Marc Faber Explains How Even The "Greatest Bear On Earth" Gets It Wrong

Tyler Durden's picture

Marc Faber was on Bloomberg TV dispensing his traditional sarcastic and sardonic wit in copious quantities. Among the traditional topics touched upon are stocks and specifically trading ranges, "I think a lot of people will say the markets formed a double low and we have some technical indicators that are going to turn positive, so we could rally around 1,250, but as I said before, for me, we reached a high on May 2, 2011. 1,370 on the S&P--that we will not go through", on Operation Twist part 1 (already announced) and part 2 (coming): "To some extent we are in midst of QE3 already, because by announcing the Fed will keep zero interest rates until the middle of 2013, they basically encourage financial institutions to borrow short-term and to buy 10-year Treasuries" on a contrarian outlook on stocks: "I am the greatest bear on earth, but if you compare Treasury bond yields and equities, equities look reasonably attractive", on why Insider "buying" just as we have said repeatedly, is far too much ado about nothing: "Compared to all the selling in the last six months the buying is relatively muted" and lastly, like a gracious loser, Faber admits he was wrong and Rosenberg was right "David Rosenberg was right and I was wrong. The 30-Year has not made a new low.  The low in December 2008 was 2.53%.  Now we're around 3.4%"... although with a caveat: "Basically we have an artificial market." Alas, no strategic observations on what particular precious metal one's girlfriend would appreciate the most in the current gold-platinum parity environment.

 

Faber on whether this is the market rally he’s been expecting:

"We had rally from the low on the ninth of August at 1,101 on the S&P to almost 1,200.  Then we came right down again.  Basically we did not make new lows.  And now I think we can rally again for a while."

Faber on how long his view of the market is:

“I think a lot of people will say the markets formed a double low and we have some technical indicators that are going to turn positive, so we could rally around 1,250, but as I said before, for me, we reached a high on May 2, 2011. 1,370 on the S&P--that we will not go through. My view is you have a lot of people with strategies that are very bullish. They have a year-end target of around 1,400-1,450 on the S&P. Then you have the super bear. I think both camps will be disappointed."

On why the markets won’t come back down again to the lows that were hit in 2009:

"On fundamentals one could make the case that we could go lower to around March 2009 lows at 666 on the S&P. But I think we have to be realistic that if the market dropped here another 10% or 15%, there would be for sure another quantitative easing move and other measures taken to support asset prices."

On what we’ll hear from Bernanke on Friday and whether there will be a selloff of Treasures after that:

"I think what [Bernanke] will say is that they are monitoring the situation, and they will take ‘appropriate measures’ when they are required.  To some extent we are in midst of QE3 already, because by announcing the Fed will keep zero interest rates until the middle of 2013, they basically encourage financial institutions to borrow short-term and to buy 10-year Treasuries."

On how uncertainty on a global level is affecting the markets:

"What I see extremely well is the stock market has traced out a major high between November of last year and June of this year and then fell sharply with very strong momentum and conviction very rapidly by close to 20%.  I think that is a very important signal that we should not overlook.  I think new highs are practically out of the question for the next six months to one year.  We will likely move lower, but as I said, I do not think we will have a complete collapse."

On why he’s not more bearish:

"I agree with you. I am the greatest bear on earth, but if you compare Treasury bond yields and equities, equities look reasonably attractive. I think we will have zero and below zero interest rates for the next 10 years. In other words, inflation adjusted to keep money in cash.  Finally, the mood is so negative right now as a contrarian, you do not take a huge short position when people are as bearish as they are right now and when insider buying has picked up as much. I am as bearish as the greatest bear is.  It is just that I do not believe stocks will implode."

On insider buying:

"The insider buying has picked up, but there is still a lot of insider selling.  Compared to all the selling in the last six months the buying is relatively muted. The insiders in general are a group of people against whom I would not bet against necessarily.  All I am saying is I am very bearish.  I think we will have inflation.  I think the Treasury market is a disaster waiting to happen.  I think the economy will slow down. They’re going to print money and we will go to war at some stage somewhere.  So, you are probably better off in equities than in bonds. My favorite investment remains gold.  As it happens the gold price is coming down, and I hope it will drop $100 or $200.  Not necessarily a prediction.  I think we will go down in a correction because there has been too much enthusiasm recently."

Faber commenting on Gary Schilling's bet against copper:

"I have known Gary Schilling since 1970 when we worked together. He has been a frequent bear about commodities and about copper. I happen to think copper is likely to come down, but I would not bet too heavily on it, because it takes a long time to bring on additional copper mines.  Unless the Chinese economy collapses, the demand for copper will stay relatively high.  If the Chinese economy collapses and Jim Chanos is right, then you want to be short not only copper, but short everything."

Faber where the 10-Year will go:

"I would like to remind you that the 10-year has made a new low. [Gluskin Sheff economist] David Rosenberg was right and I was wrong. The 30-Year has not made a new low.  The low in December 2008 was 2.53%.  Now we're around 3.4%.  Basically we have an artificial market.  The Fed has said we guarantee next to zero interest rates for the next two years. Banks and financial institutions are pouring into the 10-year because of the low rates at the present time. "

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Fukushima Sam's picture

The girls love gold, bitchez!

??'s picture

rally time for a while

give him credit for his equity calls

link to free standing video (only)

http://bit.ly/noZRyD

spiral_eyes's picture

"we're gonna find out if he is a true money printer or just an amateur" - faber

http://azizonomics.com/2011/08/23/what-if-qe3-doesnt-happen/ 

true money printer, bitchez!!

TheTmfreak's picture

I swear I can listen to this guy all day long. I wait with anticipation all the time to hear something from this guy.

"I'm the greatest bear on earth!"

 

Cdad's picture

Agreed.  You just have to love the guy.  How many on the Street have even half of his charisma?  Not to mention a sense of reality that is based in...reality.  Criminal syndicate Wall Street bankers really have a problem with reality.

RagnarD's picture

+1. I paid for Mauldin's "conversations".  But I stopped that, despite their being some great stuff supplied there.  The only other thing I paid/pay for is the $200/year, soon to be $300/year for Faber Market Commentary - I can't afford full blown DoomGloomBoom.   Like reading ZH, a guiltly pleasure, that is often "bang on".  What better guilty pleasures to have?  :)

bbq on whitehouse lawn's picture

Maybe Tyler should set up a goldbug dateing site:)

And we can see if the ladies like gold or silver. The answer may suprise you.

wisefool's picture

And then we can have the tax code and MSM clean up the problems of "single" moms/ladies who got an oz. of gold, yet the system must support a bunch of Faber Jrs. to the grave.

snark: In other news. DHS has revealed that the 500,000 poly etheline coffins standing on ready are not for the purpose of a mass killing event. They are not supposed to be truck liners for the new hybrid pick up to be released by Government Motors.

DHS has revealed that ladies like gold, and we need a place to put the bones when gold crosses $2000/oz. Our organic jobs program only needs young men with shovels, and wasted space we called graveyards.

Win the furture kids. Become a 6' junior miner!

/snarc

bbq on whitehouse lawn's picture

If i knew anything about women i would be a king among men and a slave among women.

 I would humbly turn to the great Shakespeare, when the issue of:

Frailty, thy name is woman!
William Shakespeare, "Hamlet", Act 1 scene 2
But as all men know:
Beware
Of entrance to a quarrel; but being in,
Bear't that the opposed may beware of thee.
Give every man thy ear, but few thy voice;
Take each man's censure, but reserve thy judgment.
Costly thy habit as thy purse can buy,
But not express'd in fancy; rich, not gaudy;
For the apparel oft proclaims the man.
William Shakespeare, "Hamlet", Act 1 scene 3
William knew what was said, was not ment, and what was ment was un-said.
When you are so confused as to not think, only then will you know thought.

 

wisefool's picture

good stuff. Shakespeare warned us about digging up corpses. to further your and his points:

  1. Faber should not be flirting with bloomberg chicks about his stash of gold. People with PhDs in Econ like Krugman and Bernanke watch bloomberg. They are snivling bunch who might print more money and/or tax/confiscate posession of gold.
  2. I  respect the value of gold. it is cool stuff. but it is not for me. $99 WebOS HP tablets are selling for $300 right now on ebay are cool too. you can read shakespeare on them.
  3. I seriously dont want to pay for any of 50+ year old Faber's single mom girlfreinds' kids. or DSK's.
  4. Grave digging as a tradition is just as old as gold as money.
SilverIsKing's picture

I can tell you with absolute certainty that the ladies like Silver.

Fukushima Sam's picture

Absolutely!  But there is something about the heft of gold that makes them extra creamy...  Get 18K silver alloy and it will have that white metal look but never lose it's shine!

Plus you know that deep down what they really love is that you are buying them something expensive.

bbq on whitehouse lawn's picture

So, coins and bars are out...:)

Even a club or septer,is out.

Have to add that to the list.  If you are a caveman use silver or wood, not gold when clubing women.

aces and eights's picture

This one sure does. I added some silver rounds to my stash today. On a normal day I can get assistance as soon as I walk in my local shop, but it was packed. Lots of people there to sell, a guy was buying his first 100 oz silver bar, another guy was upset because the plastic coin packaging didn't have 1 ounce written on it (nevermind the coin had it). Someone get the Sharpie! Definitely more <desperate> sellers than buyers. Sad.

Koffieshop's picture

Thumbs up. Very much worth reading if you are considering buying diamonds.
(Short summary: Don't do it! The whole market for those rocks is smoke and mirrors. The scarcity is artificial.)

NotApplicable's picture

Girls like emotional marketing.

IQ 145's picture

We don't need a comment on the Gold/Platinum "parity"; it's completely meaningless. For those of you who get your ideas from internet blogs you might want to know that grown up metals investors don't give a rat's ass about platinum. the market is so tiny and so un-stable it's useless as a vehicle.

He_Who Carried The Sun's picture

Nickolas Ashford died at 70. He is survived by his wife Valerie Simpson.

Together the two wrote many successful songs for artist like Diana Ross etc...

So sad! Rest in Peace!

Mugatu's picture

I like Farber, but he reminds me of Dr Evil on Austin Powers so much he makes me laugh.  I love it when he pronounces Buuuurnannnnkeeee.

caerus's picture

i like his tiny pony tail

Steaming_Wookie_Doo's picture

I think Marc Faber is also Karl Lagerfeld, he just puts on the glasses and the fan as a distraction. I got your Nordfleisch right here, bubby.

Joshua Falken's picture

I knew Mark Faber when he was head loud mouth at Drexel Burnham Lambert in Hong Kong in the late '80's.

 

He consistently got things wrong then (Asia's own Barton Biggs) and he hasn't improved with age.

 

Journo's and sad lazy hacks like him because he always says contraversial stuff, but it's invartably wrong.

Ratscam's picture

actually i know him today personally, he was right many more times than wrong on the midterm to longterm choices. check his views on youtube. then again he is a trader and as a trader you sometimes change your short term views in seconds, however always stick to your midterm and especially long term views.

IQ 145's picture

False. He just told you exactly what you needed to know last Friday, exactly when you needed to know it; what happens next? "The rally". Correct. Also, there will be no new highs; I'm willing to bet on this too; he's as good a market reader as I am, and that's goddam good.

Fiat2Zero's picture

What are you talking about?  Marc Faber gets it mostly right.

Who the fuck are you Drexel Lambert Burnout boy?

And learn how to spell check you tosser!  Back to the mail room for you.

baby_BLYTHE's picture

No one has been more correct on Gold than Faber.

It was when he said in an interview during early 2009 that "Gold will never go below $1,000 again",  that I bought the majority of my gold. 

A true legend, especially when it comes to timing market moves.

He should give himself more credit though, he did say treasuries were going to rally when the yield on the 10-year was near 4% late 2010- early 2011.

DosZap's picture

baby_BLYTHE,

When the Bank of India snagged 200 Tons from the IMF,@$1,050.00 in '10, I knew we were not going to look back.At least in my lifetime.

All these morons on MSM do not get the total picture.............they continue to use OLD stats, and past history,are myopic and only take into account the West,and esp the US stats from the past.(and all scream BUBBLE!!!)

They fail to factor in the NEW( old) WORLD,China,  India, and Asia.......................we have a NEW market w/another 3 Billion clients coming after the same amounts of production,and limited supplies.Gold production is going DOWN,and Silver is also.

Unless MAJOR new finds are located, the supplies are only going to get harder to come by, and more expensive.

Plat should go back down, as there is a major falling out with the two largest producers and their miners............once this gets ironed out, look for a drop in price.

 

StychoKiller's picture

"American Exceptionalism" blinds the MSM to what's going on in India, China, Vietnam, etc.

caerus's picture

the first bet expired...and i won it...

theMAXILOPEZpsycho's picture

Someone tell me why pundits like Faber - not just him, Jim Rogers, Dave Morgan, and so many others, when asked about PM's ALWAYS say "if there's a pull back I'll buy" or don't recommend buying right now because they've gone up too much too quick???

Now, I realise that right now that might actually be the case; however, Faber, rogers et al have been saying they're holding onto their horses since under $1500, and now we'll never get back under $1650.

I like Faber, but I don't recommend trading on the advice of any stock picker. Go wit your gut and don't be overly afraid of swiming with the tide if the trend is firmly in place.

Pladizow's picture

Easy, because they bought at $250/oz.

Lord Blankcheck's picture

Because they only put them on TV after big rallies

 

What comes first:gold margin increases? or the Khadaffy duck hanging?

caerus's picture

cuz they want you to think for yourself

reader2010's picture

back up the truck, and buy, buy, buy gold.

smore's picture

Keats It Simple Saver:

 

'Gold is money, money gold,—that is all

 

 Ye know on earth, and all ye need to know.'

 

baby_BLYTHE's picture

Gold is money... and nothing else- J.P. Morgan (early 1900s before the Federal Reserve Act)

FEDbuster's picture

I think it was Faber (maybe Jim Rogers?) who said to, "become your own central bank, and buy some gold and silver every month."   Kind of like a "DRIP" investment strategy for precious metals.  If you had done this over the past ten years, it would have worked out pretty well for you.

caerus's picture

anybody see that guy who raided gadhafi's room on tv?  dude had a sick gold chain and what looked like a gold walking stick...

edit: nice hat too nice chain revolution bitchez!

Caviar Emptor's picture

Emperor Romulus Augustulus announces QE3 will be very large and will fix everything! 

 

Flakmeister's picture

Pretty ironic name for the last one, eh?

slaughterer's picture

Is there a worthwhile biography out on Faber yet?   

Bokkenrijder's picture

Lagavulin single malt 16 year I hope!

Arrowhead's picture

killed most of a Bal15 last weekend. still cant' get over how nice