Choose U.S. investments over emerging markets and buy stocks, not bonds, advises Gloom, Boom and Doom investment letter editor Marc Faber.
“My feeling is that the U.S. will outperform emerging economies in the first six months of 2010,” Faber told CNBC.
“Whether the outperformance comes because markets continue to move up or because the S&P goes down less than emerging stock markets … is debatable.”
Faber believes that putting money into Treasurys is the worst thing investors can do for the long-term.
“More forecasters are very negative about Treasury bonds,” Faber says.
A year ago, when the yield on 10-year Treasuries dropped to 2.08 percent, the bullish sentiment on bonds was very high, Faber notes.
“That was the perfect time to short U.S. government bonds,” he says.
Government leveraging will continue to cause problems for investors, Faber says, even though the private sector has been de-leveraging.
“When it becomes apparent that the economy is not very strong, the Fed will continue to monetize,” he says, thus causing inflation that will be bad for government bonds but relatively good for equities.
“I think 2010 will be a year of capital preservation because I expect a lot of volatility,” Faber says.
The MSCI Emerging Markets stocks index was up nearly 73 percent in 2009, beating all previous year-to-date advances since MSCI began recording data in 1987, The Wall Street Journal reports.
In comparison, the MSCI World Index of developed countries rose 28 percent.
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