Tags: Faber | market | stocks | highs

Marc Faber: Now Is Not a ‘Very Good Time to Buy Stocks,’ Crash Coming

Monday, 08 Apr 2013 12:05 PM

By Glenn J. Kalinoski

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The Standard and Poor’s 500 could continue to make new highs, but with very few stocks making new highs because a lot of stocks have not performed well and are already down significantly from their highs, according to contrarian investor Marc Faber.

“If we continue to move up, the possibility or the probability of a crash becomes higher, sometime in the second half of this year,” Faber, editor and publisher of The Gloom, Boom & Doom Report, told CNBC.

“Every day some important stocks are breaking down, like Oracle and Federal Express. Can we go up just because of a few stocks [such as] Johnson & Johnson, Wal-Mart, Procter & Gamble? Possibly,” he said.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

But “I don’t think it’s a very good time to buy stocks,” he added.

“Near term, the market is overbought.”

Faber characterized the U.S. economy as being in a “very weak” expansion because of “all the money printing that is going on and asset purchases by central banks.”

“It does not lead to money flowing into Main Street. It flows into asset markets,” he explained.

“The corporate sector is very cash rich because the earnings are at a record. [It’s] no surprise. Since 2000 they have grown from $5 trillion to over $16 [trillion.] The corporate sector is very liquid, but nobody feels like building a new factory. What they do is take over a company, like GE is doing. It actually hurts the economy because they are going to lay off some people.”

Borrowing has maintained consumers’ resilience, Faber noted.

And with the deficit at $1 trillion, “that trillion dollars flows into food stamps, all kinds of disability insurance premiums, so that keeps consumption at a relatively high level,” he added.

“What drives wealth is capital spending and savings, not consumption,” he warned.

Faber noted that in the wake of the collapse of the banking sector in Cyprus, depositors globally should prepare for a haircut.

“In general, I believe well-to-do people who benefited from the [central banks’] money printing and easy monetary policies … will have to give back some of the money either through taxation or through revolution or through expropriation,” he said.

“I think if you have all the money in the bank, you may eventually lose 40 percent or 50 percent, depending on the quality of the bank and how you hold your deposit.”

Faber stated that he believes China and North Korea are working together.

“Everybody knows that in Asia,” he said. “[North Korea] is a country that can hardly produce bicycles. They have practically no industries. How can they have nuclear technology? How can they supply weapons to Iran?”

He compared the current situation to the Cold War.

“The Russians used Bulgarians to do the dirty work,” he said. “The Chinese are using the North Koreans.”

Mark Mobius, executive chairman of Templeton Emerging Markets Group, believes people are starting to realize that stock markets are the place to be, and with more people moving in that direction “tremendous bull markets” lie ahead.

“We're already seeing a very significant bull market, but this is just the beginning, as far as I'm concerned,” he told CNBC.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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