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"We’re extremely oversold at the present time,” Faber said in an interview with Bloomberg Television. "The market is in a position to rebound.”
The Standard & Poor’s 500 Index dropped 38 percent from its record 1,565.15 reached Oct. 9, 2007, as investors speculated more than $660 billion in bank losses will spur a recession. The ratio of stocks advancing versus those declining on the New York Stock Exchange fell to a 17-month low on Oct. 15.
Faber said he is holding gold, cash and short-term bonds because inflation will increase as the U.S. government lowers interest rates to stave off an economic slowdown. Gold climbed 5.8 percent from Sept. 11 through yesterday and yields on three- month Treasury bills fell 51 percent over the period.
Faber Says Stocks May Rally, Won’t Reach Records
Eric Martin and Rhonda Schaffler
Bloomberg, Oct. 20 2008