Marc Faber's 2010 Investment Outlook: Bullish Sentiment Too High For His Liking

Always the contrarian, Marc Faber's investing advice for 2010 is this -- listen to the experts, and then do the opposite. Faber, the editor of The Gloom Boom & Doom Report, wrote in his most recent January newsletter that he was bullish on U.S. stocks.

Nothing lasts forever, though.

He's changed his mind after participating in this week's Barron's round-table discussion. "Everybody was looking for further gains in stocks," he tells Henry in this clip. That opinion is also reflected by Bloomberg’s latest investor survey, which registered its highest level of bullish sentiment since the survey began in 2007.

That overwhelming consensus worries Faber. He now thinks a correction in U.S. stocks could come much sooner than most predict. Momentum players who are driving the market could "pull the trigger relatively quickly," he says. He also observes that the charts of stocks favored by momentum investors, like Google, RIM, Apple and Amazon, look to be flattening out.

Overall, 2010 will not be one for the record books, as 2009 was. He’s looking at a more normal 5%-10% rate of return for global investors.

Here are Faber's views on other markets and asset classes:

Asia: "Longer term we'll have still favorable growth," he says. He thinks India and Japan both offer opportunities. In his eyes, this view gained even more credibility after they were not mentioned once during the Barron's round-table discussion.

Bonds: The bull market in Treasuries that lasted from 1980-2008 is a thing of the past. Near term: after a dismal 2009 the bond market could be in for a rebound. Longer term: look for exit opportunities in Treasuries.

Gold: Still a long-term buy.

Oil: Prices in the $80s make sense since the marginal cost to find a barrel is about $70. Longer term he expects prices to continue rising as demand increases from the developing world.

Agricultural commodities: In the short term, Faber's favorite commodity is wheat. He advises against buying the wheat ETFs because they're relatively expensive. Instead, play it through farm land or potash companies, he says.
 

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