Tags: marc faber | stock market | crash | cnbc

Marc Faber: S&P to Crash 50 Percent, Erasing Years of Gains

Marc Faber: S&P to Crash 50 Percent, Erasing Years of Gains

(Stock Photo Secrets)

By    |   Wednesday, 10 August 2016 10:52 AM

Famed market bear Marc Faber is actually growling even a little bit louder these days.

The editor and publisher of the Gloom, Boom & Doom Report, told CNBC that stocks are likely to endure a gut-wrenching drop that would rival the greatest crashes in stock market history.

"I think we can easily give back five years of capital gains, which would take the market down to around 1,100," Faber said, referring to a level 50 percent below Monday's closing on the S&P 500.

When pressed on what could cause the decline he predicts, Faber responded that "you never know exactly why this will happen," adding that he believes the market's gains are unsustainable.

"The fact is, the market hasn't really been driven by genuine buying, but by stock buybacks, takeovers and acquisitions, and market leadership has been narrowing. It's not that many stocks that have been making new highs. It's quite a narrow growth of stocks that have been very strong," he said. 

But other market pundits, naturally, have somewhat more optimistic views about the U.S. economy's future.

CNBC’s Ron Insana explains that America is already great, but he does admit the nation has many problems, “and some serious ones, problems that need intelligent fixes.”

He told the opening General Session of the National Conference of State Legislatures that “the November election stands as a big uncertainty for the economy. It’s like nothing we’ve ever seen.”

Who wins the presidency, he added, is not as important as what happens after.

“Can we find a way to move forward in cooperation around areas like infrastructure and not making policy mistakes,” said Insana, the author of four books on Wall Street. “The U.S. has outpaced the rest of the world,” Insana said. “We have $90 trillion in household net worth. We are outgrowing the rest of the world," he said. “The country is great and has been great,” he added. “We have problems and some serious ones, problems that need intelligent fixes.”

As for Faber, he contends that capitalism and free markets is not exactly fair to everyone and can be cruel — but it is still the best system.

Faber, a Swiss investor who is famous for making gloomy market forecasts, believes in free market capitalism. He has frequently advocated against the central banks, specially the U.S. Federal Reserve. He has called for the Fed to be abolished because their easy monetary policies were hurting the natural process of price discovery.

“Capitalism and free markets are not fair (in fact, capitalism is a cruel system in numerous ways), but it is a far fairer system (not crony capitalism) than all the other forms of organizing economic and social life, and in particular vastly superior to socialism, communism, and the arbitrary command economy,” Faber wrote in his recent blog.

"Western democracies had (like socialism and communism) the noble idea of creating a fair society [Albert Camus: 'The welfare of the people has always been the alibi of tyrants'], but it is now ending up with system that is characterized by far more injustices and abuses by bureaucrats, powerful corporations and government officials," he wrote.

Central Banks around the world have engaged in unprecedented money printing and he blames the Fed for trying to get people to spend and spur the economy. Markets should be left as free as possible. During imbalances the good companies survive and bad companies fail. It is almost similar to the Darwinian concept of "Survival of the Fittest." By bailing out the badly managed companies it is allowing the flawed institutions to continue operating without consequences.


“We should always think realistically. We shouldn’t hope. The fact is, simply, when I look at these people in central banks, and they’re monitoring things, and believe me they will never admit that they’ve been wrong,” he wrote.

“They’ve printed money like crazy, and the global economy basically is stagnating. And I’ve written about this. The more money you print, the more REAL wages go down. That is the problem.”

Faber likes buying stocks when prices are cheap. Investment returns are much greater when buying low rather than buying the hottest stock in the market and being talked on TV. In addition he believes in holding a portion of one's investment in gold as an insurance policy.

In another recent Marc Faber Blog, he also likened investors in the stock market as being passengers on the Titanic. "We're all on the Titanic, but the Titanic still has maybe a few days to travel before it collapses so we might as well enjoy the journey," he wrote.

(Newsmax wire services contributed to this report).

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Famed market bear Marc Faber is actually growling even a little bit louder these days.
marc faber, stock market, crash, cnbc
Wednesday, 10 August 2016 10:52 AM
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