Here are a few highlights of the latest Marc Faber market commentary entitled "Will America Produce 'all these Wonderful Things'?" initially posted on Wallstreetpit
1. Stocks–World markets are likely to continue their recent rallies, due in large part to non-stop liquidity from central banks. Furthermore, April is seasonally a good time for stocks, which provides a favorable background for rising stock prices. However, Faber is looking for a correction in May/June and advises investors to sell their winners in anticipation of lower prices. He would not be adding to positions at this point. If the market does fall, as Faber expects, then prepare for QE 3,4,5,etc. by the Fed to support asset prices.
2. Gold and Gold Stocks–Continue to accumulate gold. The best way is to dollar cost average every month. Gold may decline in the short-term, but the long term trend is up. Faber also mentions that gold remains undervalued compared to the egregious amount of fiat money which has been printed by central banks worldwide. If the US ever needed to back the dollar with gold, it would take a price of $7500 per ounce of gold to accomplish this. Thus, gold remains an attractive asset. Furthermore, gold is still under owned by individuals and institutional investors. Regarding gold stocks, Faber is buying Newmont and Barrick.
3. Japan post earthquake/tsunami—Faber has been getting more bullish on Japan over the last few months, citing attractive valuations after a 20-year bear market. Even after the Japanese earthquake, Faber likes Japanese equities, but he thinks they will fall in the short-term. This will represent a good buying opportunity for investors. He still hates the Yen and believes recent BOJ money printing will lead to a lower Yen longer-term (bullish for Japanese equities).
4. Commodities–Faber is still bullish on energy shares like CHK,BTU, XOM, CVX etc. However, he would only add to these positions on weakness as he is cautious on the general market.
5. Model Portfolio–Faber mentioned that his ideal portfolio right now would be: 20-30% gold and gold equities, 30-40% equities, 20-30% real estate (including REITS) mainly in Asia, and 20-30% cash and corporate bonds. Faber cautions that while US blue chips look relatively cheap, he would prefer emerging market stocks because they represent better growth opportunities and have good dividend yields.
6. America’s Long Decline–Faber devotes a large amount of time discussing the dire outlook facing the US. The country is bankrupt and, meanwhile, the ruling elite is busy looting the last drops from the American Empire. Americans can get used to perpetual war, more terrorism, and a continuous decline in general living standards. The elite directs scholars to produce reports and arguments to justify whatever actions are taken by the oligarchs. This is the sorry state of America today. Is there any hope to rescue America from its troubles? Faber is not optimistic.