Tags: Faber | stocks | correction | QE

Marc Faber: Stocks Poised to Plunge 20 to 30 Percent

By Dan Weil   |   Wednesday, 05 Feb 2014 08:18 AM

Stocks have been artificially boosted by the Federal Reserve's quantitative easing (QE) and are set for a 20- to 30-percent plummet soon, says Marc Faber, publisher of the Gloom, Boom & Doom Report.

"I think the market is way overdue for a 20 to 30 percent correction," he tells CNBC.
"In fact, I'm hoping for the market to drop 40 percent so stocks will again become — from a value point of view — attractive."

QE's impact on the economy hasn't matched its impact on stocks, Faber explains. "I think the experience with quantitative easing is a complete failure," he notes.

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"It has lifted asset prices and created asset inflation, but it hasn't lifted the standard of living of most people in the U.S. nor worldwide."

While the Standard & Poor's 500 Index has slid 5 percent so far this year, that doesn't necessarily mean the 20-30 percent drop is upon us.

"I'd like to reserve opinion about this until we see the nature of the rebound," Faber states. "If the rebound fails around 1,820" on the S&P 500, the market may be in for trouble.

The S&P 500 closed at 1,755.20 Tuesday.

Many investors disagree with Faber, expecting the correction to be short-lived. "Main Street is still chugging along. Earnings have been fine," Ethan Anderson, senior portfolio manager at Rehmann Financial in Grand Rapids, Mich., tells Bloomberg.

"You put all these together, and I'm just not seeing anything that's suggesting that the train is off the track. We're pretty much in a very healthy pullback."

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