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Beware the false rally coming soon, says world-renowned bear Marc Faber. He says catalysts are...
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Thursday, August 16, 2012, 7:48 PM ETBeware the false rally coming soon, says world-renowned bear Marc Faber. He says catalysts are currently in place that could trigger an advance. "We could go to 1450 or even 1500," Faber says. However, he warns that “we’re in the late stage of a mature market and not a new bull.”
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You mean completely wrong.
He will eventually be right, like a broken clock. He will not be right twice though.
http://bit.ly/MBH0TW
Yeah, go up 100%, fall 25%, repeat. Sure pays to be a bear.
Marc ... zzzzzzzzzzzzzzzzzzzzz
and ,
Jimmy Rogers , bullish gold $1900 , silver $ 45 , bulish Euro $1.55...
Jimmy .......zzzzzzzzzzzz
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If these guys actually followed any of their blatherings, they'd quickly be on the dole of the government of their choice. Since they're not, it's pretty obvious that they must routinely issue bald-face lies, whether upside or downside comments, in an attempt to provide better pricing for themselves.
I just wish people would stop listening to these jokers. So he called '87 and '08, so what? If you're constantly bearish for 25 years occasionally you'll be right.
Regardless, market timing in itself is folly. You can legitimately use fundamentals to point to high or low valuations, but good luck getting the market's actual response right in the short-term.
Yep, ain't it just amazing how nobody ever owns any of those equities that have gone down 50,60,70+% in the last year. Or even any of those that are off just 20-30% from their 52 week highs.
1) We are getting close to the market run up into Xmas.
2) Iran vs USA scrimmage.
3) Real estate has probably bottomed in the US and thus will be a source not a sink of economic activity.
4) Various ME economies are being unleased in their own crude fashion.
Not much for the perma bears to feast on.
The media loves to hype up when he's negative on something, but they rarely cover when he's bullish on something. Usually he's bearish on something and bullish on something else....but you'd never know it by what the media covers.
He's just playing with us.
As usual, you make too much sense.
Why are they lower now? Many bond traders still argue over that. Do you think many are rushing to buy our debt at low yields?
Bonds are a terrible investment and not just because how risky our debt is. Inflation is higher than what bonds are paying out therefore you would not be keeping your wealth, you'd be losing it by holding them.
Short-term is all guesswork, of course, but I'm still looking for about 1430, give-or-take, marking a five-month double top similar to 2000 and 2007 (with the second top about 1% higher than the first). We should know soon. I'm putting my money where my mouth is--another tranche of SPY short this afternoon, and waiting to put on one more in a week or so around 1430 (if we get there).
Recent TLT sell-off is interesting, but so far looks identical to the March TLT sell-off--I expect it bottoms around 117-118 then bounces higher as the stock market declines. VIX and other sentiment measures also identical to late March.
You think capital allocations, now, look anything like 2000 or 2007? Or, do you believe that capital flows don't matter?
Even more recently, for example, between late 2007 and early 2010, the S&P lost 350 points while TLT was unchanged. Your theory would seem to imply that this is impossible--where did all of the money go?
Currently, both stocks and Treasuries are richly valued (treasuries more so).
Here's another thought experiment--what would happen if inflation came back in a significant way? Answer: both stocks and Treasuries would decline sharply, notwithstanding any "funds flow" rebalancing arguments.
2000 and 2007 parallels are technical pattern observations.
Money can go to cash, of course.
So, the argument can be made that folks will sell T-bills and, instead of getting those fabulous 1.5% yields, they can get zero. I'm betting that running and hiding is going to get very, very old and quite expensive, too.
Stocks are noticeably cheap if one compares earnings yields to bond yields, but, apparently, you seem to think that these cost/benefit relationships don't impact investors. That only applies for limited periods of time because eventually "fear fatigue" sets in and people realize there's no money to be made in cash and cash equivalents, especially when inflation is relentless (even if grossly understated by the Government).
Those that have exhibited signs of paralysis ever since 2008 have paid very dearly, yet the prevailing view seems to be that a new 2008 must be right around some corner. It's most unlikely, especially because lots of money is already so aligned.
I define valuation by reference to expected long-term returns. At current valuations, we're looking at something like 4-4.5% annual nominal returns on the S&P (Hussman, Bill Gross). That's better than Treasuries, but not as much as you seem to suggest. Beyond that, there's the issue of risk premium--notwithstanding potential rate risk for very long-term Treasuries, stocks can be expected to exhibit substantial volatility in the short and even intermediate term on the way to that 4% annual return. That type of volatility is a real cost for endowments, pension funds, individuals, etc. with regular drawdown needs. Bill Gross's comment today about real assets outperforming financial assets from this point is probably correct--that's why you're seeing all of the private equity guys and small investors gobbling up rental real estate. And of course, we know about farmland, gold, energy, etc.
Throughout the 1940s and early 1950s, you had very low interest rates (only modestly higher than now), but you had the DJIA trading at low valuations (a dividend yield as high as 9.5% at times!). That's what I call a valuation disconnect. Today, we have a situation where bonds and stocks are both expensive. You're correct that there's no money to be made in bonds--there's also little money to be made in equities unless you're either (i) a superior stock picker or (ii) a trader / market timer.
Finally, low bond yields over a sustained period of time such as we've had for many months now (as opposed to a sudden Nov. 2008-style spike) do not necessarily signify financial crisis-style "fear trade". Rather, they signify pessimism over economic growth prospects and subdued inflation expectations. Various sentiment measures do not indicate any fear at all at present, and from my perch, there's a great deal of complacency on all fronts.