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Marc Faber's Latest Prediction

Beacon Equity

     

Marc Faber, the editor of the Gloom Boom & Doom Report newsletter, is on the record with a fresh prediction that U.S. and European stocks will outperform emerging stock markets.

The Swiss-born, pony-tailed economist who enjoys the Asian style of life and Mao memorabilia expects emerging stock markets to succumb to headwinds as the result of inflation during 2011.

Faber opines the confluence of the U.S. Federal Reserve and European Central Bank unprecedented debt monetization activities have flooded capital fleeing into commodities – raising substantially the cost of living to lower per capita purchasing parity countries – as the root cause.

Faber’s latest prognostication comes on momentum of his previous call in March of 2009 of a stock market bottom – which, at the time, was a scary call to make amid panic of the real potential of a bona fide global meltdown.

Moreover, his correct calls to sell equities prior to the 1987 stock market crash and the 2000 tech stock crash have cast Faber as an investment guru – with humor and anti-establishment flair as an added attraction to his firm grasp of economics, markets and affects of central banking on investor portfolios.

Contrary to what could be construed as a “recovery” in the U.S. and Europe by his latest prediction, Faber believes otherwise, suggesting enough money printing by central bankers will eventually raise economic metrics as the legendary Austrian economist Ludwig von Mises observed and taught during the days of Maynard Keynes:

“It would be a serious blunder to neglect the fact that inflation also generates forces which tend toward capital consumption. One of its consequences is that it falsifies economic calculation and accounting. It produces the phenomenon of illusory or apparent profits.”

~ Ludwig von Mises

In the spirit of von Mises’ teachings, Faber warned not to “underestimate the power of money printing” as the foundation of his trademark contrarian outlook in April 2009 of an imminent powerful stock rally ahead.

So how do investors play Faber’s latest call?

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© 2011 Beacon Equity

Dr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow’s Gold.

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