Faber: Gloom, Boom or Doom?
How about all three. Faber released another provocative newsletter this month that has a little grist for investor of all stripes.
Boom. His short-term outlook is bullish because he believes money-printing will underpin the market even after the 60% increase in the S&P 500 from March 2009 lows. This puts him in the same camp with Rich Bernstein and Jim Grant. Interestingly, he says that a “very weak” economy is best for stocks because it will induce more money printing from central banks.
Gloom. However, he says this will only make matters worse over the longer-term as the U.S. government has no stomach for reigning in budget deficits expected to reach $2 trillion. It is merely underwriting the bankers’ mistakes. Down the line a point of debt revulsion will come.
Doom. In five to ten years, Faber sees major problems as a result. In the September Gloom, Boom & Doom report he writes:
The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society.
Let’s call this Financial Armageddon. While he certainly presents a dire worst-case scenario, I sympathise with this view because, as I have warned in the past, unsustainable debt bubbles like the one we are now witnessing usually end in depression, war and strife.
Below are three videos of Faber on Bloomberg earlier today spinning his tale of waste and woe. Pretty entertaining and they run twenty minutes in total. Faber likes drug stocks. He thinks that bonds and cash will be the worst long-term investments because of inflation. Faber also would be overweight Asia as he believes emerging markets will grow faster than the West. He has good things to say about Goldman. “They are really a smart group of people.”
See also Bullish Today, Marc Faber Is “Highly Confident” the Future Will Be Very Bleak and the attached video at Tech Ticker with Aaron Task. Faber gives another entertaining performance there as well.
(three videos embedded)