December 28, 2013
Marc Faber has 3 very contrarian predictions for 2014 that we are sure will have the yammering yay-bobs screaming. While “everyone thinks stocks can continue to rise,” Faber sees “the US market as expensive,” and will return very little over the next few years. Furthermore, he adds, while “some stocks are not terribly expensive; but just like in the year 2000, [social media] stocks are grossly over-valued,” and a short basket in the most egregious will return at least 30% next year. Lastly, Faber exclaims, “given all the money printing that is going on globally… physical gold is a good insurance.”
Click image for interview (no embed)
In an interview with Talking Numbers’ Brian Sullivan, Faber offers what he thinks is next for the world in 2014:
1. The market will decline from current levels
Faber says: “My sense is that at the present time, the US market is relatively expensive compared to foreign markets, especially to European markets and to emerging markets. On a cyclically-adjusted P/E [price-to-earnings] basis, it is actually going to return very little over the next seven to 10 years.
2. Best shorts for 2014: Facebook, Tesla, Twitter, Netflix, and Veeva Systems
Faber says: “If you look at the entire market, some stocks are not terribly expensive and some stocks are very expensive. It’s like in year 2000, not every stock was overpriced. At that time, the NASDAQ was grossly overvalued but, say, resource shares and so-called ‘old economy’ companies were relatively inexpensive or absolutely cheap. In the present instance, I think that stocks like Facebook, Tesla, Twitter, Netflix, [and] Veeva Systems are grossly overvalued and that the basket of shorts in these stocks will return you at least 30% next year.”
3. Best longs for 2014: Gold, gold shares, and Vietnamese stocks
Faber says: “Given all the money printing that is going on globally – and not just in the US – and given that the total credit as a percent of the advanced economies is now 30% higher than in 2007 before the crisis hit, I think that gold is a good insurance.”
“I’d rather buy something that is reasonably priced. And, I think gold shares are very inexpensive. So a basket of gold shares I think next year could easily appreciate 30%.”
“I think the Vietnamese stock market, which this year was up 22% [and] which is not bad for an emerging market, will continue to go up.”
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