Tags: Faber | stocks | bonds | Treasury

Marc Faber: Stocks Are Overbought, Bonds Are Oversold

Monday, 09 Sep 2013 09:36 AM

By John Morgan

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Stocks do not have much upside from here, and are unlikely to be a good buy for up to two years, according to Marc Faber, publisher of the Gloom, Boom and Doom Report.

Stocks are overbought, but the Treasury market is oversold, Faber told CNBC.

"We are in a bull market that is more than four years old. Four years into the economic expansion, I don't think that stocks are the greatest bargain anymore."

Editor’s Note:
5 Reasons Stocks Will Collapse . . .

Faber noted that while the Standard & Poor's 500 is not far from the all-time high of 1,709 that it hit last month, some emerging markets are now down 50 percent from their highs.

That difference in potential opportunity is not missed by institutional investors. "If someone wants to put money into equities, then he will choose depressed markets," he said.

"I don't think there's a lot of money to be made in equities for the next 12 to 24 months."

While Wall Street may expect the Federal Reserve to taper its bond purchases later this month, Faber told CNBC he is not convinced such a move would result in higher interest rates.

"The bond market would actually like a very high level of tapering. The bond market in the longer term has to be concerned about these continuous asset purchases. That basically means monetization and that means some symptoms of inflation will appear somewhere."

"The Treasury market is now very oversold and can rebound," Faber predicted.

However, John Rekenthaler, vice president of research at Morningstar, said investors should stick with stocks.

Investors who bailed out of stocks for bonds, cash, alternatives or commodities in 2008 have lost roughly the amount of their original investment in opportunity cost since then — a $10,000 investment in U.S. stocks in January 2009 would be worth $22,000 today.

Rekenthaler said the evidence shows investors who try to time the stock market simply do not prosper.

"'Buy-and-hold-is-dead' doesn't have the force of logic. It doesn't have results. It is opposed by Jack Bogle, Warren Buffett, and nearly everybody in the academic community," Rekenthaler asserted.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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