Tags: Faber | stock | market | correction

Marc Faber: US Stocks Are on the Edge of Darkness

By    |   Wednesday, 30 April 2014 10:35 AM

What stock market correction? Marc Faber, aka "Dr. Doom" for his reliably bearish crystal ball on financial markets, says there may have been a stock selloff this year, but the real correction could take place in the second half of 2014.

Faber, publisher of The Gloom, Boom and Doom Report, tells CNBC that while social media stocks and some other tech high flyers are down 20 percent to 50 percent from their high-beta peaks, that's just the appetizer portion for a larger ugly entrée to come.

"We had already a big break in the market, but we haven't yet had the big break in the overall market," he predicts.

Faber believes selling will ultimately hit the wider indexes, with energy and utility companies, among others, destined for a sharp pullback. He repeated his worry that U.S. stocks are facing a crash that could be deeper than the 2008 meltdown.

"I believe it is too late to buy the U.S. stock market," he notes.

So what's the alternative?

According to Faber, emerging markets may be a better place to hide out than U.S. stocks are because they have already had huge selloffs.

He tells CNBC he has stashed cash in countries such as Vietnam, Iraq, Malaysia, Thailand and Singapore.

Editor’s Note: Billionaires Dump Stocks (See Video)

"I made some investments more than a year ago in Iraq, because it's very cheap. There's lots of problems but the market is very, very inexpensive," Faber explains. "Russia is dirt cheap, but I don't think there is a hurry to buy Russian stocks."

In the meantime, he believes U.S. financial markets are destined to go nowhere because equities are overvalued and interest rates cannot go any lower.

"In general, individual investors have excessively optimistic expectations about their future returns," Faber states.

Ralph Acampora, senior managing director at Altaira Ltd. and one of the most respected technical analysts on equities for his record of accuracy, says in a stream of Twitter postings there is reason for concern about the U.S. stock market.

Acampora bases his worries on his comparison of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA), which together he believes can predict the direction of stocks, according to the Dow Theory.

"The DJIA has not made a new closing high since 12/31/13," he tweets. "The DJTA has made multiple new closing highs since 12/31/13.

"The disparate movement between the DJIA & DJTA means that we have been in a secondary correction since 12/31/13. The current secondary correction can only end when both the DJIA & DJTA make new closing highs."

Perhaps more worrisome is Acampora's technical conclusion that both indexes better not breach their February lows — or else.

"If the DJIA & DJTA both close below their 2/3/14 closing lows, than (sic) a Dow Theory Primary Bear Market will begin," he predicts.

The DJIA closed at 15,372.80 on Feb. 3, while the DJTA closed at 7,053.75.

Editor’s Note: Billionaires Dump Stocks (See Video)

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InvestingAnalysis
What stock market correction? Marc Faber, aka "Dr. Doom" for his reliably bearish crystal ball on financial markets, says there may have been a stock selloff this year, but the real correction could take place in the second half of 2014.
Faber, stock, market, correction
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2014-35-30
Wednesday, 30 April 2014 10:35 AM
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