Marc Faber’s January 2011 Outlook – Correction Imminent

By Nathaniel Crawford
Investor extraordinaire Marc Faber is out with his latest Gloom, Boom, and Doom report, which discusses his outlook for 2011. Here are a few highlights:

1. Equity Markets–Faber believes a correction is imminent for the stock market as bullish sentiment (AAII sentiment) nears record levels and mutual fund cash positions remain very low. Furthermore, the latest upward move in stocks has occurred on declining volume, which is usually bearish from a technical point of view. The correction should occur in January. That being said, you should be buying into the correction as it represents a good buying opportunity. Faber prefers energy companies and speculative stocks such as home builders and even AIG. He goes on to say that the third year of a Presidential cycle is very good for speculative stocks versus traditional blue chip value plays.
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Record High Inflation in India

Rising fuel and food prices in India are reviving inflation fears.
During the past year, the nation's food price index rose 12.13 percent.
Basic vegetables are of main concern as consumers complain about being unable to afford certain dietary staples.
The price of onions, for example, has risen by 350%.
Up-scale restaurants have also seen a steady increase in prices these last six months, effecting their profit margins. Although they are able to absorb the price hike right now, the question that remains is: for how long?
In an effort to ease the sting, India's embattled government banned onion exports and scrapped import duties.
High food inflation has dislodged state governments in the past. India's Congress party that leads the ruling coalition has to come up with a solution before the partial state elections later this year.
Al Jazeera's Sohail Rahman reports.