Marc Faber’s Latest Market Views
Gloom, Boom & Doom Report Editor Marc Faber was interviewed on Fox Business regarding his outlook for the markets (see video below).
When asked how long stocks can go up in a poor economy, Faber stated as long as money is being printed stocks can go up somewhat. With negative interest rates cash is dangerous and bonds are relatively unattractive, he added.
QE3 and the ECB buying of bonds has been largely discounted by the market, according to Faber. If a big QE3 is announced stocks could rally 3-5 percent and then there will be disappointments, he added.
Faber stated the markets will likely fall 20% from where they are now in the next six months. If investors can’t take a 20% downdraft in asset prices, “then don’t get up in the morning…stay in bed,” he quipped.
A crash could occur so investors should hold some cash, bonds and gold, Faber said.
Market commentators have been focusing on dividend yields, but what could happen is the corporate profits disappoint and some dividends could be cut, according to Faber.
Faber likes certain Asian shares which have dividend yields of 6-7 percent.
Faber talked about his purchases of certain high yielding European equities 3-4 months ago which have since rallied. He said he would buy more there if the prices dropped 20%.
Faber thinks a bubble exists in fiscal deficits and the U. S. will run trillion dollar deficits from now on because spending can’t be cut meaningfully. Government debt is the most unproductive debt, Faber added.
Faber said if he wasn’t a foreigner he would spend his time buying up property in Georgia, Arizona, Florida, Nevada and so forth.
Faber said he likes Khazakstan which should have a higher credit rating than the U. S. They have a fiscal surplus, current account surplus, a trade surplus, and debt/GDP is 20%.