The U.S. stock market may have outperformed foreign markets for almost three years, but Euro Pacific CEO Peter Schiff says you shouldn't count on that trend continuing.

"The last couple of years are based on a very misguided sense of what’s going on. What has driven the strength of the U.S. market is the false belief that the Fed has saved the U.S. economy," he told MarketWatch.

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The S&P 500 hit a record high of 1,955.55 Monday.

"We are on the verge of a much worse financial crisis than we had in 2008, because the Fed re-inflated all the busted bubbles, all the while the fundamentals have been eroding," Schiff said.

He believes the economy's weakness will push the Federal Reserve to reverse its tapering of quantitative easing.

"If they do stop QE, interest rates are going to rise substantially, and we won’t be able to pay $1 trillion a year in interest. The country is in really bad shape."

So what should investors do?

"People would be better off investing in countries with sound policies than investing in America," Schiff said.

Many investors don't share Schiff's pessimism about U.S. stocks and believe Iraq's military conflict won't hurt much.

"I don’t think enough has happened overseas yet to turn this into a big problem," Matt Maley, equity strategist at Miller Tabak, told Bloomberg News. "The market was ripe already for a pullback, it just needed something to knock it down. It’s not the end of the world."

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