Breakout

Ease Up on Stocks, Gradually Accumulate Gold: Marc Faber

Breakout

It may just be a sign of the times or could suggest something more sinister, but whatever the reasoning, doom is making a comeback. I mean, how else can you explain the fact that there is currently not one - but two - different shows dedicated to building doomsday survival bunkers on TV? Add in a smattering of apocalyptic forecasting, the Mayan Prophecy, some Iranian nuclear threats, and a some solar flare phobia, and suddenly "Dr. Gloom, Boom & Doom" is looking rather mainstream.

Of course I am referring to the newsletter written by noted Swiss economist Marc Faber, but when compared to the end-of-the-world scenarios of his fellow doomers, Faber's outlook seems modest. After all, he's only talking about money.

Even so, when you read his predictions like a "sudden, violent wealth destruction" on the magnitude of 50%, you tend to pay attention. And just like a good doctor should, Faber has written a prescription for survival which we discuss in the attached video.

Atop the list is his belief that investors should, generally speaking, "reduce their exposure to equities" and at least wait for a better entry point.

"Where investors were overly negative last year, they are now overly optimistic about the prospects for the U.S. economy," Faber says, pointing to the ''huge bull run'' we have had since 2009. "I think the (stock) market is very overbought."

At the same time, Faber has modified his advocacy for gold a bit, in the face of a six-month, 15% slump. While he still supports gold's long term opportunity, he feels the precious metal is "still in correction phase" and that "individual investors should gradually accumulate gold" because of the outlook for continued money printing by the Fed and other central banks around the world.

Speaking of the world, Faber is also tweaking his ''bias" for the outsized growth potential of Emerging markets (EEM) which he says were "very oversold last September and since then have become overbought."

His advice to investors is ''to hold some cash, hold some precious metals, hold some equities, and hold some real estate," he says, adding that "if one asset class or the other declines substantially move money into that asset class."

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