Marc Faber: 'It's a Better Time to Get Out of Stocks Than Into Stocks'

Thursday, 13 Mar 2014 07:17 PM

By Dan Weil

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With U.S. stock prices perched near record highs, now would be a good time to exit the market, says Marc Faber, publisher of the Gloom, Boom & Doom Report.

"Just in the last six months, there has been a euphoria for U.S. equities," he told CNBC. "My view is that it's not a good time to buy."

And why is that?

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

"This bull market has gone on longer than the average bull market for the last 80 years," Faber said. "The economic expansion will be five years old this June. So we are in a mature economic expansion, a weak one, but nevertheless, an expansion."

Bottom line: "I would say it's a better time to get out of stocks than into stocks," Faber said.

"Don't forget, since October 2011, we haven't had more than an 11 percent correction. And we've been rising for the last six months almost vertically. These types of bull markets without a correction usually lead to more than just a correction."

Indeed, they end up in 30 to 40 percent plunges, as occurred after March 2000 and October 2007, Faber said.

Investors can find safety in Treasurys, Faber said. "The U.S. [government] has the ability to print money, and the worse economic conditions become and the more stocks decline and the more geopolitical problems there might be, there will a risk-off trade. So money will move back into Treasurys," he said.

When all of market sentiment goes in one direction, investors would do well to go in the other, Faber said. "And if one asset class is hated, it is cash, because it doesn't pay you anything," he said.

"But I think going forward or for at least the next 12 to 24 months, investors should consider where will I lose the least money? And I think in Treasury bills, you're not going to earn anything, but it's unlikely you will lose, unless the dollar completely implodes, which is not very likely."

Meanwhile, Faber said the Chinese economy is growing at a 4 percent annual pace rather than at the government's target rate of 7.5 percent. "The figures that China publishes are figures they just take out of a drawer to make it look good," he said.

Not everyone shares Faber's bearishness on U.S. stocks. "I think we are now recognizing the U.S. economy is strong and getting stronger. That’s obviously very positive for the markets," Morgan Stanley CEO James Gorman told Fox Business Network.

"If you look at the macro environment, I remain very bullish. The upside risk is the U.S. economy. It’s taken a while for people to get comfortable with that."

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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