Major central banks' efforts to lift the world economy by printing money have boosted asset prices, so stocks are unlikely to hit their lows from November and March, Marc Faber, the author of "The Gloom, Boom & Doom Report," wrote in his latest research report.
"I have explained repeatedly in the past that if a government is really determined to try and postpone an inevitable collapse by 'printing money' in order to lift or support asset prices, it can be done," Faber wrote.
"This is not to say that the global economy is about to embark on a strong and sustainable growth phase. It also doesn't mean that a new bull market in global equities a la 1982-2000 has begun," he said.
"But I think that, at least in nominal terms (inflation-adjusted), the global printing presses being run by the world's central banks and fiscal deficits have begun to impact asset prices positively," Faber wrote.
Many investors did not take advantage of the recent rally because they thought it was a bear-market rally, so they stayed on the sidelined, hoarding cash. But stocks are not likely to collapse, as more players take courage to dip into the market, he said.
"Put yourself in the shoes of a fund manager who, in the last 18 months, has lost 50 percent of his clients' money and missed the recent rally," Faber wrote.
"What is he likely to do? I would think he would be inclined to purchase equities as they correct the sharp advance since early March, especially as the economic news in the near term becomes less negative," he said.
But very high volatility and "price fluctuations that don't appear to make any sense" will be the new dominant characteristic of the market, he warned.
The lows reached by resource and mining stocks, as well as Asian equities and most emerging markets, are likely to hold for now, according to Faber. But the US long-term government bond market "has the highest probability" of having reached a high, he said.