Investors unlikely to make much money in India next year: Marc Faber

Investors should diversify, as we don't know what the world will look like in five years. Markets valuations are sky-high, but the economic reality for ordinary people is not good, Faber said.

Global markets are set to sign off a choppy year and welcome 2026 amid hopes of better days. Marc Faber, editor and publisher of ‘The Gloom, Boom & Doom Report’, tells Puneet Wadhwa in a telephone interview that Indonesia, Thailand, Brazil and Colombia are among markets that could do well in the year ahead. Edited excerpts:

 

Are global markets in for more surprises in 2026 as regards US tariffs?

 

I think the impact of the tariffs on the economy will not be good. It’s negative for everyone but especially for the US. Because of tariffs, the US will face a higher inflation rate. The Fed can cut the funds rate — and they will — but long-term treasury yields may not come down. The bond market may not like these rate cuts, and long-term interest rates could even rise.

 

If that happens, the Fed will eventually be forced to reverse course. In my opinion, the only way to sustainably bring interest rates down is by tight monetary policy. But since they won’t do that, the bond market could sell off — and that would be bad for the stock market.

 

Are stock markets factoring in this risk?

 

The stock market will be very sensitive to the bond market. If bonds sell off — meaning bond prices go down and long-term interest rates go up — stock markets will not like it. Valuations in the US are extremely high across almost every metric: Price–earnings, price–sales, price–book. Many markets globally are at elevated valuations. So, equities are very vulnerable if rates don’t fall, or worse, start rising.

 

Much of the US rally is driven by the artificial intelligence (AI) trade, especially the Magnificent Seven (Mag 7). We’re seeing some selloff in AI stocks. Is the AI trade finally over?

 

I’m not sure the trade is completely over but AI stocks are overpriced. There is very little long-term value in buying them at these levels. AI may well be an important technological development but stocks already fully discount its potential. They are ahead of themselves — similar to the dotcom bubble in 2000. The internet was a great invention, but internet stocks still crashed afterwards.

 

What are the key risks for global financial markets in 2026?

 

Risks exist everywhere. Social systems in the Western world are not stable. Then we have geopolitical risks: Potential wars in the Middle East, in Latin America (Venezuela), and of course the Ukraine conflict. Nobody knows how these situations will evolve.

 

Global economies don’t have much room for strong growth because leverage is very high. This time, it’s not only consumers who are over-borrowed — governments are the biggest borrowers. Debt levels will not go away. Interest payments themselves are becoming a burden.

 

Western governments — both Europe and the US — have only one real option: Print more money. But printing money will not solve anything. It will only create more inflation. So the risks are social, geopolitical, and economic — all of them.

 

Will 2026 favour emerging markets (EMs) over developed markets?

 

EMs have underperformed the US significantly for the last 15 years. Going forward, I think EMs — especially Latin America and Indo-China/Southeast Asia — will outperform the US. Over the long run, India will also outperform the US.

 

When we spoke in May 2025, you did not expect strong Indian market returns over the next year. The benchmarks have hit new highs since then. Has that surprised you?

 

No, it hasn’t surprised me. I have always said: The Indian market may go up but the currency goes down. Yes, the Indian market is at a new high in rupee terms but in US dollar terms — and the dollar has not even been very strong — the market is down.

 

In fact, the last dollar-term high for India was in September 2024. In gold or silver terms, the Indian market is substantially lower. Investors should consider measuring their assets in gold or silver rather than paper currencies.

 

What returns should investors expect from India in the year ahead?

 

I don’t think investors will make a lot of money in India over the next year. In dollar terms, India is down over the last 12 months. Meanwhile, Brazil is up 55 per cent. Among major markets globally, India has not performed well over the past year. Some Indian stocks have risen, yes — but that is true in every market. In the US, technology stocks haven’t done well recently; what has done well are gold mining shares.

 

Global markets are complex. In Europe, the STOXX 50 index — despite poor economic conditions — is up 30 per cent over the last 12 months. So performance varies widely, but as a whole I don’t expect India to deliver strong returns over the next year.

 

Which markets are likely to attract foreign money in 2026?

 

Indonesia, Malaysia, Thailand, and Hong Kong. In Latin America: Brazil, Colombia, and Chile. I have some investments in China but not a lot. As for India, I do not think the Indian market will do well over the next 12 months — because of high valuations, geopolitical risks, and social tensions globally.

 

Do you expect most global stock markets to perform poorly over the next year?

 

Yes. I don’t think global stock markets will do well. There will be pockets of value — for example, Thai banks offer dividend yields of 6 per cent or more — but you cannot run a global portfolio by allocating everything to one niche.

 

Another point: currencies are unstable. All paper money — dollars, euros, rupees — is losing value. If you measure stock markets in gold, silver, or platinum, they are all down.

 

What is your view on gold and silver?

 

For 30 years, I’ve told Indian investors to own gold and silver. I don’t know how high they will go but I know paper currencies will lose purchasing power — just as they have for decades. Nothing in India is cheaper than it was 30 years ago.

 

I don’t give specific price targets but if you want to hold cash, you should hold part of it in gold, silver, or platinum.

 

Any final thoughts as we head into 2026?

 

Investors should diversify, as we don’t know what the world will look like in five years. I would remain cautious. Market valuations are sky-high, but the economic reality for ordinary people is not good. India is in better shape than many countries but in the Western world the typical household is worse off than 20 years ago. Cost of living increases are far higher than what governments report.