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September 22, 2006
Marc "Dr. Doom" Faber Turns Bullish on U.S. Stocks
Whoa, the financial end must be nigh: Marc "Dr. Doom" Faber has turned bullish on U.S. stocks.Waitaminute. For the next few months? Okay, that doesn't really qualify as bullish. Let's call it more like temporarily non-bearish."If the price of oil and other commodities declines for a while, it leads to something like a tax cut for the consumer," Faber said, speaking at a recent Hong Kong conference.
"Whereas I am very negative in the long run, and I believe that the U.S. economic imbalances are not sustainable, for the next few months the investment community is too negative on the U.S. economy which is more likely to surprise to the upside than the downside."
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It amazes me how people think they know so much.
Marc Faber may know some but who cares!
if you want to make money pick one investment you
like, it can be anything, and put half of your money there. If goes down 50%, put your other half.
Actually Dr.Doom turning temporarily bullish now has lots of historical precedent so it's not at all surprising. If you look at U.S. stock markets as they near all mid-term elections, which they are now (mid-term elections are Nov. 7th), they have a history of performing well in the month leading up to the election and for a week or two after the elections (as momentum carries over). This trend has been happening for quite some time now so this actually, in my opinion, is neither a surprising nor risky call.
The reason for this temporary bullish stance is quite logical. Political incumbents know that most people vote with their wallets. A strong economy, no matter even if it is articially manufactured helps build consumer confidence and confidence in the incumbent government, and thus helps gather votes for the incumbents.
Though the U.S. economy is not strong, strong markets can be artificially manufactured short-term through manipulation of interest rates, commodity prices, and dubious "official" inflation statistics, to serve the Machiavellian interest of the incumbent government. Long-term however, the U.S. stock markets are indeed "doomed".