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Find Value in First Half 'Disaster': Dr. Doom

CNBC.com
Tuesday, 23 Dec 2008 | 5:08 AM ET

The first half of next year will be very bad for the world economy, but investors will find value in stock markets as some deeply discounted shares will stage a rebound, Marc Faber, editor and publisher Gloom, Boom and Doom Report, told CNBC.

For 2009, Faber expects a continuation of the very high volatility in 2008, a strong rebound in stocks and then markets will ease again as investors realize the world economy will not recover very fast and corporate profits will not rise quickly.

"The first half of 2009 will be a disaster… I don't see any catalyst that will propel the world economy," Faber told "Squawk Box Europe."

bull and bear outside frankfurt stock exchange
AP
bull and bear outside frankfurt stock exchange

As many stocks collapsed, with the London market down around 40 percent this year and Russia falling by around 70 percent, a mood of pessimism has spread across markets and people are still bearish, and this brings opportunities, he said.

"I think that some value has been emerging. There are pockets of value in the market," said Faber, who said he believes markets bottomed out in November.

Miners and Commodities

Mining stocks and commodities prices have been collapsing but they will rise fast when an economic recovery finally takes place, as now there is very little exploration carried out and supply will not pick up much while demand will rise fast, according to Faber.

Find Value in First Half 'Disaster'
The first half of 2009 will be very bad for the world economy, but investors will find value in stock markets as some deeply discounted shares will stage a rebound, Marc Faber, editor and publisher Gloom, Boom and Doom Report, told CNBC.

Video: watch the full Marc Faber interview.

Emerging markets, especially the Asian ones which have built up strong financial positions after the 1998 crisis, will have a strong rebound, Faber predicted.

Authorities did not manage the crisis properly, with Federal Reserve and government meddling actually making things worse, he said.

"In my opinion, especially the Fed in the US has done a totally disastrous job at steering the economy," he said. "Market based solutions are the best, interventions create new and new problems in the economy."

Inflation is the next danger, as once a recovery takes place prices will rise and the Fed will find it hard to push its near-zero rates above inflation, Faber said.

Contact Europe: Economy

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