Marc Faber, editor and publisher of the Gloom, Boom & Doom Report, appears on Bloomberg to discuss the financial markets. He gives us some insights into the short-term trends of the financial markets. Is it time to buy? Time to short-sell? Faber may have the answer you’re looking for.
I wouldn’t give up entirely on the theory that we can still have some kind of rally developing relatively soon for the simple reason the news on the economy has been horrific.
The economic news is a disaster. And, the economic news will stay bad for quite some time and the global economy will continue to deteriorate. The question is, however, to what extent have asset markets discounted much of the bad news.
I think that in some asset markets, we have discounted horrific news. And as the news over the last 3 months may still be bad but not quite as bad as the last 3 months because we fell off a cliff in the global economy.
Essenbtially, Marc Faber is suggesting that we have had so much bad news, people are ready for some good news. If we get some good news in any market sectors, traders and investor alike will pounce on it to try and recover some of the money they lost during the down-turn.
The economy has fought some doubts, and we can get quite a rally. In addition to that, I can assure you, globally, the central banks will print money. And, if it doesn’t work, they will print more. And so I think that purely from a liquidity point of view and from the zero interest rates policy point of view and also sentiment is extremely bearish.
I’m not saying sentiment figures can’t stay bearish for longer, but right now we are more or less in an area where the markets, possibly after a final sell off, could have a reasonably good rally.
This is a tough forecast to make, and I am sure Marc Faber would agree, but it seems that people want to believe in a change. They have hope. And all they need is a little push from the mainstream media. While it may seem unlikely, we could see a short-term rally. My personal forecast is, that if a market rally occurs, say back to the 8000 level, the Dow Jones could go as high as 10,000+. The question is, how low will the markets go before a sell off! If we go down to 6000, then it will be quite difficult to bounce back to the 10,000 level. This is one of the situations that changes from day to day, and is quite a risky investment because of the volatility.
If you’re thinking of shorting the market… here are some final words from Doctor Faber:
I am only mentioning this because people have turned extremely bearish. Alot of my readers want to short the market here. This is not something I would do at this stage.
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