dotcom bubble loss. As Marc admits, overbetting on a crash came at a cost: “being on the short side made it difficult to make money.”