Marc Faber's January 2011 Outlook Correction Imminent
extraordinaire Marc Faber is out with his latest Gloom, Boom, and
Doom report, which discusses his outlook for 2011. Here are a few
Markets Faber believes a correction is imminent for the
stock market as bullish sentiment (AAII sentiment) nears record
levels and mutual fund cash positions remain very low. Furthermore,
the latest upward move in stocks has occurred on declining volume,
which is usually bearish from a technical point of view. The correction
should occur in January. That being said, you should be buying into
the correction as it represents a good buying opportunity. Faber
prefers energy companies and speculative stocks such as home builders
and even AIG. He goes on to say that the third year of a Presidential
cycle is very good for speculative stocks versus traditional blue
chip value plays.
and Silver Reiterates his favorable opinion on gold and
silver. Doubts they are currently in a bubble as some analysts postulate.
Faber notes that investor exposure is very low when you compare
it to the world's financial wealth, meaning that gold and silver
are still under-owned and have room to run.
Markets While he is very bullish long-term on emerging
markets, investors should avoid (or at least lighten up on) emerging
market stocks right now. They should only be bought on corrections
which would represent favorable entry levels. Overall, Faber thinks
the SP 500 will outperform emerging markets in 2011. The only emerging
market that looks attractive right now is Vietnam (VNM).
On a correction, Faber likes energy companies since the long-term
trend in oil is up, as supply fails to keep up with surging demand
from emerging markets. Notes that emerging markets have surpassed
the developed world in oil consumption and that this trend should
keep demand strong for the foreseeable future. Faber likes the majors
like Exxon, Hess, and even Chesapeake as natural gas is too cheap
on an inflation-adjusted basis. Continuing the energy theme, coal
and uranium stocks should be gradually accumulated on weakness as
the world looks for alternative sources of reliable energy. Peabody
on the coal side and Cameco for uranium should outperform over the
next few years.
Market Reiterates his bearish long-term view on US Treasuries,
but notes that they are currently oversold and could be a good trade
at this point (TLT). But this would only be a short-term bounce
as rates have likely bottomed and higher inflation will erode future
Equities While everyone is still bearish on Japan, Faber
likes Japanese equities and thinks they have the potential for more
upside. In particular, he likes Japanese financials such as Nomura
and Mizuho Financial.
is pretty bullish on equities despite his prediction of a short-term
pullback in January.
Happy New Year!
with permission from Black
Marc Faber [send him
mail] lives in Chiangmai, Thailand and is the author of Tomorrow's
Best of Marc Faber