In a live CNBC segment this week, Marc Faber, renowned bear and publisher of The Gloom, Boom and Doom Report, went on record as saying it’s too late to participate in this rally.
Check out the clip, but it boils down to this gem from Faber: “As U.S. investors, you have to choose the time to buy. I believe it’s too late to buy the U.S. stock market.”
Now, it’s fair to debate whether or not this longtime doomsayer is worth listening to at all. He has been sounding the alarm bells on hyperinflation for years now and, if anything, our current troubles hint at disinflation or deflation, with a super-low rate of price and wage increases.
But at the core of his one-liner, Faber may be on to something. After all, he himself is far too late to this rally to make up for lost time; the S&P 500 is up more than 150% from its March 2009 lows and Marc Faber has been warning investors to sit out every step of the way.
There’s a very real concern that it is too late to ride the stock market rally now that valuations are less attractive for U.S. equities, and momentum plays from Amazon (AMZN) to 3D printing stocks have started to lose steam.
After all, we just had a 30% up year in 2013 … can we really repeat that performance?
Of course, the fundamental flaw in Marc Faber’s philosophy is that he sees shadows everywhere — that corporate buybacks are just accounting tricks, that the Fed is burning down the house and that a gazillion more folks are actually unemployed than manipulated jobs numbers imply.
When you take a more rational look at the numbers — starting with the basic premise that no, the Bureau of Labor Statistics is not lying to you — the market looks indeed challenged, but not doomed for a crash.
While the stock market has struggled so far in 2014 and some recent numbers like the advance GDP estimate are certainly cause for concern, it’s not the end of the world. Consider that earlier this month, Bank of America Merrill Lynch warned that we’ll see a 10% to 15% correction this autumn — not good, for sure, but hardly the harbinger of the apocalypse.
I remain convinced that the market needs to consolidate before moving higher, but I disagree that investors are just plain old “too late” to buy stocks. There are always opportunities in any market, and I have confidence that the long-term trend is higher.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.