Tags: Faber | Europe | opportunities | bubble

Marc Faber Sees Opportunity and Danger

By Michelle Smith   |   Wednesday, 20 Nov 2013 11:49 AM

Marc Faber, editor of the Boom, Gloom & Doom Report, sees opportunities amid an array of market bubbles.

Specifically, he likes "selected European companies" and owns telecom, utility and Swiss blue-chip companies, he told CNBC.

He explained that he likes European companies because they have substantial international exposure. "Maybe 40 to 50 percent of their total sales are in Europe, and the rest is overseas," he explained.

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But he also cited the need for caution.

"At the present time, I think that Europe has had a very good move from the lows. It outperformed the U.S., and I would be a little bit careful to buy stocks indiscriminately at the present time because everything has moved up significantly. There's a lot of bullish sentiment," Faber noted.

Looking at the broader markets, he warned there is also a lot of danger.

"I see a bubble in everything that relates to the financial sector. We have a bubble in bonds. We have a bubble in low-quality bonds. We have a bubble in equities," he argued.

"If you look at the financial sector as a percentage of the global economy, it's very large. We have a huge debt bubble, and it's only getting bigger. It's not getting any smaller," he said.

Faber also foresees "a colossal bubble" forming in the high-end market. Luxury brands' costs are rising and competition is increasing.

"The outlook is relatively favorable, but tastes may change," he warned CNBC.

Faber places much of the blame for this risky environment on the Federal Reserve.

"The Fed has been flooding the system with money. The problem is the money doesn't flow into the system evenly. It doesn't increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes," he told Barron's.

Faber said money printing produced negative effects in the past, including the "colossal stock market bubble of 1999-2000" and the housing bubble that burst in 2008.

"Money printing boosts the economy of the people closest to the money flow," Faber said.

But he warned that this story of overvalued assets does not end well.

"People with assets are all doomed, because prices are grossly inflated globally for stocks, bonds and collectibles," Faber told Barron's.

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FT: European Stocks Are Cheap, US Investors Are Diving In

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