Marc Faber: Short Emerging Markets - Barron's
-
Font Size:
Today's economy is largely manipulated by central banks which use interest rates to create artificial liquidity, Barron's Roundtable participant Marc Faber says. U.S. corporate earnings are destined to disappoint. Faber also notes that net of the energy sector, the S&P's P/E ratio is an overvalued 20, not 15. Trades he likes:
Short DryShips (DRYS) - tanker rates have plunged, while dry shippers have not.iShares MSCI Japan Small Cap (SCJ) - Faber notes Japan has fallen out of favor with investors despite the fact that its valuations are very low compared to Japanese bond yields. He says to wait for a 10% correction, then buy.
Currency trades - short the pound vs. the yen [Editor: sell FXB, buy FXY]. Short the euro vs. the yen [Editor: sell FXE, buy FXY].
Short emerging markets - by buying ProShares Short MSCI Emerging Markets (EUM), shorting iShares Trust FTSE-Xinhua China 25 Index Fund (FXI), and buying ProShares UltraShort FTSE/Xinhua China 25 (FXP).
- International ETF Update: Israel, Thailand, China, and Latin America »
- Friday Outlook: Commodities, Emerging Markets »
- The Competitive Advantage of Stock Exchanges Without Parking Lots »
- When Trading Stops Being Fun: Riots at the Pakistani Exchange »
- Southeast Asian Currencies: All's Well, Everybody Back in the Pool »
Get Seeking Alpha Free Stock Alerts by Email!
Get Free Stock Alerts by Email!
-
Editor's Picks
-
Most Popular
- U.S. Markets: Is it Time to Throw Caution to the Wind?
- Protecting Your Wealth and Profit During the 2008 Crash
- Inside the Dubai Gold & Commodities Exchange: An Interview with Malcolm Wall Morris
- How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play it
- How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play It, Part II
- How High Leverage Has Brought Down the Whole Banking Industry
- Full list of Editor's Picks »
- Apple Feels 'Max Pain' »
- The Oil Bubble Will Meet the Same Fate as Tech, Housing »
- Time To Buy Banks? Proceed With Caution. »
- How High Leverage Has Brought Down the Whole Banking Industry »
- ConocoPhillips: Why the Sell-off? »
- How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play it »
- Earnings Preview: Bank of America »
- Why I'm Shorting Apple Ahead of Earnings »
- Sirius and XMSR's Six Year Prison Sentence »
- Evergreen Solar, Inc. Q2 2008 Earnings Call Transcript »
- Advanced Micro Devices, Inc. Q2 2008 Earnings Call Transcript »
-
Long Ideas
-
Short Ideas
-
Cramer's Picks
- The Continuum for Google Shares Continues
- What Will It Take for Finisar to Reach the High End of Revenue Guidance?
- Ship Finance Int'l: Steady Income in a Volatile Sector
- Majority of Americans Support Ethanol
- Thinking About Currency ETFs and Sovereign Debt
- ETF Pick of the Week: ProShares UltraShort Oil & Gas
- Google Proves Mortal: Opportunity Knocks?
- Amazon: New Kindle To Tap $5.5 Billion Textbook Market?
- Blockbuster - Profiting More Than the Profiteers
- Coal Stocks: Make Money in Picks and Shovels
- Full list of Long Ideas »
- Ford's Financial Services Business About to Enter the Red
- Educational and Training Services Are An Excellent Short Opportunity
- Short Selling: Others Want Protection Too
- The SEC's Campaign Against Naked Shorting: Misguided or Right On?
- The Oil Bubble Will Meet the Same Fate as Tech, Housing
- Why I'm Shorting Apple Ahead of Earnings
- The Best Safe-Haven Investments, and Some Potential Threats
- Do Tell, Intel - Fast Money Recap (7/15/08)
- Separate Abusive Short Sellers from Those Who Play by the Rules
- Lehman: The End Game
- Full list of Short Ideas »
- For Everything, Wind - Stop Trading! (7/17/08)
- Market Lunacy Provides Opportunity - Cramer's Lightning Round (7/17/08)
- Market Rotation Underway - Cramer's Mad Money (7/17/08)
- Cox Not Watching - Cramer's Stop Trading! (7/16/08)
- Buy Boring Gas and Oil - Cramer's Lightning Round (7/16/08)
- Bear Market Rally - Mad Money Recap (7/16/08)
- The Great American Sellout - Cramer's Stop Trading! (7/15/08)
- Natural Gas Will Stay - Cramer's Lightning Round (7/15/08)
- The Windex Will Clean Up - Cramer's Mad Money (7/15/08)
- Fearful Day for Financials - Stop Trading! (7/14/08)
- Full list of Cramers Picks »
Most Popular Feeds
-
ETFs
-
US Market
-
Long Ideas
-
Alt. Energy
- Full list of feeds »
Hedge Fund Jobs
Job Seekers:
- Search jobs by category
- Get job alerts by email or live feed
- Apply online
Employers
- See all recruitment options
- Get applications online or by email



This article has 6 comments:
with that said, they are the best short if rates are dropping, DRYS is totally dependent on short term spot rates. much more than the other dry bulk carriers.
wallastoninvestments.c...
Guy
www.dryships.com/index...
These dry bulk shippers break even at rates which are less than half the current charter rates. Analysts est. that DRYS will earn between $18 and $20/share this year. My own analysis is a bit higher. DRYS is currently trading with a forward PE of 4!!!
Now, short sellers have been all over DRYS recently, so perhaps Faber new something other than what he said! The earnings however are really quite easy to calculate. Many have done so. And, the lowest forecast I have seen to date for 2008 is $13/share. I figure EPS to be closer to $22/share. It is also worth noting that DRYS has recently put more of its ships under longer term charters. Now, 40% of the fleet is locked in for a year or more. The largest of the DRYS fleet, the cape size vessels, are now chartering for over $140,000 PER DAY!!
I should conclude by saying that thus far Faber has been right about shorting DRYS. So if his comment in Barron's was for the short term, he was right. However, if he meant to short this for the longer term, he will get burned by that short because there is no quetion that 2008 earnings for DRYS will be stupendous. FYI... DRYS earned over $4.00, during the fourth quarter of 2007.