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Beware the false rally coming soon, says world-renowned bear Marc Faber. He says catalysts are...

Beware 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.”
Comments (40)
  • Stone Fox Capital
    , contributor
    Comments (7017) | Send Message
     
    doesn't Faber ever get tired of being negative?
    16 Aug 2012, 07:51 PM Reply Like
  • financemc
    , contributor
    Comments (472) | Send Message
     
    Stone;

     

    You mean completely wrong.

     

    He will eventually be right, like a broken clock. He will not be right twice though.
    16 Aug 2012, 08:21 PM Reply Like
  • Noreika
    , contributor
    Comments (479) | Send Message
     
    Haha, you mean Dr.Evil?!
    16 Aug 2012, 09:12 PM Reply Like
  • Iron Hamster
    , contributor
    Comments (423) | Send Message
     
    The day he goes positive, I'm selling everything, because at that point everybody is in.
    16 Aug 2012, 09:26 PM Reply Like
  • bbro
    , contributor
    Comments (10435) | Send Message
     
    Faber...

     

    http://bit.ly/MBH0TW
    17 Aug 2012, 01:55 AM Reply Like
  • johnycarrs
    , contributor
    Comments (96) | Send Message
     
    Really don't like this guy, he always cries wolf, and if of course eventually correct but is generally really annoying
    16 Aug 2012, 07:51 PM Reply Like
  • Tack
    , contributor
    Comments (14416) | Send Message
     
    "eventually correct..."

     

    Yeah, go up 100%, fall 25%, repeat. Sure pays to be a bear.
    16 Aug 2012, 07:56 PM Reply Like
  • deercreekvols
    , contributor
    Comments (6828) | Send Message
     
    What did Marc "Chicken Little" Faber have to say about the Mars Rover?
    16 Aug 2012, 07:57 PM Reply Like
  • Remyngton
    , contributor
    Comments (354) | Send Message
     
    Faber was bearish at DJIA --12,000 and S&P500 --1280
    Marc ... zzzzzzzzzzzzzzzzzzzzz

     

    and ,

     

    Jimmy Rogers , bullish gold $1900 , silver $ 45 , bulish Euro $1.55...

     

    Jimmy .......zzzzzzzzzzzz

     

    .

     

    .
    16 Aug 2012, 07:59 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (7017) | Send Message
     
    Those guys have been bearish all the way from 800 on the S&P500.
    16 Aug 2012, 08:10 PM Reply Like
  • Tack
    , contributor
    Comments (14416) | Send Message
     
    SFC:

     

    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.
    16 Aug 2012, 09:27 PM Reply Like
  • Brendan O'Boyle
    , contributor
    Comments (1199) | Send Message
     
    The sky is falling narrative always gets more ears than hearing the world will be ok. These guys just say whatever will get them on TV.

     

    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.
    16 Aug 2012, 09:43 PM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Faber and Rogers aren't in all cash. Both prefer real assets to the S&P 500. Agricultural commodities, gold, silver, etc. have performed extremely well in recent years. They'll do even better when we finally get QE3. And we will get QE3.
    17 Aug 2012, 09:12 AM Reply Like
  • J Mintzmyer
    , contributor
    Comments (4481) | Send Message
     
    Comparing the valuation and yield of the S&P 500 to the yields on treasuries and commercial paper, by historical standards the market is extremely cheap. If the S&P 500 must crash, then everyone across the board will be burned. A few high fliers might crash, but the overall index should be fine imo.

     

    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.
    16 Aug 2012, 08:38 PM Reply Like
  • wmateri
    , contributor
    Comments (555) | Send Message
     
    Anytime you use a ratio for a comparison, you have to realize that either the numerator or denominator needs to change to revert to the mean. The obvious conclusion is that yields on treasuries have been manipulated far from their mean and that they (NOT equities) will revert to their normal values, bringing this comparative ratio back into line.
    16 Aug 2012, 10:01 PM Reply Like
  • J 457
    , contributor
    Comments (952) | Send Message
     
    There are no problems in the US or global economy- all is clear so any extra $$ you have should immediately be put to work here at SPX 1,410. It's clear this market will always go up, until SPX 2,500, or maybe 3,000. It's a natural and healthy sign when markets only go up. People need stocks to always rise in value to pay for retirement plans and 401k's and pensions. To achieve this the government/FED gives subsidies to investment banks thru zero interest loans and other free taxpayer money plans, all to buy more stocks. Just make sure you pick the right stocks, stay clear of those that drop 70% in value in one year such as MCP, GMCR, NFLX, FLSR, ANR and on and on...
    16 Aug 2012, 08:39 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    J,
    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.
    16 Aug 2012, 11:53 PM Reply Like
  • Valley Boy
    , contributor
    Comments (2211) | Send Message
     
    The best time to buy stocks like MCP and GMCR is when they are genuinely cheap.
    17 Aug 2012, 12:57 AM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    Some market drivers:

     

    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.
    16 Aug 2012, 08:58 PM Reply Like
  • Larry Minden
    , contributor
    Comments (6) | Send Message
     
    5) November elections
    17 Aug 2012, 02:04 AM Reply Like
  • Nolesince87
    , contributor
    Comments (262) | Send Message
     
    Hurry, everybody buy stocks... sell your car, house, iphone, even children... put that money in stocks because they will never again be so low... Dow 75,000 is just around the corner.
    16 Aug 2012, 09:16 PM Reply Like
  • Michael Kudrna
    , contributor
    Comments (238) | Send Message
     
    Actually, he publicly stated he was bullish in Nov 2011 stating that bonds are not safe therefore he expects the equities to rise as bondholders realize this. The market rose significantly since then.

     

    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.
    16 Aug 2012, 09:40 PM Reply Like
  • Tack
    , contributor
    Comments (14416) | Send Message
     
    Bonds are safer now? The yields are even lower than last November. The shift away from bonds hasn't even gotten off its training wheels yet.

     

    He's just playing with us.
    16 Aug 2012, 09:43 PM Reply Like
  • financemc
    , contributor
    Comments (472) | Send Message
     
    Tack;

     

    As usual, you make too much sense.
    16 Aug 2012, 09:48 PM Reply Like
  • Michael Kudrna
    , contributor
    Comments (238) | Send Message
     
    Actually, the 20 year sold off between Nov 2011 and March 2012 which coincides with the market rising.

     

    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.
    16 Aug 2012, 10:43 PM Reply Like
  • The EconomicJoker
    , contributor
    Comments (961) | Send Message
     
    Thank you. There are plenty of idiots in this thread that don't know fact, which is a fact in itself. :)
    16 Aug 2012, 11:48 PM Reply Like
  • The EconomicJoker
    , contributor
    Comments (961) | Send Message
     
    Buy you some FRNs to deal with interest rates.
    16 Aug 2012, 11:49 PM Reply Like
  • Deepv
    , contributor
    Comments (444) | Send Message
     
    REad his blog and he flip flops constantly. And has been bearish through much of the rally (even while get "the bottom"). Why he gets so much attention I dunno.
    16 Aug 2012, 09:51 PM Reply Like
  • Value Doc
    , contributor
    Comments (782) | Send Message
     
    Yes, as usual with him, this is more like an "observation" than a prediction given the timing of this call. He's not very good at tactical timing calls although he's an independent thinker with a decent knack for the big picture.

     

    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.
    16 Aug 2012, 10:50 PM Reply Like
  • Tack
    , contributor
    Comments (14416) | Send Message
     
    JPK:

     

    You think capital allocations, now, look anything like 2000 or 2007? Or, do you believe that capital flows don't matter?
    16 Aug 2012, 11:30 PM Reply Like
  • Value Doc
    , contributor
    Comments (782) | Send Message
     
    I'm not a believer in the non-equilibrium "money on the sidelines" theory that you've espoused--you had a debate with another poster on this recently, and I concur with his views. Historically, treasuries and stocks can go up and down simultaneously despite the fact that they've been negatively correlated in recent years.

     

    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.
    16 Aug 2012, 11:46 PM Reply Like
  • Tack
    , contributor
    Comments (14416) | Send Message
     
    JPK:

     

    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.
    16 Aug 2012, 11:54 PM Reply Like
  • Value Doc
    , contributor
    Comments (782) | Send Message
     
    Strictly speaking, big money can't go to cash, but it can certainly go to short-term instruments such as T-bills and money markets, etc. which I think is what you're getting at.

     

    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.
    17 Aug 2012, 12:44 AM Reply Like
  • Aristiphones
    , contributor
    Comments (1327) | Send Message
     
    Where's that beer we were going to have together in Chiang Mai you offered Marc if I was right? AND I WAS! Now enuf about the markets...let's talk...Misterioso http://bit.ly/NHjVwW
    16 Aug 2012, 11:12 PM Reply Like
  • Ron Myers
    , contributor
    Comments (256) | Send Message
     
    Stocks are going down guys - but they could go up before then!!! In other words I can never be wrong.
    16 Aug 2012, 11:38 PM Reply Like
  • Julius Ferraro
    , contributor
    Comments (495) | Send Message
     
    All the bulls in this thread sure scare me enough to sell some stocks. I will say however marc has been wrong quite a bit
    16 Aug 2012, 11:45 PM Reply Like
  • jmartz101
    , contributor
    Comments (187) | Send Message
     
    I happen to agree with Mr. Faber this rally has just been on ECB, FED and other Central Bank easing across the globe that is supposed to happen. The question is will it happen? We'll find out but if it doesnt I expect that market to drop a few points nothing major though.
    17 Aug 2012, 12:00 AM Reply Like
  • vtorch
    , contributor
    Comments (311) | Send Message
     
    Over the next century, I'm pretty sure that Faber will be right a couple more times ...
    17 Aug 2012, 01:48 AM Reply Like
  • abhay_agarwal
    , contributor
    Comments (60) | Send Message
     
    Faber is a certified fear monger who has predicted 10 of the last 2 recessions. Because of his funny accent and hairstyle the financial media plays him up since he looks and sounds amusing. I have nothing against him just that for someone who has been so consistently wrong he should not get so much of airtime. There should be some regulator to reign in the financial media.
    17 Aug 2012, 02:45 AM Reply Like
  • Tack
    , contributor
    Comments (14416) | Send Message
     
    The only regulator we need is the TV remote.
    17 Aug 2012, 05:05 AM Reply Like
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