Saturday, May 30, 2015

Marc Faber Predictions: U.S. Stocks

 Overall, Faber remains bullish on U.S. equities, relative to fixed-income assets like bonds. The simple reason for this is that many European government bonds, including Switzerland, Germany, and Demark, have negative yields. The story is similar around the globe, with fixed income yielding investors close to nothing. (Source: PIMCO, February 1, 2015.)
A bond with a negative yield, or a negative rate of return, means that an investor who owns that security will lose money each year over the entire life of the bond. Faber does not want to lose money and therefore believes U.S. stocks will outperform government bonds, especially European government debt, over a longer horizon. This can take anywhere from five to 10 years. (Source: The Wall Street Journal, January 31, 2015.)
However, within the S&P 500, some sectors have moved much higher than others. For example, the NASDAQ Biotechnology Index has gained roughly 54% since the start of 2014, while the broader benchmark S&P 500 has only moved up 14%. That’s why Faber believes that for the first time since the 2007 to 2008 period, there are some select shorting opportunities. Faber hinted at the biotech and social media space as richly valued sectors that are prime for price declines. (Source: The Wall Street Journal, January 31, 2015.)

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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