Marc Faber to Moneynews: S&P 500 Could Decline 40%

Wednesday, 10 Apr 2013 08:03 PM

By Glenn J. Kalinoski and David Nelson

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The Standard & Poor’s 500 Index could drop 40 percent, according to contrarion investor Marc Faber.

“There are some people now calling for Dow Jones 18,000 or 20,000 by year end,” Faber told Newsmax TV in an exclusive interview. “The S&P could then easily drop by 40 percent.”

The editor and publisher of "The Gloom, Boom & Doom Report" said the market “needed the correction” starting in February or March.

Watch our exclusive video. Article continues below.



Editor's Note: A full, unedited version of this interview is available exclusively to Financial Braintrust Alliance subscribers. Visit www.fbtalliance.com for more information and to sign up.

“I thought maybe we’re in a year like ’87, where the market goes up strongly between Jan. 1 and Aug. 25,” he said. “The market went up by 40 percent and then it crashed by 40 percent in two months’ time.”

Stock indexes in the U.S. have been soaring to record highs on an almost-daily basis.
“We may get into a bubble,” he said. “One of the reasons that this may happen is one way or the other, central banks have to be discredited very badly.”

Editor’s Note: Put the World’s Top Financial Minds to Work for You

The discussion turned to Federal Reserve Chairman Ben Bernanke.

“One way to discredit central banks, and, in particular, Mr. Bernanke, would be to have a stock market bubble," he said.

"And at the same time the real economy, the economy of the middle class, the economy of the working class, of the typical American family going downhill, which it has done essentially for a long time if you adjust it for the cost of living increases that households are incurring ... we may very well get a stock market bubble now that would be a gigantic bubble and then a complete collapse.”

Faber was interviewed on the same day President Barack Obama announced a budget plan that includes capping tax deductions for top earners, boosting the estate tax, an elimination of private-equity managers’ ability to receive lightly taxed carried interest and force those earning more than $1 million to pay a minimum tax rate.

“The government just fattens the pigs before they lead them to slaughter and they’re going to tax the well-to-do people … or expropriate them or do something against them whereby we will lose money, and a lot of money,” he said. “The well-to-do people … invest in assets because they think they’re going up.”

He went on to outline some of the investments wealthy investors are piling into.

“If you bought a Warhol 10 years ago, it’s up 10 times today,” he said. “If you bought a Picasso 15 years ago, it’s up 10 times. If you bought a high-quality wine, it’s up. [The same is true regarding] stamps, gold, fine property.”

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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