Tags: Faber | stock | market | economy

Marc Faber: 'I've Never Seen Such a Disconnect Between Asset Market and Economic Reality'

By Dan Weil   |   Wednesday, 15 May 2013 09:16 AM

While the stock market surges to record highs almost daily, the economy struggles to maintain momentum, creating a stark dichotomy, according to Marc Faber, publisher of the Gloom, Boom & Doom Report.

“In the 40 years I’ve been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality," he told The Toronto Globe and Mail.

"Asset markets are in the sky, and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up."

Editor's Note:
See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

The U.S. economy grew 2.5 percent in the first quarter, but most analysts believe it's decelerating now.

Faber still has 25 percent of his portfolio in equities, in case they rise further, but "I would be very careful being overweight equities," he said. Faber also holds 25 percent of his portfolio in corporate bonds.

And what about gold?

"Nobody knows whether it’s a good time to buy gold," Faber explained. "As I have repeatedly said, I buy gold every month. On the recent decline, I bought more at $1,400. I have an order at $1,300, one at $1,200 and one at $1,100 an ounce.

"I will never sell my gold. ... My maximum allocation to gold at the present time is 25 percent of assets," he added.

Faber still believes a stock market correction or even a crash will occur this summer. "Something will always move markets up and something will always move them down. I would guess at the present time, given markets from the 2009 lows have in many cases increased by as much as 100 percent, that they are no longer very cheap. ... Something could come along, geopolitically or otherwise," he noted.

"Something will break very bad."

Hedge fund heavyweight David Tepper, president of Appaloosa Management, doesn't share Faber's bearishness toward stocks.

"I'm definitely bullish" on the stock market, he told CNBC.

"The evidence is so overwhelming. The economy is getting better, autos are better, housing is better. The Fed, well, before we get to the Fed, Australia just eased, the ECB [European Central Bank] just eased, South Korea just eased and Japan's in a massive easing mode."

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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