Monday, February 2, 2015

Faber likes 30 year US bonds... does not like US Stocks

The U.S. market is expensive. Yet, the whole world seems to think it is the only game in town. That suggests it may be vulnerable to a sell-off. I hate to short individual stocks because an activist could step in and send a stock soaring. Instead, I would short the SOX, or Philadelphia Semiconductor Index, through the iShares PHLX Semiconductor ETF [SOXX]. I would also short the Global X Social Media ETF [SOCL] and the iShares Nasdaq Biotechnology ETF [IBB].

While people think U.S. stocks are the only game in town, U.S. bonds are still attractive. Japanese government bonds now yield 0.27%. Japan’s government debt exceeds 200% of gross domestic product. Compared to these dynamics, U.S. Treasuries are cheap. Last year, I recommended the 10-year Treasury note. This year, I recommend buying 30-year U.S. government bonds.

VIA Barrons 2015 Roundtable