1. Equity Markets--Everyone is bearish--individual investors and institutions alike, but this extreme negative sentiment should prevent stocks from falling in the short term (September). Faber thinks stocks could rally to 1150 then fall to 875-900 by mid-October. Superbears should consider shorting Apple. Investors should not be making big bets at this time,either long or short. Capital preservation is more important than capital gains. Overall, Faber is underweight equities, but likes Asian equities with high yields.
2. Bond Market--US government bonds have been in a 29 year rally. It is getting long in the tooth and should be avoided at all costs. At 2.5%, the 10 yr is near the all time low reached in 1947. Faber compares buying government debt in Sept. 2010 to buying tech stocks in early 2000--you may a few more months left, but not much before the bull market ends. The time to be buying bonds was back in 1981 when the 10 Yr was yielding 15.84%. Back then no one wanted bonds and inflation expectations were high. Today, everyone wants bonds and inflation expectations are very low. The herd is going to get slammed.
3. Gold--Faber still likes gold and notes September is usually a good month for gold. The people who say gold is in a bubble are wrong, but this does not mean it will not experience severe corrections from time to time. In the very short term silver could have more upside (if it breaks $20) but Faber likes gold better because it is more of a monetary metal. Investors need to have a large amount of gold in their portfolio for proper diversification.
4. Agriculture--Still bullish. Faber likes the fertilizer stocks and expects them to outperform the general market. In particular Potash One.
5. Yen--Faber thinks the Yen is extremely overbought right now and is one of the worst currencies to be long. The Yen and the 10 Yr treasury are highly correlated and will likely top out at the same time. The economic fundamentals of Japan do not merit a strong currency. People who think the Yen is a safe haven currency will be disappointed in the next few years.
Previous articles on Marc Faber:
Thoughts From Marc Faber--- Aug 1
Get Ready For More Money Printing--Faber Says
Thoughts From Marc Faber--July
Happy Trading!
Black Swan Insights
Marc Faber is of the few people I follow. He has always been able to call the tops and bottoms perfectly. I remember seeing him on Bloomberg on March 6 saying buy stocks. Thanks for the post
ReplyDeleteNow marc faber is someone thats always good to listen to.
DeleteFaber is the man! Called Bernanke a criminal on Australian TV. He said to be long gold for as long Bernanke remains Fed chairman.
ReplyDeleteFaber seems to have had a change of heart lately. In Auguest he was saying that the market was unlikely to fall below 1040ish. now he is callling for the market to fall to 875-900 by october. Why the change?
ReplyDelete