Even though Marc Faber, who publishes the famous Boom, Gloom & Doom report, says Standard & Poor’s 500 Index may drop as much as 10 per cent in the coming weeks, themarket prognosticator is sounding relatively bullish these days. For instance, although he predicts a correction this spring and summer, he also says the rally may resume after July.
“We need some kind of correction, maybe around 5 to 10 per cent, and after that we can maybe rally more into July,” Faber said in an interview with Bloomberg TV in Singapore. “The economic news, while it won’t be good, the rate of getting worse will slow down.”
Faber started sounding bullish on stocks back on March 9, when he told Bloomberg TV that the market would rally through the end of April. Since then the S&P has rallied 25 per cent.
Some Faber insights:
- The S&P may decline to about 750 and probablyrebound after July.
- Global stock markets are unlikely to fall below their October and November lows.
- Commodity stocks have risen too sharply and are no longer attractive buys.
- Asian stocks are a much better value than US stocks.
- The US dollar may weaken, so investors should buy the currencies of Canada, Australia and Singapore.
- Bonds are entering a long bear market and should be avoided.
- Gold will be “dead money” for the next three to six months, but he plans to buy more gold if prices drop to between $750 and $800 an ounce.