Faber: Japan Will Outperform All Markets in 2012

Posted by - Tuesday, April 3rd, 2012

Marc Faber is advising investors to be very careful when making investment decisions at this point in the year. Although the economy has bottomed out, it is quite far away from showing real strength.

He sat down with Bloomberg's Betty Liu and asserted his belief that the Japanese market is the place to be. In fact, Faber believes that Japanese stocks will outperform all other equities markets this year.

Considering the money-printing frenzy currently dominating our economy right now, Faber said he is reluctant to short...

The U.S. dollar is desirable at the present time. And we have to say one thing. The market consists of thousands of stocks and the market consists of many different stock markets globally. The S&P has done exceptionally well relative to, say, emerging economy stock markets, most of which are still lower than they were in 2011. So, if you look at the advance-decline line of all the share markets in the world, then it is definitely being deteriorating. And I happen to believe that money printing will continue and I would probably buy financial shares and I believe that the Japanese market may outperform all the other markets against all expectations in 2012."

He is careful to dissuade investors from making any hasty decisions based upon the recent uplifting news regarding the economy. Although improvements have been made, the cost of living increases and high oil prices are still a serious burden to most American households. According to Faber, families are paying between 5% to 10% more for goods and services than they were at this point in time one year ago.

Yes, the first quarter surprised many corporate investors with a strong performance, but Faber suggests those investors keep realistic expectations going into the second quarter: “The market is no longer oversold the way it was in December. And everybody thinks that the race is on, go along with equities, the hedge funds have positioned themselves on the long side and optimism is high. I would be very careful at this stage." 

Essentially, it sounds like Faber expects second quarter earnings to disappoint the people and corporate profit margins may deteriorate. In the meantime, he reminds investors that they should hold off any urge to sell gold for cash. The money-printing madness has not come to an end and, quite frankly, many experts like Faber don't trust the Federal Reserve of the governments.

Currently, gold is still up about 12%. Here's what he has to add regarding the poor returns for gold this past quarter:

I think that gold is in a correction period and we had an intermediate peak on September 6, 2011. And I always advise don't put all your money into gold because it doesn't have any cash flow. So you are really dependent on the price appreciation. That is different from owning, say, equities that have a dividend yield of 5%, which I can find in Asia.

...

I think that the correction period is not yet over. I’m not selling my gold because I don’t trust governments and I don’t trust the Federal Reserve, nor would I trust the ECB or other money traders in the world. They are all going to print money. I still recommend to hold gold.

To see the full interview with Faber's market foresight regarding stocks, gold, the Federal Reserve, along with his investment strategy going into the second quarter take a look at this Bloomberg exclusive video.

 

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