Marc Faber predicts 20% to 30% drop in stocks

'We're not exactly in a uniformly strong market,' says the notably pessimistic newsletter publisher.

By MSN Money Partner Jul 28, 2014 3:36PM
Image: Broken-Pencil © Christian Zachariasen/JupiterimagesBy Bruno J. Navarro, CNBC

Permabear Marc Faber said Monday he expects stocks to drop 20 percent 30 percent by October.


"Don't forget many stocks are already down 10 percent. The home builders are down roughly 15 percent. Airlines have just dropped around 10 percent," he said on CNBC's "Halftime Report."


Faber, publisher of the "Gloom, Boom & Doom Report," also noted that several large-cap stocks were down by double-digit percentages.


"So, we're not exactly in a uniformly strong market," he said. "The Russell 2000 ($TOMX), which represents 2,000 companies, is down 2 percent for the year. And big deal, the S&P is up 6 percent, whereas the Philippines, Indonesia, India, Thailand, Vietnam are all up between 15 percent and 25 percent."


Earlier this month, Faber said the market is setting up for a big decline that could be as bad as the crash of 1987. But he stopped short of predicting what would set it off.


While Faber's worst-case scenarios often make headlines, he has also been criticized for making dire predictions that didn't bear out.


Last August, he called for a 1987-style crash. Meanwhile, the Standard & Poor's 500 Index ($INX) is up 17 percent since then.


After President Barack Obama's re-election in 2012, Faber joked that investors "should buy themselves a machine gun" to protect their assets. Since then, the S&P is up 45 percent.


Faber defended his record.


"Over my career, somewhere, somehow I must've made some right calls," he said. "Otherwise, I wouldn't be in business."


Faber claimed that over the past 12 years, his Barron's stock picks on average have been up 22.7 percent annually. Faber also said that the Market Vectors Junior Gold Miners ETF, which he owns, is up 42 percent this year.


Overall, higher stock prices, he added, were the result of the Federal Reserve's quantitative easing and M&A activity.


"And the asset purchases by the Fed have done little for Main Street, for the average family in the United States, for the average or median household. But it's lifted some asset prices, including luxury property prices, and particularly stocks and bonds," he said.


"And in the stock market this year -- maybe you find this healthy -- corporations are very liquid, but they don't build capacity. They don't spend on capital equipment. What they do is to buy other companies because their currency, their shares, are a good way to buy other companies. And that has driven the companies. Not so much individual buying. There has been very little individual buying."


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46Comments
Jul 28, 2014 4:05PM
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Not only did he recommend getting out of the stock market last year (which was up 30%), he recommended moving all of your assets into gold (which was down 30%+ last year).  Not to mention he's been bearish since 2009.  Some expert.
Jul 28, 2014 4:18PM
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He's been predicting a market drop for 5 years now; market's up 80% since then. When it does drop, he will make the rounds of the financial shows proclaiming his acumen. I've said before: "Even a blind squirrel finds an acorn once in awhile".
Jul 28, 2014 4:16PM
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Even a broken watch is right twice a day.  Eventually Faber's prediction will come true, but a 10% accuracy rate isn't very impressive.
Jul 28, 2014 4:08PM
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He is right.  It is just a question of when.
Jul 28, 2014 4:32PM
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people are acting like the market made these big gains on its own. they put 6 trillion into it. they should make a cabinet post for wall st in the govt
Jul 28, 2014 4:20PM
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"....I must have made some right calls..."    But what have you done for us lately?
Great hedging. Predicts doom and gloom, and then brags how the market rose. Typical.
Jul 28, 2014 5:26PM
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All Faber is doing is stirring up the media pot. That's what he likes doing......and he's playing the odds. We all know a correction is coming.....IT ALWAYS IS. So what else is new? Nothing.  
Jul 28, 2014 5:01PM
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David Levy has a much better track record and he's saying watch out in 2015 for a world-wide recession that could take housing lower than it did in the Great Recession. 
Jul 28, 2014 4:11PM
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Yeah, Yeah.  Just another 'Bear' in the woods....
Jul 28, 2014 5:19PM
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Market will tank a few months after Obama leaves office and everyone will blame the new guy just because he wasn't able to keep building the house of cards even higher. Wouldn't surprise me if big money let the market tank at the first sign of a lessening of quantitative easing just to keep the easy money rolling in.
Jul 28, 2014 6:04PM
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Thank goodness we have Obama & his pro business stance; up 45 percent
Jul 28, 2014 6:08PM
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Well here's the problem, The Global FEDS are already in it KNEE Deep. We are also far likely closer to another natural Recession Cycle. So I again ask the Question, what are the Global Feds going to do for an Encore when this current House of Cards comes unraveled. Folks always attacking pullback topics strictly as  Doom and Gloom commentary just avoids an actual Adult Conversation.

That  won't change the Fact that Global Debt has soared over 40% since the Great Recession. What caused the Great Recession, too much Debt and Leverage. Eventually the Chickens will come home to Roost, they always do. When they do, just who's going to Bail out Whom?
Jul 28, 2014 5:54PM
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Sooner or later it will rain in California!
Jul 28, 2014 5:35PM
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What good does a stock drop do except let others in. Stocks finally have some value after all these years!! Wish want you want but things are going generally pretty well so why would we have a crash and destroy everything that was built up except to satisfy manipulator of the stock market. Stock may not have the gains they have enjoyed the last few years but remember wjere we came from to get here . 
Jul 29, 2014 12:26AM
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The world it seems is driven by fear those among us who do the best job selling it can make a nice career. And a lot of cash!
Jul 29, 2014 10:58AM
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He will be right some day,

You can no longer believe anything the government says.

they LIE,LIE,LIE

Look at this mornings consumer confidence 90+ %

That is out right lie.

How could this be possible when more than 30% OF AMERICANS

DEBT IS IN COLLECTIONS.

Jul 29, 2014 10:41AM
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As long as some one still buys our monthly auctions and the feds keep borrowing the party will go on.

There just is no other game in town. at some point the world will wake up and see that the US

can no way ever honor the paper it is printing every month.

When that happens we will simply screw the world and default on our debt.

It will happen no other way out.

The question is WHEN, how much higher can the market go.

IN  the end it will crash not 20 30% but 80 90%.







Jul 28, 2014 5:39PM
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A 30% drop won't break us under the 10,000 mark and we will see that number come and go below it. What holds up the markets besides fake money? The entities behind the stocks are dead and do not do enterprise. I think if I wanted to own a stock, I'd be sure they knew how to make what they've been importing. Almost all do not. 
Jul 29, 2014 8:37AM
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"WASHINGTON- More than 35 percent of Americans have debts and unpaid bills that have been reported to collection agencies, according to a study released Tuesday by the Urban Institute. These consumers fall behind on credit cards or hospital bills. Their mortgages, auto loans or student debt pile up, unpaid. Even past-due gym membership fees or cellphone contracts can end up with a collection agency, potentially hurting credit scores and job prospects, said Caroline Ratcliffe, a senior fellow at the Washington-based think tank.
"Roughly, every third person you pass on the street is going to have debt in collections," Ratcliffe said. "It can tip employers' hiring decisions, or whether or not you get that apartment."
$$$
Filter out seniors who no longer have any expenses and children-- and more than 70% of us are in this position. For more than six years now, the original problem of financial tyranny has thrived while there has been ZERO movement to dis-incorporate the inherited entities, close the banks and to get RID of Wall Street-- all the venues of greedy wealth. 
When all hope is gone, the government is destroyed because they failed to do what the People needed them to. Whether it was possible or not.
Obama will be impeached and removed in the coming months. Congress will in-fight itself into dysfunction and bastions will collapse. Quantitative Easing and money printing built and empowered wealth to be anti-economic.
We pretty much have days now. You have no choice but to crash the financial system or more wars start, more anger is fueled, more destitution created. We will not be able to stop it soon. 
$$$
Replace the modern era words and you have the very same statement made by people who lived in Detroit, Chicago, Cleveland, St. Louis and other cities with populations of 25,000 or more, overly indebted to Loan Sharks by 1905. The nation came to halt that year.
You ask- where is the money? It never existed. I try to explain this in other blogs. When we finally snap, it's a trap, nothing deflates, it evaporates. Normal people are buying what they can hoping that it can be translated into some form of currency or barter fodder in the aftermath. 
Consider that prospect... walking from your suburban home out into the country with a pocket full of gold coins looking for someone who will let you use them to buy food with. CHAOS has yet to begin.  
Jul 28, 2014 5:43PM
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Marc:


I believe your text was written mainly  for the "Faint of Heart"..

and is well intended..

There are those who have invested most if not all of their saving in the DOW

 and a reduction of 30% or 40% would decrease that saving considerably,

effecting their retirements or the chance to retire early.


But to suggest an investment in GOLD to those same people was ill advised..

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