LONDON (Commodity Online): Inflation is ruling high across the countries and continents. When inflation has turned out to be the most worrying factor in the world, where are commodities heading? Legendary investor Marc Faber has warned that investors should now prepare for some downside volatility in commodities.

Saying that commodities are overbought these days, Faber, editor and published of the Gloom Boom and Doom report, points out that commodities have reached the parabola stage.

Here are the highlights of Faber's outlook on commodities, stocks, bonds and stocks for the month of February:

Commodities: Faber is concerned about commodities, as they are currently very overbought by almost any measure. He goes on to say that commodities seem to have reached the parabola stage--going straight up, which is usually the very end of the move. Yes, it could last longer than anyone expects, but at some point prices will collapse again, as they did back in 2008.

This cycle, Faber notes, always occurs as higher prices lead to an increase in supply, which eventually overwhelms the market causing prices to fall. The cycle is longer for industrial commodities compared to agricultural prices as it is harder to build a new copper mine than it is for a farmer to plant more soybeans.

This cycle will play out even with the Fed's money printing. Investors should prepare for some downside volatility in commodity prices.

Emerging Markets: Faber remains very bearish on emerging markets in general (Brazil, India, etc). He notes that many failed to make new highs in January, despite favorable market conditions, which could indicate a major top in some emerging markets. Faber thinks emerging markets could fall between 20-30%. In fact, this would be a great buying opportunity for investors. 

Real Estate: No, Faber is not calling a bottom in US real estate, but he points out that relative to other asset classes, real estate is cheap. He would consider buying a home as long as you are prepared to live in it for a while. Faber also postulates that if housing continues to decline, commodities and stocks may sell-off even more.

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