Buy oil and sell stocks, says contrarian Marc Faber, editor of the Gloom, Boom and Doom report.
"My view is that the U.S. market will eventually join the emerging markets on the downside because if you take a bearish view about emerging economies, you cannot be too optimistic about the U.S. because for many U.S. corporations, 50 percent or more of their profits come from emerging economies," Faber said in an interview with CNBC in India.
Faber noted that only three times in the last century have U.S. stocks doubled from a bottom.
"I would be a little bit careful here to just buy the U.S. because investor sentiment is very positive. The volume has been relatively sluggish and the market is extremely overbought by any statistical model," he said.
A decline in the emerging world — particularly in China — would be felt across other market tied to growth there, such as exporting powerhouses Brazil and Australia, he said. Emerging market stocks have fallen but perhaps have farther to fall.
Nevertheless, he says, oil looks cheap compared to roaring metals like copper.
"Oil prices could go up substantially even from these levels," Faber said. "I don't think that oil is expensive compared to other commodities or compared to other goods prices in the world."
Oil spiked up 7 percent as U.S. markets reopened after a trading holiday, touch $98 a barrel as jets reportedly roared over the capital of Libya and chaos reigns in the streets.
"Now it's starting to look like the entire region's on fire and it looks like it could spread to other parts of the region," Peter Beutel, oil analyst with energy risk management firm Cameron Hanover, told CNNMoney.
"This thing is getting worse and worse and worse and it could spread to Saudi Arabia and that's the big fear."
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