Tags: faber | stocks | decline

Faber: Stocks Will Drop Up to 10 Percent

By Dan Weil   |   Wednesday, 08 Apr 2009 08:37 AM

Investment guru Marc Faber sees a five to 10 percent profit-taking correction in store for stocks before they resume their rally.

The Standard & Poor’s 500 Index rose as much as 28 percent from its March 6 low of 666, the fastest rebound of that size in 71 years.

“After a rally [like that], we need some kind of correction: maybe five to 10 percent,” Faber tells Bloomberg TV.

Already the S&P has dropped 4 percent from its April 2 high of 846.

Still, Faber sees U.S. and foreign stocks returning to bull territory soon.

“The economic news, while it won’t be good, the rate of getting worse will slow down,” Faber says.

“So bullish analysts will say: ‘See the economy is bottoming out.’ That combined with stimulus packages will lift sentiment somewhat.”

After the correction, “we can rally more into July,” Faber says.

As for his own investing, Faber bought resource shares last November and has seen some of them rise two or three times in value.

So, he sold to lock in gains, he says.

Recently, “I’ve been buying banks here and there more as a trade,” he says. “Citigroup dropped from $57 to $1. Now it’s at $2.50 and could easily rebound to $5.”

Other experts also see bank shares rising.

Renowned bank analyst Dick Bove told CNBC that banks’ “deposits are increasing rapidly, their margins are spreading, their profits are actually going up from an operating standpoint.”

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Investment guru Marc Faber sees a five to 10 percent profit-taking correction in store for stocks before they resume their rally.The Standard & Poor’s 500 Index rose as much as 28 percent from its March 6 low of 666, the fastest rebound of that size in 71 years.“After a...
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