Black Swan Insights

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September Thoughts From Marc Faber

Here are some highlights from Marc Faber's Gloom, Boom and Doom Report:

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!

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Latest Thoughts from Marc Faber--July 1

Legendary market commentator and investor Marc Faber is out with his latest issue of the Gloom, Boom and Doom Report and it is another good one. Here are some of the highlights:

1. Stock Markets--Faber is bearish on the all markets around the world, especially Shanghai, Australia, and Canada. He believes that while markets are temporarily oversold in the very short-term and could bounce, that the direction will likely be down until Oct/Nov. He goes own to explain that the slowdown in China could turn into a crash and that it will bring markets down 20-30%. He specifically said the S&P 500 could fall down to 850-900. He does believe that the March 09 lows of 666 will hold because of money printing,

2. Gold and Precious Metals--While long term bullish, Faber is cautious in the short term on gold and thinks it may dip down to 1100, but this would present investors with a buying opportunity. He notes that from a seasonal perspective gold generally falls in July and into mid August. However he thinks the Elliott Wave deflationists are wrong about gold falling back to 500. He thinks gold could actually go to 4,000 based on M2 (money supply).

3. Gold Stocks--He likes gold stocks and will continue to hold them even though he expects them to fall with the general market.

4. Housing Market--Faber did not address US housing but pointed out that the Australian and Canadian real estate markets are in bubbles (even larger than the US housing bubble) and that with the slowdown in China could collapse.

5. Bonds---Faber said that bonds could rally a little more (between 105-110 for TLT) and he would be looking to short them. Long term you will lose holding bonds because of inflation he declares.

6. Central Bank Policies--As worldwide markets fall central banks will again resort to money printing on a scale larger than last time. And as history shows money printing works which will prevent markets from collapsing.

Good Luck!

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Thoughts from Marc Faber

Marc Faber is one of the investors I actually listen to because he has an admirable track record dating back over decades. I subscribe to his Gloom Boom Doom Report and while I cannot legally publish a copy of it I can give you a general outlook from Marc Faber.

Faber is not currently bullish on stocks and believes that the odds of a correction are high over the next 12 months (10-20%). The only exception is Thailand and Japanese stocks which are still cheap.

Faber compares buying US Treasury bonds in 2010 to purchasing tech stocks in 1999--not a good idea. He believes that there is no future scenario which would benefit treasuries (particularly 30yr bonds).

When it comes to currencies Faber notes that the Yen should decline and is a good short here against the Euro. He would be a buyer of the Euro against the dollar.

He still likes gold and advises buying on a regular basis.

Faber is cautious on commodities but likes grains, especially soybeans and likes fertilizer companies (POT,MOS,AGU) as a play on this.

Overall Faber is not bearish longer term on stocks because he believes the Federal Reserve will simply print more money to prop up asset classes. But in the short term he expects a real correction which should be bought by investors.

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